The Guardian One-Day MBA MasterclassStrategic Transformation
Professor George YipAssociate Dean, Executive Programmes
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Strategic Objective
Business Model
What is Strategy
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EXECUTIVE STRATEGIC OBJECTIVE(example of one)
STRATEGIC MOVES(example of one)
EXECUTION(example of one)
Chief Executive Diversify Create new line of business
Select and start up new business, appoint general manager
General Manager Make the new business a success
Develop appealing new products
Set up new product development unit, appoint unit manager
New Product Development Unit Manager
Run the unit well, including delivering successful new products
Put in the right processes, systems and workers
Monitor processes, systems and workers
Cascade of objectives, strategic moves and execution
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• All strategies need to be executed
• Not the same as operational execution
• Strategy execution new, different situation (Lexus)
• Operational execution same situation (perhaps better but not different)
• Some strategies are more difficult to execute than others, depending on
– Extent of stretch in strategic objectives
– Fit with current business model
– Change capabilities of organization
– Implementation capabilities of organization
Defining strategy execution
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Source: Laurent Mirabeau and Steve Maguire, “From Autonomous Strategic Behavior to Emergent Strategy,” Strategic Management Journal 35 (2014), pp. 1202-1229.
Intended versus emergent strategy
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Product launch
Acquisitions
Market development
Related diversification
Strategic decisions
Strategies evolve and inform strategic decisions, which in turn consolidate strategic direction
Evolving strategic direction
Source: Johnson, Whittington and Scholes, Exploring Strategy.
Strategic direction from prior decisions
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EnvironmentalChange
PHASE 1Incremental
Change
PHASE 2Strategic
Drift
PHASE 3Flux
PHASE 4Transformational
Change or Demise
Amou
nt o
f cha
nge
Time
Source: Gerry Johnson and Kevan Scholes
The problem of strategic drift
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• Individual cognitive limits
• “Steady as you go”
• Core rigidities
• Organizational culture
• Lagged performance effects
• Past success: The Icarus Paradox
Source: Gerry Johnson
Why strategic drift?
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“When the rate of change inside the company is exceeded by the rate of change outside the company, the end is near.”
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When it goes bankrupt
When it loses money, consistently
When it loses market share
When sales go down
BUT BY NOW IT IS TOO LATE to avoid trauma for the company, shareholders, employees, customers, partners and managers.
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How to tell when your business needs strategic transformation
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Look for the following indicators:
• A new technology or product form introduced into your industry
• By someone else
• Which your top managers refuse to regard as significant (e.g., motorcycles, personal computers, coffee, music downloads, Apple iPhone, etc.)
How to anticipate the need for strategic transformation
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Sales and profits good.BUT the most innovative/fashionable/desirable customers desert you.e.g. Cadillac, Nissan in U.S. in 1990s
• Customer loyalty and retention declines • The smartest employees do not join you• Your company is worth more broken up
How to anticipate the need for strategic transformation (cont.)
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• State owned until 1982• BA =“ Bloody Awful”• Rules for flight attendants• New advertising campaign• Product innovations
No. 1 among world business travellers
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Transformation of British Airways
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Develop the Organization
Achieve Mobilization
Create the Vision
Build the Measures
Construct an Economic Model
Align Physical Infrastructure
Achieve Market Focus
Invent New Businesses
Change Rules Through Information Technology
Create Reward Structure
Build Individual Learning
Redesign Work Architecture
Transforming the organisation
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Conclusion
A strategy is a journey not a destination.
The best strategy ideas are the outcome of a creative process strongly grounded in deep knowledge and understanding of both the external and the internal environment.
The best strategies are successfully executed.
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Manuel Hensmans, Gerry Johnson and George Yip, Strategic Transformation: Changing While Winning, Basingstoke, England: Palgrave Macmillan, 2013.
Gerry Johnson, George Yip and Manuel Hensmans, “Achieving Successful Strategic Transformation,” MIT Sloan Management Review, Spring 2012, pp. 25-32.
Gerry Johnson and George S. Yip, “Transforming Strategy,” Business Strategy Review, 18/1 Spring 2007, pp. 11-15.
References