SM
472.42
10
Winter 2012
Review
Strategy is: resolving tension between
• what a firm SHOULD do
&
• what it CAN do
&
• what it WANTS to do
How to get all 3 lined up and pulling in the same direction?
Management preferences
preferences are the junction between• needs
• beliefs
• reality
Management preferences
managers drive strategy• energy
• impetus
A forward—even a very good forward—will struggle on defence.
Management preferences
“Many top-level managers do not have an explicit and useful way of thinking about personal values…”
This is one place where you may have an advantage.
Management preferences
roots basic needs
• power
• achievement
• security
• recognition
beliefs
Most business-people think they don’t have beliefs—that they will (and can) do what’s necessary for the firm to succeed.
Management preferences
roots basic needs
• power
• achievement
• security
• recognition
beliefs
Preferences come from person’s core
In fact, they reveal the core of the person as a manager.
Management preferences
beliefs goals
• we must grow in volume and roi maintain a conservative financial structure be measured against the best
Management preferences
beliefs product market focus
• don’t diversify except where our technology can be applied
• we must not be dependent on one single product line run businesses where we not expert
• we can manage a range of industries
Management preferences
beliefs value proposition
• market share come through technically superior products a known brand name product quality innovation
» in processes and basic products price
Management preferences
beliefs core activities
• we’re a production company a sales company a profit-making company
Management preferences
beliefs core activities
• the product is everything
• no, marketing is everything
• no, customer happiness is everything
• we don’t make sales, we build relationships
Management preferences
beliefs core activities
• we must lead in keeping costs down and quality up control every input to our products
• we are prepared to pay a price to remain flexible
Management preferences
beliefs job context
• scope of job
• how success is measured how it’s rewarded
• what consequences of failure are
Management preferences
beliefs job definition
• What are you supposed to do?
• What am I supposed to do?
Management preferences
beliefs job relations
• What were people “promised?” Fun? Hard work? A fierce fight with competitors? Stability?
Employee expectations are powerful.
Preference Mismatches
proposedpreferred
reality
Preference Mismatches
Your strategist is incompetent
proposedpreferred
reality
Preference Mismatches
A simple problem—not easy to solve, but easy to outline.
proposedpreferred
reality
Preference Mismatches
1st cause:Managers stick with old strategy even when conditions change.
proposedpreferred
reality
Preference Mismatches
2nd cause:Managers become committed to new strategy that doesn’t fit capabilities or environment.
proposedpreferred
reality
Preference Mismatches
Hardest problem:Managers don’t realize they have preferences
proposedpreferred
reality
Preference Mismatches
2nd hardest problem:Frozen preferences
proposedpreferred
reality
Preferences Strategy
1. identify mismatch• What should management prefer?
• Do they?
• What needs to change?
Preferences Strategy
2. test the linkages Can you sell this?
• Can they?
Do they even know what “this” is?
Preferences Strategy
3. close the gap minimal conflict
Really?
Preferences Strategy
3. close the gap moderate conflict
• test—flexibility
Can the old dog learn new tricks? Can he be enthusiastic about
them?
Preferences Strategy
close the gap• serious conflict
Can organization survive change in leadership?
Preferences Strategy
3.close the gap the challenge
• hold to the strategy
• change the organization
Compromise doesn’t work here
It will feel good but you’ll come to grief
Preferences Strategy
3. close the gap middle managers
• dislike risk
• probably not consistent
Preferences Strategy
3. close the gap middle managers
• minimal conflict a nice possibility
But probably self-deception
Preferences Strategy
3. close the gap middle managers
• moderate conflict a better situation
Can be some give and take
Preferences Strategy
3. close the gap middle managers
• serious conflict probably looking at changing people
Mgmt preference analysis
purpose identify mismatches
• strategic necessities
vs
• beliefs
bring these to surface find a resolution to discrepancy
A happy note
this will also be true for competitors• most managers have limited repertoire
• enables you to predict
Also opens possibility of “fish out of water”
Stakeholder preference
Irrelevant? Hindrance? Legitimate? Essential?
To be implemented successfully over time, any strategy must command the creativity, energy and desire of the company’s members.
K. R. Andrews
Process
1. Identify stakeholders
2. Define their interests
3. Compare strategy to interests
4. Align strategy & interests
Process
1. Identify stakeholders Internal External
Process
1. Identify stakeholders Internal
• Owner
• Shareholders
• Lenders
• Management team
• Employees
• Unions
Process
1. Identify stakeholders External
• Customers
• Government
• Interest groups
• Community
• Suppliers
• Competitors?
Process
2. Define stakeholders’ interests• What’s “best” for each stakeholder
Do they know it?
• Should you deliver it?
• Does the strategy drive them towards their “best” interest? away from their “best” interest?
• Find potential alliances of interest
Process
3. Strategy ? Interests• Likely consequences of your actions?
What reactions will stakeholders have?
• Your personal feeling about your actions? How do you weigh interests of others? How do you set priorities? What are the effects?
• Are you prepared to defend your decision? Can you justify your action to others?
Process
Strategy = Interests• If likely to object
Can they be brought into alignment?
• Why not?
Don’t stakeholders have the same fundamental interests—to benefit from the success of the company?