strategic thinking prof. abhishek nirjar strategic management group indian institute of management,...
TRANSCRIPT
Strategic ThinkingStrategic Thinking
Prof. Abhishek NirjarProf. Abhishek NirjarStrategic Management GroupStrategic Management Group
Indian Institute of Management, LucknowIndian Institute of Management, Lucknow
Content for the session
StrategyStrategy
Strategic MindsetStrategic Mindset
Tools for developing Strategic ThoughtsTools for developing Strategic Thoughts
Strategy
1. The aim of strategy is to choose a unique strategic position for the Organisation
2. Generate Options
3. Strategic choice/s
• Combine to create a reinforcing assortment
• The assortment must achieve fit with the firm’s environment without sacrificing flexibility
4. The assortment of activities is the firm’s strategy. It needs organizational support to function properly
Unique Position
1. Who should I target as my customers?
2. What products and services should I be offering?
3. How should I do all this in an efficient manner?
Customer group
Customer function
Alternate Technologies
In our context…..In our context…..
Where is the school now? Where is the school now? Where does the school want to be in Where does the school want to be in
3, 5, 10, 20 years? 3, 5, 10, 20 years? How are we going to get there? How are we going to get there?
A Reinforcing Assortment
1. After the choice resources are allocated and activities identified
2. Fit and Flexibility has to be balanced: With pros and consan Example
ActivitiesActivities Pros Pros ConsCons
Flat StructureFlat Structure Open Open CommunicationCommunication
No perceived No perceived ProgressProgress
Cross-utilization of Cross-utilization of peoplepeople
Helps see the Helps see the big picturebig picture
No specialistsNo specialists
High Quality StaffHigh Quality Staff ProductiveProductive Recruitment Recruitment difficultiesdifficulties
High UtilizationHigh Utilization EfficientEfficient Wear and TearWear and Tear
Team workTeam work Motivating/Motivating/holistic holistic perspectiveperspective
No development No development of leadersof leaders
Fast GrowthFast Growth ProfitsProfits Attracts Attracts competitorscompetitors
Creating Internal and External Fits
The Firm’s Environment
Internal Organisational Environment
The Firm’s Strategy
Culture
People
Structure Incentives
Choice ofCustomers
Manufacturing
Choice of Products
Distribution
Inventory
No Strategy Remains Unique For Ever
Playing the Game Better Playing the Game Differently
Operational Excellence:
Focus on existing PositionRestructuringRefocusingProcess Re-engineeringQuality ProgrammesEmpowering Employees
Strategic Innovation:
New or unexpected customer segmentsto focus onNew Customer NeedsNew ways of producing, deliveringSelling and distributing your products/Services
What is the purpose of a business firm?
The strategic purpose of a firm is to create value that meets the need of its stakeholders.
Who are the stakeholders?
All parties that have an interest (or a stake) in the success or performance of the firm are its stakeholders.
All the parties that stand to benefit from a firm’s successful operation, including owners, suppliers, customers, employees, local communities, trade associations, and society at large.
Focal Point Of Strategy :Competitive Advantage
Competitive Advantage can be defined as the
• ability of a firm to outperform its industry
• to earn higher rates of profits than the industry norm.
• Create more value for the customer than the competitor does
Customers want goods and services which are
i) better, (Differentiation)
ii) cheaper (Cost Leadership)
iii) faster (Quick response)
Forms Of Strategy
Deliberate StrategyIntended
StrategyRealized Strategy
Unrealized Strategy
Emergent Strategy
Sustaining Competitive AdvantageSustaining Competitive Advantage
Creating superior customer valueCreating superior customer value
Creating superior value for the shareholdersCreating superior value for the shareholders
Disciplined and passionate execution of strategyDisciplined and passionate execution of strategy
The ability to innovate strategically.The ability to innovate strategically.
Managerial MindsetManagerial Mindset
Reactive, goals arise out of necessity not Reactive, goals arise out of necessity not dreamsdreams
See themselves as conservators and See themselves as conservators and regulators of existing orderregulators of existing order
Involved in situational and contextual Involved in situational and contextual characteristics of day-to day activitiescharacteristics of day-to day activities
Engage in and support short term least cost Engage in and support short term least cost behaviour to enhance financial performance behaviour to enhance financial performance figuresfigures
Strategic Focus adopts
Takes a long term focus
Requires coordination of complex, multi-pronged initiatives
Aims at order-of magnitude benefits, rather than incremental gains
Assumes that risk is inherent, and is (usually) willing to spend money to manage risk
Strategic MindsetStrategic Mindset
Combine both strategic and operating mattersCombine both strategic and operating matters
Formulate and implement strategies for both Formulate and implement strategies for both immediate and long term goals that ensure long-immediate and long term goals that ensure long-term survivalterm survival
Use linear and non-linear thinkingUse linear and non-linear thinking
Believe in strategic choice Believe in strategic choice
Strategic ThinkingStrategic Thinking Purpose is to discover Purpose is to discover
novel, imaginative novel, imaginative strategies which can re-strategies which can re-write the rules of the write the rules of the competitive game.competitive game.
Envision potential futures Envision potential futures significantly different from significantly different from the presentthe present
Creative, synthetic and Creative, synthetic and divergentdivergent
Strategic PlanningStrategic Planning Purpose is to Purpose is to
operationalise the operationalise the strategies developed strategies developed through strategic thinking through strategic thinking and to support the and to support the strategic thinking processstrategic thinking process
Analytical, Convergent and Analytical, Convergent and ConventionalConventional
Effective Strategic Thinking contributes Effective Strategic Thinking contributes
to….to…. Determining strategic directionDetermining strategic direction
Exploiting and maintaining competenciesExploiting and maintaining competencies
Developing human capitalDeveloping human capital
Sustaining an effective organizational cultureSustaining an effective organizational culture
Emphasizing ethical practicesEmphasizing ethical practices
Establishing balanced organizational controlEstablishing balanced organizational control
Model of Strategic Thinking (Model of Strategic Thinking (Liedtka, ’98)Liedtka, ’98)
Elements of strategic thinking
Strategic Thinking
Systems perspective
Intelligent opportunism
Intent Focused
Thinking in time
Hypothesis driven
Systems PerspectiveSystems Perspective: : A strategic mindset has a mental model
of the complete end to end system of value creation and the interdependencies within.
New insights conflict with deeply held internal images of ‘how the world works’how the world works’
Clear understanding of internal and Clear understanding of internal and external factors- business ecosystem external factors- business ecosystem essential essential
Intent FocusedIntent Focused Long term market or competitive Long term market or competitive
position a firm hopes to build over a position a firm hopes to build over a decade or so.decade or so. conveys a sense of directionconveys a sense of direction
Intelligent opportunism Adaptability
Thinking in Time the past has predictive value present is the departure from the past Continuous comparison, thoughtful of prospective
change Use both an intuition memory and its broad
historical context to think well about creating the future
Hypothesis driven Strategic thinking has to be creative and critical in
nature Use scientific methods What ifs… and the …if… then....
How can we build a Strategic Mindset?How can we build a Strategic Mindset?
Realize the importance of future based Realize the importance of future based thinkingthinking How to improve the value of your How to improve the value of your
company by thinking in time company by thinking in time Understanding the forces driving Understanding the forces driving
changechange How can future based thinking benefit How can future based thinking benefit
my organizationmy organization Initiate a thought process among allInitiate a thought process among all
Understanding the cycle time of Understanding the cycle time of Organizations Organizations Do companies have life cycles? Do companies have life cycles? Are all companies fated to die? Are all companies fated to die? How can companies beat the odds? How can companies beat the odds?
What mental models do managers have? Can What mental models do managers have? Can we change them?we change them?