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What is strategy?

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Dr. Marc Sniukas
Dr. Marc Sniukas

The document discusses strategy and strategic planning. It begins by explaining that strategy provides direction for an organization's activities and prevents time and resources from being wasted. It then summarizes Mintzberg's 10 schools of strategic thought, which describe different aspects of strategy. Finally, it outlines elements that are important to developing an effective strategy, including analyzing the industry, establishing objectives, and ensuring strategic elements are internally consistent. The document provides an overview of key concepts for understanding and developing organizational strategy.

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The Economist “Nobody really knows what strategy is.” Version 3.2 March 20111 © Marc Sniukas
Download this presentation as PowerPoint file. Visit: www.e-junkie.com/sniukas Version 3.2 March 2011© Marc Sniukas2 € 2.99
What is Strategy? A (very) brief introduction.
Why do we need a strategy? §  Without a strategy, we fill our time with… … what we want, or … what we think the boss wants, or … by reacting. §  Without a strategy, time and resources are easily wasted on piecemeal, disparate activities. Version 3.2 March 2011 “Are you sure you have a strategy?” Donald C. Hambrick and James W. Frederickson Academy of Management Executive 2001 Vol. 15 No. 4 4 © Marc Sniukas
Five Definitions Strategy as… §  a consciously and purposefully developed plan; §  a ploy to outmaneuver a competitor; §  a pattern in a stream of actions, whether intended or not; §  a position defined either with respect to a competitor, in the context of a number of competitors, or with respect to markets; and as §  a perspective, i.e. a certain mindset of how to perceive the world. Mintzberg, H. (1987). "The Strategy Concept I: Five Ps For Strategy." California Management Review 30(1) Fall: 11-24. Version 3.2 March 20115 © Marc Sniukas
Mintzberg‘s 10 Schools §  Being unsatisfied with the strategy discussion, Henry Mintzberg, professor at McGill University Canda, set out to structure the literature and thinking on strategy. He discovered 10 different schools of thought on strategy, arguing that every one of them describes a specific part of strategy. §  Just like the blind men describe the elephant…. Version 3.2 March 2011© Marc Sniukas6
Mintzberg‘s 10 Schools Prescriptive §  Design §  Planning §  Positioning Descriptive §  Configuration §  Cognitive §  Cultural §  Entrepreneurial §  Environmental §  Learning §  Power 7 © Marc Sniukas Version 3.2 March 2011
Mintzberg‘s 10 Schools : The 3 Prescriptive ones Design School §  Strategy as a process of conception §  Goal = Achieving the essential fit between –  internal strengths & weaknesses and –  external opportunities & threats §  '70s Version 3.2 March 2011© Marc Sniukas8
Mintzberg‘s 10 Schools : The 3 Prescriptive ones Planning School §  Strategy as a formal process §  Takes on most of the design schools assumptions §  Process: Formal, Decomposable, Steps §  Supported by checklists and formal techniques §  Igor Ansoff §  mid '70s Version 3.2 March 2011© Marc Sniukas9
Mintzberg‘s 10 Schools : The 3 Prescriptive ones PositioningSchool §  Strategy as an analytical process §  Generic positions selected through formalized analyses of industry situations §  Michael Porter §  '80s Version 3.2 March 2011© Marc Sniukas10
Mintzberg‘s 10 Schools : The 7 Descriptives ones Configuration School §  Strategy as a process of transformation §  Process varies according to company configuration Version 3.2 March 2011© Marc Sniukas11
Mintzberg‘s 10 Schools : The 7 Descriptives ones Cognitive School §  Strategy as a mental process and creative interpretations Version 3.2 March 2011© Marc Sniukas12
Mintzberg‘s 10 Schools : The 7 Descriptives ones Cultural School §  Strategy as a social process rooted in the company‘s culture §  Focuses on common interest & integration Version 3.2 March 2011© Marc Sniukas13
Mintzberg‘s 10 Schools : The 7 Descriptives ones Entrepreneurial School §  Strategy as a visionary process §  Intuition §  The leader is central Version 3.2 March 2011© Marc Sniukas14
Mintzberg‘s 10 Schools : The 7 Descriptives ones Environmental School §  Strategy as a reactive process §  Influenced by the demands of the environment Version 3.2 March 2011© Marc Sniukas15
Mintzberg‘s 10 Schools : The 7 Descriptives ones Learning School §  Strategy as an emergent process §  Organisational Learning §  Formulation & implementation interwine Version 3.2 March 2011© Marc Sniukas16
Mintzberg‘s 10 Schools : The 7 Descriptives ones Power School §  Strategy as a process of negotiation §  Micro vs Macro, i.e. company vs individual interests §  Political §  Focuses on personal interest Version 3.2 March 2011© Marc Sniukas17
Dimensions of Strategy Process, Content, Context Version 3.2 March 201118 © Marc Sniukas “Strategy: Process, Content, Context” 3rd edition De Wit & Meyer Thomson Learning 2004
Strategy Process Version 3.2 March 201119 © Marc Sniukas “Strategy: Process, Content, Context” 3rd edition De Wit & Meyer Thomson Learning 2004
Strategy Formation Version 3.2 March 201120 © Marc Sniukas “Strategy: Process, Content, Context” 3rd edition De Wit & Meyer Thomson Learning 2004
Realized Strategy Strategy Formation Activities Version 3.2 March 201121 © Marc Sniukas “Strategy: Process, Content, Context” 3rd edition De Wit & Meyer Thomson Learning 2004
Strategy Content Version 3.2 March 201122 © Marc Sniukas “Strategy: Process, Content, Context” 3rd edition De Wit & Meyer Thomson Learning 2004
Strategy Context Version 3.2 March 201123 © Marc Sniukas “Strategy: Process, Content, Context” 3rd edition De Wit & Meyer Thomson Learning 2004
Strategic Tensions Version 3.2 March 201124 © Marc Sniukas Dimension Topic Tension “Strategy: Process, Content, Context” 3rd edition De Wit & Meyer Thomson Learning 2004
Setting Strategy A great strategy has pieces, …but they form a coherent whole! Version 3.2 March 201125 © Marc Sniukas
“Are you sure you have a strategy?” Donald C. Hambrick and James W. Frederickson Academy of Management Executive 2001 Vol. 15 No. 4 Putting strategy in its place Strategic Analysis § Industry Analysis § Customer/marketplace trends § Customer activity cycle § Environment forecast § Competitor analysis § Assessment of internal strengths, weaknesses, resources, culture § Stakeholders Mission § Fundamental purpose § Values § Vision Objectives § Specific targets, short & long term Strategy! The central integrated, externally oriented concept of how we will achieve our objectives Supporting Organizational Arrangements § Structure § Process § Symbols § Rewards § People § Activities § Functional policies It’s not about the sequence. The robustness of the whole is key ! Version 3.2 March 201126 © Marc Sniukas
The five major elements of strategy Arenas Staging Differentiators VehiclesEconomic Logic Version 3.2 March 201127 © Marc Sniukas “Are you sure you have a strategy?” Donald C. Hambrick and James W. Frederickson Academy of Management Executive 2001 Vol. 15 No. 4
The five major elements of strategy Economic Logic Arenas Staging Differentiators Vehicles Where will we be active? How will we get there? How will we win in the market place? What will be our speed and sequence of moves? How will we obtain our returns? Version 3.2 March 201128 © Marc Sniukas “Are you sure you have a strategy?” Donald C. Hambrick and James W. Frederickson Academy of Management Executive 2001 Vol. 15 No. 4
The five major elements of strategy Strategy is an integrated set of choices. §  Arenas Where will we be active? §  Vehicles How will we get there? §  Differentiators How will we win in the market place? §  Staging What will be our speed and sequence of moves? §  Economic Logic How will we obtain our returns? Version 3.2 March 201129 © Marc Sniukas “Are you sure you have a strategy?” Donald C. Hambrick and James W. Frederickson Academy of Management Executive 2001 Vol. 15 No. 4
The five major elements of strategy Arenas: Where will we be active? §  With how much emphasis ? §  Which product categories ? §  Which market segments ? §  Which geographic areas ? §  Which core technologies ? §  Which value-creating stages ? Version 3.2 March 201130 © Marc Sniukas “Are you sure you have a strategy?” Donald C. Hambrick and James W. Frederickson Academy of Management Executive 2001 Vol. 15 No. 4 1
The five major elements of strategy Vehicles: How will we get there? §  The means for attaining the needed presence in the identified arenas §  Internal development ? §  Joint ventures / alliances ? §  Licensing / franchising ? §  Acquisitions ? §  Which channels ? Version 3.2 March 201131 © Marc Sniukas “Are you sure you have a strategy?” Donald C. Hambrick and James W. Frederickson Academy of Management Executive 2001 Vol. 15 No. 4 2
The five major elements of strategy Differentiators: How will we win? §  The reasons that customers will choose us §  Image ? §  Customization ? §  Price ? §  Styling ? §  Product reliability ? §  Anything else ? Version 3.2 March 201132 © Marc Sniukas “Are you sure you have a strategy?” Donald C. Hambrick and James W. Frederickson Academy of Management Executive 2001 Vol. 15 No. 4 3
The five major elements of strategy Staging: What will be our speed & sequence of moves? §  Driven by availability of resources, urgency, need for credibility and need for early wins §  Speed of expansion ? §  Sequence of initiatives ? Version 3.2 March 201133 © Marc Sniukas “Are you sure you have a strategy?” Donald C. Hambrick and James W. Frederickson Academy of Management Executive 2001 Vol. 15 No. 4 4
The five major elements of strategy Economic Logic: How will we obtain our returns? §  How profits will be generated, above the firm’s cost of capital. §  Lowest costs through scale advantages ? §  Lowest costs through scope and replication advantages ? §  Premium prices due to unmatchable service ? §  Premium prices due to proprietary features ? Version 3.2 March 201134 © Marc Sniukas “Are you sure you have a strategy?” Donald C. Hambrick and James W. Frederickson Academy of Management Executive 2001 Vol. 15 No. 4 5
The five major elements of strategy Economic Logic: How will we obtain our returns? §  What generates cash ? §  What decides your margins ? §  What generates market share growth ? §  How fast do sales turn into cash ? §  What numbers / ratios tell us we’re successful ? §  What are our underlying core capabilities ? Version 3.2 March 201135 © Marc Sniukas “Are you sure you have a strategy?” Donald C. Hambrick and James W. Frederickson Academy of Management Executive 2001 Vol. 15 No. 4 5
Testing the Quality of Your Strategy Version 3.2 March 201136 © Marc Sniukas
Some key evaluation criteria Does your strategy fit within what’s going on in the environment? Does your strategy exploit your key resources & capabilities? Is your strategy implementable? Do you have enough resources to pursue this strategy? Are the elements of your strategy internally consistent? Will your envisioned differentiation be sustainable? Version 3.2 March 201137 © Marc Sniukas
Some key evaluation criteria §  Does your strategy exploit your key resources & capabilities? With your particular mix of resources, does this strategy give you a good head start on competitors? Can you pursue this strategy more economically than competitors? §  Will your envisioned differentiation be sustainable? Will competitors have difficulty matching you? If not, does your strategy explicitly include a ceaseless regimen of innovation & opportunity creation? §  Are the elements of your strategy internally consistent? Have you made choices of arenas, vehicles, differentiators, and staging, and economic logic? Do they all fit and mutually reinforce each other? §  Is your strategy implementable? Will your key constituencies allow you to pursue this strategy? Can your organization make it through the transition? Are you & your management team able & willing to lead the changes? §  Do you have enough resources to pursue this strategy? Do you have the money, managerial time & talent, & other capabilities to do all you envision? Are you sure you’re not spreading your resources too thinly, only to be left with a collection of feeble positions? Version 3.2 March 201138 © Marc Sniukas
Putting strategy in its place Strategic Analysis § Industry Analysis § Customer/marketplace trends § Customer activity cycle § Environment forecast § Competitor analysis § Assessment of internal strengths, weaknesses, resources, culture Mission § Fundamental purpose § Values § Vision Objectives § Specific targets, short & long term Strategy! The central integrated, externally oriented concept of how we will achieve our objectives Supporting Organizational Arrangements § Structure § Process § Symbols § Rewards § People § Activities § Functional policies Version 3.2 March 201139 © Marc Sniukas “Are you sure you have a strategy?” Donald C. Hambrick and James W. Frederickson Academy of Management Executive 2001 Vol. 15 No. 4
What drives competition in the industry? Porter’s Five Forces Suppliers Potential Entrants Buyers Substitutes The Industry Threat of new entrants Bargaining power of customers / buyers The threat of substitue products Bargaining power of suppliers Competition within the industry An industry = the group of companies producing products fulfilling the same customer needs. Version 3.2 March 201140 © Marc Sniukas
What drives competition in the industry? Porter’s Five Forces Version 3.2 March 201141 © Marc Sniukas “Strategy: Process, Content, Context” 3rd edition De Wit & Meyer Thomson Learning 2004
Anything else? Version 3.2 March 201142 © Marc Sniukas “Strategy: Process, Content, Context” 3rd edition De Wit & Meyer Thomson Learning 2004
Let’s move from the industry to the business! Suppliers Potential Entrants Buyers Substitutes The Industry Version 3.2 March 201143 © Marc Sniukas
Industries, Markets and Businesses Version 3.2 March 201144 © Marc Sniukas “Strategy: Process, Content, Context” 3rd edition De Wit & Meyer Thomson Learning 2004
Business System, Model & the value chain §  A business system is the chain of activities through which a product is developed, produced and delivered to its end-customers. §  A business model describes the way a company has selected to exploit its capabilities, relative to the industry characteristics. §  The value chain is the chain of activities through which a product is developed, produced and delivered to it end-customers, when done by one company. Adapted from Prof. Xavier Gilbert & Jim Pulcrano, IMD Version 3.2 March 201145 © Marc Sniukas
What’s your business model? Version 3.2 March 201146 © Marc Sniukas
The Business Model: 9 Building Blocks §  What‘s your value proposition? §  Who are your customers? Which customer segments do you serve? §  What‘s your relationship to your customers? §  How do you reach your customers? Which channels do you use? §  What key resources does your company possess? §  What key activities does your company perform? §  How are your key partners? §  Where does the money come from? Revenue streams? §  What does it cost? Cost structure? Version 3.2 March 2011© Marc Sniukas47 Adapted from Alexander Osterwalder www.alexosterwalder.com
Analyzing your company’s value chain Version 3.2 March 201148 © Marc Sniukas
The Activity System Value Chain §  An activity system is an integrated set of value creation processes leading to the supply of product and/ or service offerings. This activity system is frequently referred to as the value chain. (Porter, 1985) Version 3.2 March 201149 © Marc Sniukas “Strategy: Process, Content, Context” 3rd edition De Wit & Meyer Thomson Learning 2004
The Activity System Primary and Support Activities Primary Activities Inbound Logistics Operations Outbound Logistics Marketing & Sales Service Procurement Technology Development HRM Firm Infrastructure Support Activities Activities associated with receiving, storing, and disseminating inputs Activities associated with transforming inputs into final products Collecting, storing, and physically distributing products/ services to buyers Providing a means by which buyers can purchase the product Providing service to enhance or maintain the value of products Purchasing of inputs to facilitate all other activities The improvement of technologies throughout the firm Activities associated with the management of personnel All general activities that support the entire value chain Version 3.2 March 201150 © Marc Sniukas Following “Strategy: Process, Content, Context” 3rd edition De Wit & Meyer Thomson Learning 2004
Implementing Strategies What matters most to Strategy Execution Building a Strategy-Focused-Organization The Balanced Scorecard Strategy Maps Version 3.2 March 201151 © Marc Sniukas
Putting strategy in its place Strategic Analysis § Industry Analysis § Customer/marketplace trends § Customer activity cycle § Environment forecast § Competitor analysis § Assessment of internal strengths, weaknesses, resources, culture Mission § Fundamental purpose § Values § Vision Objectives § Specific targets, short & long term Strategy! The central integrated, externally oriented concept of how we will achieve our objectives Supporting Organizational Arrangements § Structure § Processes § Symbols § Rewards § People § Activities § Functional policies Version 3.2 March 201152 © Marc Sniukas “Are you sure you have a strategy?” Donald C. Hambrick and James W. Frederickson Academy of Management Executive 2001 Vol. 15 No. 4
What matters most to Strategy Execution? Information Decision  Rights Motivators Structure Version 3.2 March 2011© Marc Sniukas53 “The Secrets to Successful Strategy Execution.” Gary L. Neilson, Karla L. Martin, and Elizabeth Powers. Harvard Business Review June 2008
What matters most to Strategy Execution? Ranking 1.  Everyone has a good idea of the decisions and actions for which he or she is responsible. 2.  Important information about the competitive environment gets to headquarters quickly. 3.  Once made, decisions are rarely second-guessed. 4.  Information flows freely across organizational boundaries. 5.  Field and line employees usually have the information they need to understand the bottom-line impact of their day-to-day choices. 6.  Line managers have access to the metrics they need to measure the key drivers of their business. 7.  Managers up the line get involved in operating decisions. 8.  Conflicting messages are rarely sent to the market. 9.  The individual performance-appraisal process differentiates among high, adequate, and low performers. 10.  The ability to deliver on performance commitments strongly influences career advancement and compensation. 11.  It is more accurate to describe the culture of this organization as “persuade and cajole” than “command and control.” 12.  The primary role of corporate staff here is to support the business units rather than to audit them. 13.  Promotions can be lateral moves (from one position to another on the same level in the hierarchy). 14.  Fast-track employees here can expect promotions more frequently than every three years. 15.  On average, middle managers here have five or more direct reports. 16.  If the firm has a bad year, but a particular division has a good year, the division head would still get a bonus. 17.  Besides pay, many other things motivate individuals to do a good job. Version 3.2 March 2011© Marc Sniukas54 “The Secrets to Successful Strategy Execution.” Gary L. Neilson, Karla L. Martin, and Elizabeth Powers. Harvard Business Review June 2008
Aligning & Focusing Resources on Strategy Business Units Executive Team Information Technology Balanced Scorecard Human Resources Budget & Capital Investments Strategy Adapted from “The Strategy-Focused-Organization” Robert Kaplan and David Norton Harvard Business School Press 2001 Version 3.2 March 201155 © Marc Sniukas
The Principles of a Strategy-Focused-Organization Balanced Scorecard Strategy Mobilize Change through Executive Leadership Mobilization Governance Process Strategic Management System Make Strategy a Continual Process Linking Budgets and Strategies Analytics and Information Systems Strategic Learning Translate the Strategy to Operational Terms Strategy Maps Balanced Scorecard Align the Organization to Strategy Corporate Roles Business Unit Synergies Shared Service Synergies Make Strategy Everyone’s Everyday Job Strategic Awareness Personal Scorecards Balanced Paychecks Version 3.2 March 201156 © Marc Sniukas Adapted from “The Strategy-Focused-Organization” Robert Kaplan and David Norton Harvard Business School Press 2001
Learning & Growth Perspective Internal Perspective Customer Perspective Financial Perspective Organizational Capital Information Capital Human Capital Operations Management - Supply - Production - Distribution - Risk Mgmt Customer Management - Selection - Acquisition - Retention - Growth Innovation - Opportunity ID - R&D Portfolio - Design/Develop - Launch Regulatory & Social - Environment - Safety & Health - Employment - Community Customer Value Proposition Price Quality Availability SelectionFunctionality BrandPartnershipService Product / Service Attributes Relationship Image Culture Leadership Alignment Teamwork Long-Term Value Expand Revenue Opportunities Enhance  Customer   Value   Increase Asset Utilization Improve Cost Structure Productivity Strategy Growth Strategy Version 3.2 March 201157 © Marc Sniukas
Financial Perspective Long Term Shareholder Value Productivity Strategy Improve Cost Structure Increase Asset Utilization Expand Revenue Opportunities Growth Strategy §  Reduce cash expenses §  Eliminate defects §  Improve yields §  Manage capacity from existing assets §  Make incremental investments to eliminate bottlenecks §  New sources of revenue §  New products §  New markets §  New partners The strategy for growth, profitability, and risk viewed from the perspective of the shareholder. Enhance Customer Value §  Improve profitability §  Expand relationship with existing customers Version 3.2 March 201158 © Marc Sniukas
Customer Perspective Price Quality Availability Selection Functionality Brand Partnership Service Product / Service Attributes Relationship Image Customer Value Proposition The strategy for creating value and differentiation from the perspective of the customer. Version 3.2 March 201159 © Marc Sniukas
Customer Perspective Price Quality Availability Selection Functionality Brand Partnership Service Product / Service Attributes Relationship Image Operational Excellence Strategy Differentiator General Requirement Quality & selection in key categories with unbeatable prices. „Smart Shopper“ Version 3.2 March 201160 © Marc Sniukas
Customer Perspective Price Quality Availability Selection Functionality Brand Partnership Service Product / Service Attributes Relationship Image Customer Intimacy Strategy Differentiator General Requirement Personal service tailored to produce results for customers and build long-term relationship. „Trusted Brand“ Version 3.2 March 201161 © Marc Sniukas
Customer Perspective Version 3.2 March 2011 Price   Quality   Availability   Selec9on   Func9onality   Brand   Partnership   Service   Product  /  Service  A/ributes   Rela5onship   Image   Product  Leadership  Strategy   Differen(ator   General   Requirement   Unique  products  and  services  that  „push  the   envelope“.   „The  Best   Product“   62 © Marc Sniukas
Internal Perspective The strategic priorities for various business processes, which create customer and shareholder satisfaction. Operations Management Processes Customer Management Processes Innovation Processes Regulatory & Social Processes Processes that produce & deliver products & services. Processes that enhance customer value. Processes that create new products & services. Processes that improve communities & the environment. • Supply Chain Mgmt • Operations Efficiency cost reduction, quality & cycle time improvements • Capacity Mgmt • Production • Distribution • Risk Mgmt • Selection • Acquisition • Retention • Growth • Solution Development • Customer Service • Relationship Mgmt • Advisory Services • Invention • Product Development / Design • Speed to Market / Launch • Joint Ventures / Partnerships • Opportunity ID • R&D Portfolio • Environment • Safety & Health • Employment practices • Community • Social „Achieve Operational Excellence“ „Increase Customer Value“ „Build the Franchise“ „Be a Good Corporate Citizen“ Version 3.2 March 201163 © Marc Sniukas
Strategic Internal Processes Internal Process Strategy Operations Management Processes Customer Management Processes Innovation Processes Operational Excellence §  Supply Chain Mgmt §  Operations Efficiency §  Capacity Mgmt Meet basic requirements Meet basic requirements Customer Intimacy Meet basic requirements §  Solution Development §  Customer Service §  Relationship Mgmt §  Advisory Services Meet basic requirements Product Leadership Meet basic requirements Meet basic requirements §  Invention §  Product Development §  Exploitation Version 3.2 March 201164 © Marc Sniukas
Operations Management Strategies for Achieving Operational Excellence Supply Production Distribution Risk Mgmt §  Develop supplier relations §  Lower cost of ownership §  Just-in-Time delivery §  High-quality supply §  New ideas from suppliers §  Supplier partnerships §  Outsource mature nonstrategic services §  Improve inventory management §  Lower cost of production §  Continous process & quality improvements §  Process cycle time §  Fixed asset utilization §  Improve hardware performance §  Working capital efficiency §  Reduction of asset downtime §  Create flexible infrastructure §  Simplify where possible §  Lower cost to serve §  Responsive delivery time §  On spec; on Time §  Enhance quality §  Improve inventory management §  Financial risk / high credit rating §  Operating risk §  Technology risk §  Elimination of environmental, safety, & health-threathening incidents Improve  Cash  Flow   Version 3.2 March 201165 © Marc Sniukas
Customer Management Strategies for Increasing Customer Value Selection Acquisition Retention Growth §  Understand segments & needs §  Capture knowledge about customers §  Screen unprofitable customers §  Target high-value customers §  Strategic accounts §  Manage the brand §  Communicate value proposition §  Customize mass marketing §  Acquire/convert leads §  Develop dealer network §  Premium customer service §  „sole source“ partnerships §  Service excellence §  Lifetime customers §  Expand, deepen, or redefine relationships with existing customers §  Become trusted advisor & consultant §  Cross-selling §  Solution selling §  Partnering/ integrated management §  Customer education §  Integrate with the customer‘s value chain to deliver solutions Version 3.2 March 201166 © Marc Sniukas
Customer Management Strategies for Increasing Customer Value §  Empower front-line employees with information they need §  Ensure that everyone knows the customer §  Make company knowledge available to customers §  Strategic Account Management §  Increase customer loyalty §  Optimize packaging §  Redesign order fullfillment §  Streamline customer interactions §  CRM / integrated mgmt system §  Identify, upgrade, or exit unprofitable accounts §  Grow & retain high-value customers (HVCs) §  Provide premium services to retain HVCs §  Broaden the relationship with HVCs §  Excel at customer interaction §  Best-in-class franchise / distribution teams Version 3.2 March 201167 © Marc Sniukas
Innovation Management Strategies for Building the Franchise Identify Opportunities R&D portfolio mgmt Design & Development Launch §  Anticipate customer needs §  Identifiy new opportunities §  Ensure that ideas flow §  Choose & manage mix of projects §  Extend products to new applications §  collaborate §  Manage products through development stages §  Reduce development cycle time §  Reduce development costs §  Reuse what other parts of the company have already learned §  Ramp-up time §  Production cost, quality, cycle time §  Achieve initial sales goals §  Reduce time to market Version 3.2 March 201168 © Marc Sniukas
Regulatory & Social Strategies for Being a Good Corporate Citizen Environment Safety & Health Employment Community §  Energy & resource consumption §  Water & air emissions §  Solid waste disposal §  Product environmental impact §  Environmental incidents §  Safety incidents §  Health §  Diversity §  Employ the unemployable §  Community programs §  Aliances with nonprofits §  Manage relationships with external, legitimizing stakeholders §  Maintain public support Version 3.2 March 201169 © Marc Sniukas
Learning & Growth Perspective The priorities to create a climate that supports organizational change, innovation, and growth. Organizational CapitalHuman Capital Information Capital+ + §  Skills §  Knowledge §  Training §  Functional Excellence §  Leadership skills §  Integrated view of the company among employees §  Best practice sharing §  Systems §  Databases §  Networks §  Infrastructure §  Applications §  New technology that encourages & aids process improvements §  Culture §  Leadership §  Aligment of personal goals w/ BSC / Strategy §  Teamwork §  Awareness §  understanding of strategy §  Readiness §  Motivation §  morale & satisfaction §  employee feedback Version 3.2 March 201170 © Marc Sniukas
The Balanced Scorecard Vision & Strategy Financials Processes Learning, Innovation & Growth Customers Long term Internal Short term“If we succeed, how do we look to our shareholders?” External “To achieve our vision, how must we look to our customers?” “To satisfy our customers, which processes must we excel?” “To achieve the strategy, how must the organization learn?” Version 3.2 March 201171 © Marc Sniukas
Strategy Map Balanced Scorecard Action Plan Perspective Objectives Measurement Target Initiative Budget Financial Profitability ROCE 25% € XXX Customer Attract & retain more customers # repeat customers # customers 70% +12% Implement CRM Quality Mgmt € XXX € XXX Internal Asset Utilization Inventory Turnover 4x Inventory Mgmt € XXX Learning & Growth Develop the necessary skills Develop the support system Strategic job readiness Info system availability Y1-70% Y3-90% Y5-100 % 100% Staff training € XXX € XXX Strategy Maps & the Balanced Scorecard Version 3.2 March 201172 © Marc Sniukas
Want more? Version 3.2 March 2011© Marc Sniukas73
www.sniukas.com Version 3.2 March 2011© Marc Sniukas74
Download this presentation as PowerPoint file. Visit: www.e-junkie.com/sniukas Version 3.2 March 2011© Marc Sniukas75 € 2.99
A presentation by Marc Sniukas www.sniukas.com Version 3.2 March 2011© Marc Sniukas76 Marc is a partner at Doujak Corporate Development, a boutique consulting company partnering with leadership teams and their organizations to drive growth through strategic innovation and organizational transformation. Learn more at www.doujak.eu

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What is strategy?

  • 1. The Economist “Nobody really knows what strategy is.” Version 3.2 March 20111 © Marc Sniukas
  • 2. Download this presentation as PowerPoint file. Visit: www.e-junkie.com/sniukas Version 3.2 March 2011© Marc Sniukas2 € 2.99
  • 3. What is Strategy? A (very) brief introduction.
  • 4. Why do we need a strategy? §  Without a strategy, we fill our time with… … what we want, or … what we think the boss wants, or … by reacting. §  Without a strategy, time and resources are easily wasted on piecemeal, disparate activities. Version 3.2 March 2011 “Are you sure you have a strategy?” Donald C. Hambrick and James W. Frederickson Academy of Management Executive 2001 Vol. 15 No. 4 4 © Marc Sniukas
  • 5. Five Definitions Strategy as… §  a consciously and purposefully developed plan; §  a ploy to outmaneuver a competitor; §  a pattern in a stream of actions, whether intended or not; §  a position defined either with respect to a competitor, in the context of a number of competitors, or with respect to markets; and as §  a perspective, i.e. a certain mindset of how to perceive the world. Mintzberg, H. (1987). "The Strategy Concept I: Five Ps For Strategy." California Management Review 30(1) Fall: 11-24. Version 3.2 March 20115 © Marc Sniukas
  • 6. Mintzberg‘s 10 Schools §  Being unsatisfied with the strategy discussion, Henry Mintzberg, professor at McGill University Canda, set out to structure the literature and thinking on strategy. He discovered 10 different schools of thought on strategy, arguing that every one of them describes a specific part of strategy. §  Just like the blind men describe the elephant…. Version 3.2 March 2011© Marc Sniukas6
  • 7. Mintzberg‘s 10 Schools Prescriptive §  Design §  Planning §  Positioning Descriptive §  Configuration §  Cognitive §  Cultural §  Entrepreneurial §  Environmental §  Learning §  Power 7 © Marc Sniukas Version 3.2 March 2011
  • 8. Mintzberg‘s 10 Schools : The 3 Prescriptive ones Design School §  Strategy as a process of conception §  Goal = Achieving the essential fit between –  internal strengths & weaknesses and –  external opportunities & threats §  '70s Version 3.2 March 2011© Marc Sniukas8
  • 9. Mintzberg‘s 10 Schools : The 3 Prescriptive ones Planning School §  Strategy as a formal process §  Takes on most of the design schools assumptions §  Process: Formal, Decomposable, Steps §  Supported by checklists and formal techniques §  Igor Ansoff §  mid '70s Version 3.2 March 2011© Marc Sniukas9
  • 10. Mintzberg‘s 10 Schools : The 3 Prescriptive ones PositioningSchool §  Strategy as an analytical process §  Generic positions selected through formalized analyses of industry situations §  Michael Porter §  '80s Version 3.2 March 2011© Marc Sniukas10
  • 11. Mintzberg‘s 10 Schools : The 7 Descriptives ones Configuration School §  Strategy as a process of transformation §  Process varies according to company configuration Version 3.2 March 2011© Marc Sniukas11
  • 12. Mintzberg‘s 10 Schools : The 7 Descriptives ones Cognitive School §  Strategy as a mental process and creative interpretations Version 3.2 March 2011© Marc Sniukas12
  • 13. Mintzberg‘s 10 Schools : The 7 Descriptives ones Cultural School §  Strategy as a social process rooted in the company‘s culture §  Focuses on common interest & integration Version 3.2 March 2011© Marc Sniukas13
  • 14. Mintzberg‘s 10 Schools : The 7 Descriptives ones Entrepreneurial School §  Strategy as a visionary process §  Intuition §  The leader is central Version 3.2 March 2011© Marc Sniukas14
  • 15. Mintzberg‘s 10 Schools : The 7 Descriptives ones Environmental School §  Strategy as a reactive process §  Influenced by the demands of the environment Version 3.2 March 2011© Marc Sniukas15
  • 16. Mintzberg‘s 10 Schools : The 7 Descriptives ones Learning School §  Strategy as an emergent process §  Organisational Learning §  Formulation & implementation interwine Version 3.2 March 2011© Marc Sniukas16
  • 17. Mintzberg‘s 10 Schools : The 7 Descriptives ones Power School §  Strategy as a process of negotiation §  Micro vs Macro, i.e. company vs individual interests §  Political §  Focuses on personal interest Version 3.2 March 2011© Marc Sniukas17
  • 18. Dimensions of Strategy Process, Content, Context Version 3.2 March 201118 © Marc Sniukas “Strategy: Process, Content, Context” 3rd edition De Wit & Meyer Thomson Learning 2004
  • 19. Strategy Process Version 3.2 March 201119 © Marc Sniukas “Strategy: Process, Content, Context” 3rd edition De Wit & Meyer Thomson Learning 2004
  • 20. Strategy Formation Version 3.2 March 201120 © Marc Sniukas “Strategy: Process, Content, Context” 3rd edition De Wit & Meyer Thomson Learning 2004
  • 21. Realized Strategy Strategy Formation Activities Version 3.2 March 201121 © Marc Sniukas “Strategy: Process, Content, Context” 3rd edition De Wit & Meyer Thomson Learning 2004
  • 22. Strategy Content Version 3.2 March 201122 © Marc Sniukas “Strategy: Process, Content, Context” 3rd edition De Wit & Meyer Thomson Learning 2004
  • 23. Strategy Context Version 3.2 March 201123 © Marc Sniukas “Strategy: Process, Content, Context” 3rd edition De Wit & Meyer Thomson Learning 2004
  • 24. Strategic Tensions Version 3.2 March 201124 © Marc Sniukas Dimension Topic Tension “Strategy: Process, Content, Context” 3rd edition De Wit & Meyer Thomson Learning 2004
  • 25. Setting Strategy A great strategy has pieces, …but they form a coherent whole! Version 3.2 March 201125 © Marc Sniukas
  • 26. “Are you sure you have a strategy?” Donald C. Hambrick and James W. Frederickson Academy of Management Executive 2001 Vol. 15 No. 4 Putting strategy in its place Strategic Analysis § Industry Analysis § Customer/marketplace trends § Customer activity cycle § Environment forecast § Competitor analysis § Assessment of internal strengths, weaknesses, resources, culture § Stakeholders Mission § Fundamental purpose § Values § Vision Objectives § Specific targets, short & long term Strategy! The central integrated, externally oriented concept of how we will achieve our objectives Supporting Organizational Arrangements § Structure § Process § Symbols § Rewards § People § Activities § Functional policies It’s not about the sequence. The robustness of the whole is key ! Version 3.2 March 201126 © Marc Sniukas
  • 27. The five major elements of strategy Arenas Staging Differentiators VehiclesEconomic Logic Version 3.2 March 201127 © Marc Sniukas “Are you sure you have a strategy?” Donald C. Hambrick and James W. Frederickson Academy of Management Executive 2001 Vol. 15 No. 4
  • 28. The five major elements of strategy Economic Logic Arenas Staging Differentiators Vehicles Where will we be active? How will we get there? How will we win in the market place? What will be our speed and sequence of moves? How will we obtain our returns? Version 3.2 March 201128 © Marc Sniukas “Are you sure you have a strategy?” Donald C. Hambrick and James W. Frederickson Academy of Management Executive 2001 Vol. 15 No. 4
  • 29. The five major elements of strategy Strategy is an integrated set of choices. §  Arenas Where will we be active? §  Vehicles How will we get there? §  Differentiators How will we win in the market place? §  Staging What will be our speed and sequence of moves? §  Economic Logic How will we obtain our returns? Version 3.2 March 201129 © Marc Sniukas “Are you sure you have a strategy?” Donald C. Hambrick and James W. Frederickson Academy of Management Executive 2001 Vol. 15 No. 4
  • 30. The five major elements of strategy Arenas: Where will we be active? §  With how much emphasis ? §  Which product categories ? §  Which market segments ? §  Which geographic areas ? §  Which core technologies ? §  Which value-creating stages ? Version 3.2 March 201130 © Marc Sniukas “Are you sure you have a strategy?” Donald C. Hambrick and James W. Frederickson Academy of Management Executive 2001 Vol. 15 No. 4 1
  • 31. The five major elements of strategy Vehicles: How will we get there? §  The means for attaining the needed presence in the identified arenas §  Internal development ? §  Joint ventures / alliances ? §  Licensing / franchising ? §  Acquisitions ? §  Which channels ? Version 3.2 March 201131 © Marc Sniukas “Are you sure you have a strategy?” Donald C. Hambrick and James W. Frederickson Academy of Management Executive 2001 Vol. 15 No. 4 2
  • 32. The five major elements of strategy Differentiators: How will we win? §  The reasons that customers will choose us §  Image ? §  Customization ? §  Price ? §  Styling ? §  Product reliability ? §  Anything else ? Version 3.2 March 201132 © Marc Sniukas “Are you sure you have a strategy?” Donald C. Hambrick and James W. Frederickson Academy of Management Executive 2001 Vol. 15 No. 4 3
  • 33. The five major elements of strategy Staging: What will be our speed & sequence of moves? §  Driven by availability of resources, urgency, need for credibility and need for early wins §  Speed of expansion ? §  Sequence of initiatives ? Version 3.2 March 201133 © Marc Sniukas “Are you sure you have a strategy?” Donald C. Hambrick and James W. Frederickson Academy of Management Executive 2001 Vol. 15 No. 4 4
  • 34. The five major elements of strategy Economic Logic: How will we obtain our returns? §  How profits will be generated, above the firm’s cost of capital. §  Lowest costs through scale advantages ? §  Lowest costs through scope and replication advantages ? §  Premium prices due to unmatchable service ? §  Premium prices due to proprietary features ? Version 3.2 March 201134 © Marc Sniukas “Are you sure you have a strategy?” Donald C. Hambrick and James W. Frederickson Academy of Management Executive 2001 Vol. 15 No. 4 5
  • 35. The five major elements of strategy Economic Logic: How will we obtain our returns? §  What generates cash ? §  What decides your margins ? §  What generates market share growth ? §  How fast do sales turn into cash ? §  What numbers / ratios tell us we’re successful ? §  What are our underlying core capabilities ? Version 3.2 March 201135 © Marc Sniukas “Are you sure you have a strategy?” Donald C. Hambrick and James W. Frederickson Academy of Management Executive 2001 Vol. 15 No. 4 5
  • 36. Testing the Quality of Your Strategy Version 3.2 March 201136 © Marc Sniukas
  • 37. Some key evaluation criteria Does your strategy fit within what’s going on in the environment? Does your strategy exploit your key resources & capabilities? Is your strategy implementable? Do you have enough resources to pursue this strategy? Are the elements of your strategy internally consistent? Will your envisioned differentiation be sustainable? Version 3.2 March 201137 © Marc Sniukas
  • 38. Some key evaluation criteria §  Does your strategy exploit your key resources & capabilities? With your particular mix of resources, does this strategy give you a good head start on competitors? Can you pursue this strategy more economically than competitors? §  Will your envisioned differentiation be sustainable? Will competitors have difficulty matching you? If not, does your strategy explicitly include a ceaseless regimen of innovation & opportunity creation? §  Are the elements of your strategy internally consistent? Have you made choices of arenas, vehicles, differentiators, and staging, and economic logic? Do they all fit and mutually reinforce each other? §  Is your strategy implementable? Will your key constituencies allow you to pursue this strategy? Can your organization make it through the transition? Are you & your management team able & willing to lead the changes? §  Do you have enough resources to pursue this strategy? Do you have the money, managerial time & talent, & other capabilities to do all you envision? Are you sure you’re not spreading your resources too thinly, only to be left with a collection of feeble positions? Version 3.2 March 201138 © Marc Sniukas
  • 39. Putting strategy in its place Strategic Analysis § Industry Analysis § Customer/marketplace trends § Customer activity cycle § Environment forecast § Competitor analysis § Assessment of internal strengths, weaknesses, resources, culture Mission § Fundamental purpose § Values § Vision Objectives § Specific targets, short & long term Strategy! The central integrated, externally oriented concept of how we will achieve our objectives Supporting Organizational Arrangements § Structure § Process § Symbols § Rewards § People § Activities § Functional policies Version 3.2 March 201139 © Marc Sniukas “Are you sure you have a strategy?” Donald C. Hambrick and James W. Frederickson Academy of Management Executive 2001 Vol. 15 No. 4
  • 40. What drives competition in the industry? Porter’s Five Forces Suppliers Potential Entrants Buyers Substitutes The Industry Threat of new entrants Bargaining power of customers / buyers The threat of substitue products Bargaining power of suppliers Competition within the industry An industry = the group of companies producing products fulfilling the same customer needs. Version 3.2 March 201140 © Marc Sniukas
  • 41. What drives competition in the industry? Porter’s Five Forces Version 3.2 March 201141 © Marc Sniukas “Strategy: Process, Content, Context” 3rd edition De Wit & Meyer Thomson Learning 2004
  • 42. Anything else? Version 3.2 March 201142 © Marc Sniukas “Strategy: Process, Content, Context” 3rd edition De Wit & Meyer Thomson Learning 2004
  • 43. Let’s move from the industry to the business! Suppliers Potential Entrants Buyers Substitutes The Industry Version 3.2 March 201143 © Marc Sniukas
  • 44. Industries, Markets and Businesses Version 3.2 March 201144 © Marc Sniukas “Strategy: Process, Content, Context” 3rd edition De Wit & Meyer Thomson Learning 2004
  • 45. Business System, Model & the value chain §  A business system is the chain of activities through which a product is developed, produced and delivered to its end-customers. §  A business model describes the way a company has selected to exploit its capabilities, relative to the industry characteristics. §  The value chain is the chain of activities through which a product is developed, produced and delivered to it end-customers, when done by one company. Adapted from Prof. Xavier Gilbert & Jim Pulcrano, IMD Version 3.2 March 201145 © Marc Sniukas
  • 46. What’s your business model? Version 3.2 March 201146 © Marc Sniukas
  • 47. The Business Model: 9 Building Blocks §  What‘s your value proposition? §  Who are your customers? Which customer segments do you serve? §  What‘s your relationship to your customers? §  How do you reach your customers? Which channels do you use? §  What key resources does your company possess? §  What key activities does your company perform? §  How are your key partners? §  Where does the money come from? Revenue streams? §  What does it cost? Cost structure? Version 3.2 March 2011© Marc Sniukas47 Adapted from Alexander Osterwalder www.alexosterwalder.com
  • 48. Analyzing your company’s value chain Version 3.2 March 201148 © Marc Sniukas
  • 49. The Activity System Value Chain §  An activity system is an integrated set of value creation processes leading to the supply of product and/ or service offerings. This activity system is frequently referred to as the value chain. (Porter, 1985) Version 3.2 March 201149 © Marc Sniukas “Strategy: Process, Content, Context” 3rd edition De Wit & Meyer Thomson Learning 2004
  • 50. The Activity System Primary and Support Activities Primary Activities Inbound Logistics Operations Outbound Logistics Marketing & Sales Service Procurement Technology Development HRM Firm Infrastructure Support Activities Activities associated with receiving, storing, and disseminating inputs Activities associated with transforming inputs into final products Collecting, storing, and physically distributing products/ services to buyers Providing a means by which buyers can purchase the product Providing service to enhance or maintain the value of products Purchasing of inputs to facilitate all other activities The improvement of technologies throughout the firm Activities associated with the management of personnel All general activities that support the entire value chain Version 3.2 March 201150 © Marc Sniukas Following “Strategy: Process, Content, Context” 3rd edition De Wit & Meyer Thomson Learning 2004
  • 51. Implementing Strategies What matters most to Strategy Execution Building a Strategy-Focused-Organization The Balanced Scorecard Strategy Maps Version 3.2 March 201151 © Marc Sniukas
  • 52. Putting strategy in its place Strategic Analysis § Industry Analysis § Customer/marketplace trends § Customer activity cycle § Environment forecast § Competitor analysis § Assessment of internal strengths, weaknesses, resources, culture Mission § Fundamental purpose § Values § Vision Objectives § Specific targets, short & long term Strategy! The central integrated, externally oriented concept of how we will achieve our objectives Supporting Organizational Arrangements § Structure § Processes § Symbols § Rewards § People § Activities § Functional policies Version 3.2 March 201152 © Marc Sniukas “Are you sure you have a strategy?” Donald C. Hambrick and James W. Frederickson Academy of Management Executive 2001 Vol. 15 No. 4
  • 53. What matters most to Strategy Execution? Information Decision  Rights Motivators Structure Version 3.2 March 2011© Marc Sniukas53 “The Secrets to Successful Strategy Execution.” Gary L. Neilson, Karla L. Martin, and Elizabeth Powers. Harvard Business Review June 2008
  • 54. What matters most to Strategy Execution? Ranking 1.  Everyone has a good idea of the decisions and actions for which he or she is responsible. 2.  Important information about the competitive environment gets to headquarters quickly. 3.  Once made, decisions are rarely second-guessed. 4.  Information flows freely across organizational boundaries. 5.  Field and line employees usually have the information they need to understand the bottom-line impact of their day-to-day choices. 6.  Line managers have access to the metrics they need to measure the key drivers of their business. 7.  Managers up the line get involved in operating decisions. 8.  Conflicting messages are rarely sent to the market. 9.  The individual performance-appraisal process differentiates among high, adequate, and low performers. 10.  The ability to deliver on performance commitments strongly influences career advancement and compensation. 11.  It is more accurate to describe the culture of this organization as “persuade and cajole” than “command and control.” 12.  The primary role of corporate staff here is to support the business units rather than to audit them. 13.  Promotions can be lateral moves (from one position to another on the same level in the hierarchy). 14.  Fast-track employees here can expect promotions more frequently than every three years. 15.  On average, middle managers here have five or more direct reports. 16.  If the firm has a bad year, but a particular division has a good year, the division head would still get a bonus. 17.  Besides pay, many other things motivate individuals to do a good job. Version 3.2 March 2011© Marc Sniukas54 “The Secrets to Successful Strategy Execution.” Gary L. Neilson, Karla L. Martin, and Elizabeth Powers. Harvard Business Review June 2008
  • 55. Aligning & Focusing Resources on Strategy Business Units Executive Team Information Technology Balanced Scorecard Human Resources Budget & Capital Investments Strategy Adapted from “The Strategy-Focused-Organization” Robert Kaplan and David Norton Harvard Business School Press 2001 Version 3.2 March 201155 © Marc Sniukas
  • 56. The Principles of a Strategy-Focused-Organization Balanced Scorecard Strategy Mobilize Change through Executive Leadership Mobilization Governance Process Strategic Management System Make Strategy a Continual Process Linking Budgets and Strategies Analytics and Information Systems Strategic Learning Translate the Strategy to Operational Terms Strategy Maps Balanced Scorecard Align the Organization to Strategy Corporate Roles Business Unit Synergies Shared Service Synergies Make Strategy Everyone’s Everyday Job Strategic Awareness Personal Scorecards Balanced Paychecks Version 3.2 March 201156 © Marc Sniukas Adapted from “The Strategy-Focused-Organization” Robert Kaplan and David Norton Harvard Business School Press 2001
  • 57. Learning & Growth Perspective Internal Perspective Customer Perspective Financial Perspective Organizational Capital Information Capital Human Capital Operations Management - Supply - Production - Distribution - Risk Mgmt Customer Management - Selection - Acquisition - Retention - Growth Innovation - Opportunity ID - R&D Portfolio - Design/Develop - Launch Regulatory & Social - Environment - Safety & Health - Employment - Community Customer Value Proposition Price Quality Availability SelectionFunctionality BrandPartnershipService Product / Service Attributes Relationship Image Culture Leadership Alignment Teamwork Long-Term Value Expand Revenue Opportunities Enhance  Customer   Value   Increase Asset Utilization Improve Cost Structure Productivity Strategy Growth Strategy Version 3.2 March 201157 © Marc Sniukas
  • 58. Financial Perspective Long Term Shareholder Value Productivity Strategy Improve Cost Structure Increase Asset Utilization Expand Revenue Opportunities Growth Strategy §  Reduce cash expenses §  Eliminate defects §  Improve yields §  Manage capacity from existing assets §  Make incremental investments to eliminate bottlenecks §  New sources of revenue §  New products §  New markets §  New partners The strategy for growth, profitability, and risk viewed from the perspective of the shareholder. Enhance Customer Value §  Improve profitability §  Expand relationship with existing customers Version 3.2 March 201158 © Marc Sniukas
  • 59. Customer Perspective Price Quality Availability Selection Functionality Brand Partnership Service Product / Service Attributes Relationship Image Customer Value Proposition The strategy for creating value and differentiation from the perspective of the customer. Version 3.2 March 201159 © Marc Sniukas
  • 60. Customer Perspective Price Quality Availability Selection Functionality Brand Partnership Service Product / Service Attributes Relationship Image Operational Excellence Strategy Differentiator General Requirement Quality & selection in key categories with unbeatable prices. „Smart Shopper“ Version 3.2 March 201160 © Marc Sniukas
  • 61. Customer Perspective Price Quality Availability Selection Functionality Brand Partnership Service Product / Service Attributes Relationship Image Customer Intimacy Strategy Differentiator General Requirement Personal service tailored to produce results for customers and build long-term relationship. „Trusted Brand“ Version 3.2 March 201161 © Marc Sniukas
  • 62. Customer Perspective Version 3.2 March 2011 Price   Quality   Availability   Selec9on   Func9onality   Brand   Partnership   Service   Product  /  Service  A/ributes   Rela5onship   Image   Product  Leadership  Strategy   Differen(ator   General   Requirement   Unique  products  and  services  that  „push  the   envelope“.   „The  Best   Product“   62 © Marc Sniukas
  • 63. Internal Perspective The strategic priorities for various business processes, which create customer and shareholder satisfaction. Operations Management Processes Customer Management Processes Innovation Processes Regulatory & Social Processes Processes that produce & deliver products & services. Processes that enhance customer value. Processes that create new products & services. Processes that improve communities & the environment. • Supply Chain Mgmt • Operations Efficiency cost reduction, quality & cycle time improvements • Capacity Mgmt • Production • Distribution • Risk Mgmt • Selection • Acquisition • Retention • Growth • Solution Development • Customer Service • Relationship Mgmt • Advisory Services • Invention • Product Development / Design • Speed to Market / Launch • Joint Ventures / Partnerships • Opportunity ID • R&D Portfolio • Environment • Safety & Health • Employment practices • Community • Social „Achieve Operational Excellence“ „Increase Customer Value“ „Build the Franchise“ „Be a Good Corporate Citizen“ Version 3.2 March 201163 © Marc Sniukas
  • 64. Strategic Internal Processes Internal Process Strategy Operations Management Processes Customer Management Processes Innovation Processes Operational Excellence §  Supply Chain Mgmt §  Operations Efficiency §  Capacity Mgmt Meet basic requirements Meet basic requirements Customer Intimacy Meet basic requirements §  Solution Development §  Customer Service §  Relationship Mgmt §  Advisory Services Meet basic requirements Product Leadership Meet basic requirements Meet basic requirements §  Invention §  Product Development §  Exploitation Version 3.2 March 201164 © Marc Sniukas
  • 65. Operations Management Strategies for Achieving Operational Excellence Supply Production Distribution Risk Mgmt §  Develop supplier relations §  Lower cost of ownership §  Just-in-Time delivery §  High-quality supply §  New ideas from suppliers §  Supplier partnerships §  Outsource mature nonstrategic services §  Improve inventory management §  Lower cost of production §  Continous process & quality improvements §  Process cycle time §  Fixed asset utilization §  Improve hardware performance §  Working capital efficiency §  Reduction of asset downtime §  Create flexible infrastructure §  Simplify where possible §  Lower cost to serve §  Responsive delivery time §  On spec; on Time §  Enhance quality §  Improve inventory management §  Financial risk / high credit rating §  Operating risk §  Technology risk §  Elimination of environmental, safety, & health-threathening incidents Improve  Cash  Flow   Version 3.2 March 201165 © Marc Sniukas
  • 66. Customer Management Strategies for Increasing Customer Value Selection Acquisition Retention Growth §  Understand segments & needs §  Capture knowledge about customers §  Screen unprofitable customers §  Target high-value customers §  Strategic accounts §  Manage the brand §  Communicate value proposition §  Customize mass marketing §  Acquire/convert leads §  Develop dealer network §  Premium customer service §  „sole source“ partnerships §  Service excellence §  Lifetime customers §  Expand, deepen, or redefine relationships with existing customers §  Become trusted advisor & consultant §  Cross-selling §  Solution selling §  Partnering/ integrated management §  Customer education §  Integrate with the customer‘s value chain to deliver solutions Version 3.2 March 201166 © Marc Sniukas
  • 67. Customer Management Strategies for Increasing Customer Value §  Empower front-line employees with information they need §  Ensure that everyone knows the customer §  Make company knowledge available to customers §  Strategic Account Management §  Increase customer loyalty §  Optimize packaging §  Redesign order fullfillment §  Streamline customer interactions §  CRM / integrated mgmt system §  Identify, upgrade, or exit unprofitable accounts §  Grow & retain high-value customers (HVCs) §  Provide premium services to retain HVCs §  Broaden the relationship with HVCs §  Excel at customer interaction §  Best-in-class franchise / distribution teams Version 3.2 March 201167 © Marc Sniukas
  • 68. Innovation Management Strategies for Building the Franchise Identify Opportunities R&D portfolio mgmt Design & Development Launch §  Anticipate customer needs §  Identifiy new opportunities §  Ensure that ideas flow §  Choose & manage mix of projects §  Extend products to new applications §  collaborate §  Manage products through development stages §  Reduce development cycle time §  Reduce development costs §  Reuse what other parts of the company have already learned §  Ramp-up time §  Production cost, quality, cycle time §  Achieve initial sales goals §  Reduce time to market Version 3.2 March 201168 © Marc Sniukas
  • 69. Regulatory & Social Strategies for Being a Good Corporate Citizen Environment Safety & Health Employment Community §  Energy & resource consumption §  Water & air emissions §  Solid waste disposal §  Product environmental impact §  Environmental incidents §  Safety incidents §  Health §  Diversity §  Employ the unemployable §  Community programs §  Aliances with nonprofits §  Manage relationships with external, legitimizing stakeholders §  Maintain public support Version 3.2 March 201169 © Marc Sniukas
  • 70. Learning & Growth Perspective The priorities to create a climate that supports organizational change, innovation, and growth. Organizational CapitalHuman Capital Information Capital+ + §  Skills §  Knowledge §  Training §  Functional Excellence §  Leadership skills §  Integrated view of the company among employees §  Best practice sharing §  Systems §  Databases §  Networks §  Infrastructure §  Applications §  New technology that encourages & aids process improvements §  Culture §  Leadership §  Aligment of personal goals w/ BSC / Strategy §  Teamwork §  Awareness §  understanding of strategy §  Readiness §  Motivation §  morale & satisfaction §  employee feedback Version 3.2 March 201170 © Marc Sniukas
  • 71. The Balanced Scorecard Vision & Strategy Financials Processes Learning, Innovation & Growth Customers Long term Internal Short term“If we succeed, how do we look to our shareholders?” External “To achieve our vision, how must we look to our customers?” “To satisfy our customers, which processes must we excel?” “To achieve the strategy, how must the organization learn?” Version 3.2 March 201171 © Marc Sniukas
  • 72. Strategy Map Balanced Scorecard Action Plan Perspective Objectives Measurement Target Initiative Budget Financial Profitability ROCE 25% € XXX Customer Attract & retain more customers # repeat customers # customers 70% +12% Implement CRM Quality Mgmt € XXX € XXX Internal Asset Utilization Inventory Turnover 4x Inventory Mgmt € XXX Learning & Growth Develop the necessary skills Develop the support system Strategic job readiness Info system availability Y1-70% Y3-90% Y5-100 % 100% Staff training € XXX € XXX Strategy Maps & the Balanced Scorecard Version 3.2 March 201172 © Marc Sniukas
  • 73. Want more? Version 3.2 March 2011© Marc Sniukas73
  • 74. www.sniukas.com Version 3.2 March 2011© Marc Sniukas74
  • 75. Download this presentation as PowerPoint file. Visit: www.e-junkie.com/sniukas Version 3.2 March 2011© Marc Sniukas75 € 2.99
  • 76. A presentation by Marc Sniukas www.sniukas.com Version 3.2 March 2011© Marc Sniukas76 Marc is a partner at Doujak Corporate Development, a boutique consulting company partnering with leadership teams and their organizations to drive growth through strategic innovation and organizational transformation. Learn more at www.doujak.eu

Editor's Notes

  • #31: Use these for the manual & give them a form which holds all the possible choices, which they can pick from. OMV Strategy & Finance February 2007
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