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Strategic Business LeadershipExecutive Education Seminar
June 2015
STRATEGIC BUSINESS LEADERSHIP
Strategic Thinking & the Strategic Management of Change
J. Michael (Mike) Geringer, Ph.D.O’Bleness Professor of International Strategy
College of BusinessOhio University, Athens Ohio, 45701 USA
email: [email protected]
Materials in this packet copyright © by Geringer & Associates, Inc. Do not quote, cite, reproduce or otherwise infringe without written permission.
© Geringer & Associates, Inc.
“Nobody really knows what strategy is.”
The Economist
© Geringer & Associates, Inc.
WHAT IS STRATEGY?
How would YOU define strategy?
© Geringer & Associates, Inc.
WHAT IS STRATEGY?
The pattern in choices a firm makes about developing & deploying scarce resources to achieve & maintain a unique & valuable position involves a set of activities different from competitors, yet consistent among the activities
© Geringer & Associates, Inc.
WHAT IS STRATEGY? Strategy is about being different
in ways that add value & are clearly better
V ValuableR Rare
I Hard to imitate or substitute for O Organizationally
able to develop, sustain, & capture benefits
© Geringer & Associates, Inc.
WHAT IS STRATEGY?
Strategy deals withconfigurations of activities
how activities fit with & reinforce each other how to constantly upgrade & leverage capabilities to sustain advantage
Deciding what not to do is key
© Geringer & Associates, Inc.
PERSPECTIVE ON STRATEGY FROM CEO OF A $150 BILLION COMPANY…
“Look, what is strategy but resource allocation? When you strip away all the noise, that’s what it comes down to. Strategy means making clear-cut choices about how to compete. You cannot be everything to everybody, no matter what the size your business or how deep its pockets. You have to figure out what to say “NO” to.”
Jeffrey Immelt, CEO, General Electric
IMPORTANCE OF CLEAR STATEMENTS OF STRATEGY
• Clear statements – leave no room for misinterpretation – facilitate communication, empowerment &
resource allocation
• Strategy statement of Edward Jones:“To grow to 17,000 financial advisors by offering trusted and convenient face-to-face financial advice to conservative individual investors who delegate their financial decisions, through a national network of one-financial-advisor offices.”
© by Geringer & Associates, Inc.
© by Geringer & Associates, Inc.
COMPETENCIES & STRATEGY FORMULATION
3 key questions to ask:• Where are we now?• Where do we want to go?• How do we get there from here?
KSFs: Those skills or resources that a firm must master
Builds shared understanding of:
What firms in our industry must be good at
How this is changing What our current competitive position is How to develop our competitive
advantage How to allocate our resources
ACHIEVING SUCCESS: IMPORTANCE OF KEY SUCCESS FACTORS (KSFs)
© Geringer & Associates, Inc.
INDUSTRY LIFE CYCLE INFLUENCES KEY SUCCESS FACTORS
Dis
tinct
ive S
kill
Need
ed
Time
Emerging Growth Maturity Decline
Life Cycle Dynamics & Sources of Competitive Advantage
Manufacturing SkillsProcess TechnologyProcess RefinementsCost-Based Drivers(favors larger firms over time)
Segmentation & Differentiation (finding & serving attractive niches)
Product ConceptsCreativityDesign CapabilitiesNew Technologies or Methods(favors smaller firms early on)
© Geringer & Associates, Inc.
Describes overall competition & differentiation strategyDescribes customer value proposition
Operational Excellence• Low costs• Good standard quality & service• Process synchronization
Product leadership• State-of-the-art products / offerings• Speed to market
Customer focus • Customization• Deep, long-term
relationships
Note: Try to indicate both current & desired future position
YOUR CURRENT & FUTURE BUSINESS MODEL DETERMINES KSFs
© by Geringer & Associates, Inc.
• Competitive strategies are generally mutually exclusive
• A clear competitive position requires difficult choices
• A strategic change must be total: all operations must be realigned across your company’s chain of activities in order to support the new strategy
GETTING “STUCK IN THE MIDDLE”:
NO CLEAR COMPETITIVE POSITION
© by Geringer & Associates, Inc.
Key Point:
Strategy is INTERNALas well as EXTERNAL
© Geringer & Associates, Inc.
ACHIEVING STRATEGIC SUCCESS: DISTINCTIVE COMPETENCIES
Competencies should define strategy
• Company-specific effects account for ~30% - 45% of performance variation among firms vs. ~20% for industry effects
A distinctive competence: what a company does better than anyone else, distinguishing your company competitively
© Geringer & Associates, Inc.
COMPETENCE GAPS & STRATEGIC ALTERNATIVES
Strategy Environment
Key Success FactorsCompetencies
Competency Gap
Internal Development Acquisition
Strategic Alliance
© by Geringer & Associates, Inc.
Exit
THE STRATEGIC MANAGEMENT PROCESS IS NOT JUST TOP-DOWN
Objective
Strategy
Operational Plans
Tactics
Comm
unication
DirectionInitiative
Com
mun
icatio
nDi
recti
on
Initi
ative
© by Geringer & Associates, Inc.
BENEFITS OF STRATEGIC MANAGEMENT
Using a systematic process vs. producing a decision or document
• Goal: improved understanding & commitment from all managers & employees through involvement in process
Process provides opportunity to empower people
© Geringer & Associates, Inc.
CHALLENGE ASSUMPTIONS ABOUT HOW TO COMPETE
• Understand how you filter information to create meaning
• Challenge your filters so you don’t miss anything important
• Understand your filters & those for whom you are doing the scanning
• And…try & understand worldviews of the people you are scanning – which ones have blind spots, and about what activities or events?
WORLDVIEWS
© by Geringer & Associates, Inc.
The strategic management of change is about being ready for the future … rather than waiting for it to bite you
© Geringer & Associates, Inc.