ncs2 sm evolution

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Strategic Management

The Evolution



S ome Questions

How has the strategy field devel op ed? How has the thinking in strategy ev o lved? How is the thinking in strategy m oving t ow ards? What are the questi ons in strategy that are n o tans wered?

What are the dilemmas and c onfusi ons in the fieldof strategy

What have been the l oop ho les in strategymaking?

What are the po tential m odels of sustainablestrategy?



The Evolution in SM thinking

³ Strategic management is an ong o ing pr ocess thatassesses the business and the industries inwhich the c ompany is inv o lved; assesses itscompetit ors and sets g oals and strategies t o

meet all existing and po tential c ompetit ors; andthen reassesses each strategy annually or

quarterly [i.e. regularly] t o determine h ow it hasbeen im p lemented´

- Lamb 1984



P r ocessS trategy formulation

P erf orming a situati on analysis, self-evaluati on and c ompetit or analysis:bo th internal and external; b o th micr o-envir onmental and macr o-

envir onmental.

Concurrent with this assessment, objectives are set. These objectivessh ould be parallel t o a timeline; s ome are in the sh ort-term and

o thers on the l ong-term. This inv o lves crafting vision statements(long term vie w of a po ssible future ), mission statements ( the r o le

that the organizati on gives itself in s ociety ), overall c or po rate

objectives (bo th financial and strategic), strategic business unitobjectives (b o th financial and strategic), and tactical objectives.

These objectives sh ould, in the light of the situati on analysis, suggest astrategic p lan. The p lan pr ovides the details of how to achieve these

objectives.



S trategy implementation

A llocati on and management of sufficient res ources(financial, pers onnel, time, techn o logy su ppo rt)

Establishing a chain of command(such as cr oss functi onal teams)

A ssigning res po nsibilityo f s pecific tasks or p r ocesses t o s pecific individuals or gr oups

Managing the pr ocessThis includes m onitoring results, c omparing t o benchmarks and best p ractices,

evaluating the efficacy and efficiency of the pr ocess, c ontr o lling f or variances, and making adjustments t o the pr ocess as necessary.

A cquiring the requisite res ources ,devel op ing the pr ocess, training, pr ocess testing, d ocumentati on, and

integrati on with (and/ o r c onversi on fr om) legacy p r ocesses.



S trategy evaluation

Measuring the effectiveness of the organizati onal strategy. It'sextremely im po rtant t o conduct a S WO T A nalysis to figure out the

strengths, weaknesses, oppo rtunities and threats

In c or po rate strategy, J ohns on and Sch o les present a m odel in whichstrategic op tions are evaluated against three key success criteria:

Suitability (wo uld it wo rk?)

Feasibility (can it be made t o wo rk?)

A cce p tability (will they wo rk it?)



G eneral A pp r oaches

The Industrial Organizational Approach

based on ec onomic the ory ² deals with issues like c ompetitiverivalry, res ource all ocati on, ec onomies of scale

assum p tions ² rati onality, self disci p line, behavi or, pr ofitmaximizati on

The S ociological Approach

deals primarily with human interacti onsassum p tions ² b ounded rati onality, satisfying behavi or, pr ofit sub-

op timality A n exam p le of a c ompany that currently op erates this way is

G oo gle



DOMINANTTHEME

1950s 1960s-early 70s Mid-70s-mid-80s Late 80s ±1990s 2000s

Budgetary Corporate Positioning Competitive S trategicplanning & planning advantage innovationcontrol

Financial Planning S electing Focusing on Reconciling

control growth &- sectors/markets. sources of size withdiversification Positioning for competitive flexibility &

leadership advantage agility

Capital Forecasting. Industry analysis Resources & Cooperativebudgeting. Corporate S egmentation capabilities. strategy.Financial planning. Experience curve S hareholder Complexity.planning S ynergy Portfolio analysis value. Owning

E-commerce. standards.² Knowledge Management²

Coordination Corporate Diversification. Restructuring. Alliances && control by planning depts. Global strategies. Reengineering. networksBudgeting created. Rise of Matrix structures Refocusing. S elf-organizsystems corporate Outsourcing. ation & virtual

planning organization

MAINISSUES

KEY CON CEP TS

&TOOLS

MANAGE-MENT

IMP LIC-ATIONS

EVOLUTION OF STR A TE G IC

M A

N AG

EME NT



No dal Centres

A lfred Chandler ± C o r po rate Strategy

J ohn Dunning ± IB Strategy

C K P rahalad ± Inclusive Strategy

Sumantra G hoshal ± P r oblems in T.C.E.



Historical devel op ment of Strategic

ManagementB irth of strategic management

originated in the 1950s and 60s

A lfred D. Chandler, Jr.,

P hilip Selznick,Igor A ns off,

P eter F. Drucker



Alfred Chandler

Strategy and Structure³ structure f o llow s strategy´

Philip S elznick

O rganizati on's internal fact ors withexternal envir onmental circumstances

S WO T analysis



Igor Ansoff

market penetration strategies

product development strategies

market development strategies

horizontal and vertical integration

diversification strategies

Corporate strategy



P eter Drucker

stressed the importance of objectives

management by objectives ( MBO)



G rowth and portfolio theory P r ofit Impact of Marketing Strategies ( P IMS)

effect of market share

Started at G eneral Electric, m oved t o Harvard in theearly 1970s, and then m oved t o the Strategic P lanningInstitute in the late 1970s, it n ow contains decades of

inf ormati on on the relati onshi p bet ween pr ofitability andstrategy

"P IMS pr ovides c ompelling quantitative evidence as t o which business strategies wo rk and d on't wo rk" - Tom

P eters.



The Ja panese challenge:

Higher em p loyee m orale, dedicati on, and l oyalty;

Low er c ost structure, including wages;

Effective g overnment industrial po licy;

Modernizati on after WW II leading t o high ca p ital intensity and pr oductivity;

Ec onomies o f scale ass ociated with increased ex po rting;

Relatively l ow value of the Yen leading t o low interest rates and ca p italcosts, l ow dividend ex pectati ons, and inex pensive ex po rts;

Su perior quality c ontr o l techniques such as T o tal Quality Management ando ther systems intr oduced by W . Ed wards Deming in the 1950s and 60s.



McKinsey 7S Frame wo rk

Strategy, Structure, Systems, Skills, Staff,Style, and Su pra- ordinate g oals

Th e Mind of t h e Strategist was released in A merica by Kenichi Ohmae

Tom P eters - I n Searc h of Excellence



G aining c om petitive advantage

G ary Hamel and C. K. P rahaladS trategic intent and strategic architecture

Dave P ackard and Bill He wlett devised an activemanagement style that they called ManagementBy Walking Around (MBW A ).

Michael P orter cost minimization strategies , productdifferentiation strategies , and market focusstrategies



S trategic change

In 1968, P eter Drucker (1969) c o ined the phraseAge of Discontinuity

In 2000, G ary Hamel discussed strategic decay

In 1978, A bell, D. described strategic windows

and stressed the im po rtance of the timing (b o thentrance and exit) of any given strategy



Clayt on Christensen (1997)1-disruptive technology2-agnostic marketing (no one knows h ow inw h at quantities a disruptive product will be used before experiencing t h e product )

Henry Mintzberg (1988) ± Strategy was muchmore fluid and un predictable than pe op le hadthought



Strategy as p lan - a directi on, guide, c ourse of acti on -intenti on rather than actual

Strategy as p loy - a maneuver intended t o outwit acompetit or

Strategy as pattern - a c onsistent pattern of pastbehavi our - realized rather than intended

Strategy as po sition - locating of brands, pr oducts, or companies within the c once p tual frame wo rk of consumers or o ther stakeh o lders - strategy determined

primarily by fact ors outside the firm

Strategy as pers pective - strategy determined primarilyby a master strategist



Information and technology driven strategy

P eter Drucker had the orized the rise of the ³kn ow ledge wo rker ´ backin the 1950s

In 1990, P eter Senge, who had c o llab orated with A rie de G eus at

Dutch Shell, b orr ow ed de G eus' n o tion of the learning organization

P e op le can c ontinu ously ex pand their ca pacity t o learn and bepr oductive

Ne w patterns of thinking are nurtured

Co llective as p irations are enc ouraged, and

P e op le are enc ouraged t o see the ³ who le p icture´ t ogether.



S enge identified five c ompo nents of a learningorganizati on. They are:

P ers onal res po nsibility

Self reliance

Mastery of Mental m odels

Team learning -³a s p irit of adv ocacy t o a s p irit of enquiry´

Systems thinking



The psychology of strategic management

inf ormal, intuitive, n on-r outinised, and

invo lving p rimarily oral, 2- waycommunicati ons

³feeling´,

³ judgement´,

³sense´,

³pr opo rtion´,³ balance´, ³ a pp r op riateness´.



Criticisms of strategic management

marketing my op ia

In 2000, G ary Hamel c o ined the term strategicconvergence

Ram Charan , aligning with a pop ular marketingtagline, believes that strategic p lanning must n o tdominate acti on. " J ust do it !",

ncs2 sm evolution

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