Winning Strategy Overview of presentation John Viljoen (PhD) 27 - - PDF document

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Winning Strategy Overview of presentation

John Viljoen (PhD)

27 September, 2012

Summary The presentatjon will focus on how to develop and implement a Winning Strategy and will stress:

• The atuributes of a winning strategy – how you can tell when you have one
• The strategy development processes that are most likely to lead to a Winning Strategy
• How to performance manage a Winning Strategy
• The leadership requirements for a Winning Strategy.

The presentatjon will offer delegates with the opportunity to benchmark themselves against demonstrated best practjce in strategy and will provide examples from a variety of industries to reinforce the concepts and tools. Developing a Winning Strategy Theme 1: What is a winning strategy? There is no such thing as “a” winning strategy, only “your” winning strategy. Every strategy is different, in fact difference is a key to winning. Despite the fact that differentjatjon can be created in a myriad of ways, many businesses put litule effort into this aspect of their strategy. Yet almost any product or service can be differentjated for example, some countries have even managed to differentjate commoditjes like raw sugar. “Winning” is relatjve concept. Like in the Olympics, the winner does not have to beat the world record, they just have to beat the other competjtors. You can get a good idea of how “Winning” your current strategy is by your company’s relatjve positjon in the following areas:

• Is my brand relatjvely stronger than my competjtors?
• Is my market share growing faster than my competjtors?
• Are my customers relatjvely more satjsfied than my competjtors and do I get greater repeat

purchases?

• How fast is my EBITDA increasing relatjve to my competjtors?

One of the great benefits of “Winning” is it culminates in effectjve barriers to entry for other competjtors because you dominate your chosen area of the market. This gives you the tjme you need to extract value from the investment you have made in that strategy. Theme 2: The basics of successful strategy One of the reasons why businesses struggle to produce a winning strategy is because they fail to grasp some strategy fundamentals, such as:

• Many executjve teams over-engineer strategy. Keep it simple. Too many strategic plans contain

spreadsheets! On the contjnuum of running the business, enhancing the business and transforming the business, strategy focuses on “transformatjon”. Of course transformatjon ultjmately has implicatjons for how a business is “run” and “enhanced”, but these are essentjally

• peratjonal roles, not strategic ones.

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Question : Is your strategy crystal clear on how i t will transform your business?

• Failing to integrate all aspects of strategy, aligning all of its key elements (see model):

Vision What we aspire to be Values The approach we will take to running our business Goals What we want to achieve – the specific targets Strategies Actions we will take to achieve our Goals Purpose What we will do achieve our Vision

• Failure to understand different levels of strategy and to act on corporate strategy before

business strategy:

• Corporate level strategy – deciding the scope of your product or service portgolio – what

will be kept in the portgolio, what will be added to the portgolio and what will be dropped from the portgolio? (For example in “tourism” the portgolio could include any

• ne or all of resorts, travel agency, tours, etc, each with a local / regional / internatjonal
• ptjon)
• Business level strategy – for each product or service in the portgolio, deciding “how can

we be as successful as we can possibly be?” Theme 3: The keys to a Win ning Strategy There are 4 keys to developing a Winning Strategy:

Think / Analyse Act

Manage the present from the future Run strategic projects Challenge conventional wisdom

KEY 2 KEY 1

Effectiveness not efficiency Find the “ elephants”

KEY 3 KEY 4

Who can help me, who can I help? Build partnerships & alliances Create points of difference & targeted innovation

Key 1: The fundamental skill of the strategist is to be able to “manage the present from the future”. They stand in the future, use best available evidence to map its atuributes and identjfy what their business needs to do to “Win” under these antjcipated future conditjons. In doing this, the volatjlity of most markets requires businesses to be more adept at “opportunistjc strategy” than they have been in the

• past. Gone are the days of big, prestjgious, well resourced strategy teams located on the same floor as

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the CEO. Instead, recognising and capitalising on opportunitjes quickly is essentjal – not teams of PhDs analysing data to death. Test your strategy: Every executjve team should have a common view on the 4 or 5 major differences between their industry today versus in 3 years tjme. Collectjvely they should agree on what this means for their business and they should be testjng the new strategies that they think will be required. Key 2: This is based on the obvious point that positjve differentjal advantage leads to a Winning Strategy. Conversely, being completely “conventjonal” doesn’t because there is no reason why a consumer should choose your product or service over any other one. Differentjatjon can improve sales volumes as well as profit margins (Example: Apple and Samsung in cell phones). Winning strategies are either highly differentjated or very low cost. (see model).

Strong Differentiation Weak Low cost Performance

Stuck in the middle (No added value & no low cost) “Gravity pull”

Strategy Strategy : Cut costs Strategy : Add value Question : Is your business “ stuck in the middle” ?

Test your strategy: Does your business have a clear plan to prevent it becoming stuck in the middle? What are the cost and differentjatjon components of this strategy? Key 3: It is no use doing something efficiently if you are doing the wrong thing in the first place! Executjves are too frequently focused on “urgent” operatjonal crises that deal with efficiency and fail to pay adequate atuentjon to the “important” strategic issues for their business (Example: Kodak was stjll commissioning low cost, completely automated dark-room factories for camera film when the digital revolutjon in cameras was well underway). Winning strategies are effective strategies. Test your strategy: Where does your executjve team prefer to focus, on urgent operatjonal matuers (efficiency) or important strategic issues (effectjveness)? How disciplined is your executjve team in removing itself from “efficiency-type” decisions and atuending to “effectjveness”? What tools do you use to gather evidence and avoid making purely intuitjve or gut-feel strategy decisions?

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Key 4: Strategic alliances are becoming increasingly important in developing “Winning Strategy”. For example, EdEx is an alliance between Harvard University and Massachusetus Instjtute of Technology (MIT) that places their degree courses online. They stjll vigorously compete with each other for students, research funds and brand equity, but not in the course content space, because they both believe content is a commodity not worth the expense of competjtjve batules. This is a good example of “co-opetjtjon” (ie. cooperatjng with a competjtor in one aspect of your business but competjng in another aspect). Test your strategy: What strategic alliances do you currently operate? How successful are they? What

• ther optjons exist? Is “co-opetjtjon” an optjon for you?

Implementing Win ning Strategies Developing strategy is only one aspect of Winning Strategy. Implementjng it through strong performance management and effectjve leadership is also essentjal.

Strategy development Performance management Leadership

You are

• nly as

strong as your weakest link

A Winning Strategy will fail if it is poorly managed

A N D AND

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Performance management of Winning Strategy

Some important performance management issues include:

• Risk assessment and management – all transformatjons are risky. How should strategy risk be

managed?

• Accountability for strategic initjatjves – what is the best balance between single-point

accountability and a team approach?

• Capability-based strategy – in volatjle markets strategy assumptjons can change rapidly. Does

your business have the capability to adapt to these changes or are you locked in to a single approach?

• Recognising trade-offs between speed, cost and quality when you implement strategy
• Coordinatjng all strategy implementatjon resources / tools – especially changes to structure,

systems, capabilitjes and culture (see model).

“ Hard” levers “ Soft” levers Structure Systems Capabilities Culture

• Roles/teams
• Authority

levels

• Business,

Functional & Horizontal integration

• Performance

management

• Risk

management

• People

management

• IT systems
• Reporting
• Communication
• Staff skills
• Flexibility of

people resources

• Capability

gaps

• Workforce

planning

• Values &

Behaviours

• Leadership (at

all levels)

• Employee

engagement

Defining the future Delivering the future

Our Vision, Values, Goals & Strategies

Financial plan

Leadership for Winning Strategy

Three issues relevant to leadership will be presented briefly:

• 1. The challenge for global businesses is the need to “operate globally but lead locally”. What this

means is that ofuen the leadership style of the parent company tends to dominate all offices /

• peratjons around the world and it may not fit with local culture. For example the “slow to

decide, quick to act” Japanese style of leadership is problematjc in the USA. More autocratjc styles of leadership common in Asian countries are problematjc for collegiate western leadership

• styles. (Examples of leadership problems encountered with the global operatjons of a German

hospital products company and a French wine and spirits company)

• 2. A common technique for generatjng enthusiasm within the business for a Winning Strategy is the

“goals down, plans up” leadership approach. Here senior managers communicate targets to the rest of the business (for innovatjon, performance, etc) but they do not say how they want this

• done. The “how” decision is negotjated with middle managers and their staff. The executjve has

the power of veto on any decision. This results in “leadership down, ownership up”.

• 3. Strategy transforms businesses. Good strategists need a well-balanced set of leadership skills to

drive this transformatjon. These include analysis, judgment and decision-making skills, the ability

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to lead and influence people, the ability to achieve outcomes and deliver required performance results and the ability to keep improving their skills and act with integrity (See model)

Spirit

Personal integrity

Head

Strategic thinking

Heart

Leading people

Feet

Delivering results



Transformational Leadership

iedex 2012

O r g a n i s a t i

• n

a l c

• n

t e x t Personal strengths & weaknesses

Conclusion Although strategy transform businesses, it is important to keep it simple. There is enough complexity in running your business day-to-day without adding a complex strategy on top of that. Most Winning Strategy is represented in a “plan-on-a-page”.