viable business strategies
TRANSCRIPT
TITLE: eg. Marketing
Subtitle/Description: Eg. Online Marketing
Faculty Name: eg. Godfrey Parkin
Date: 10/02/2011
Viable Business Strategies: A Fieldbook for Leaders by Ungerer, Pretorius & Herholdt
We Read For You – February 2011 Presented by Prof Marius Ungerer
Date: 11 - 02 - 11
Source: Ungerer, M., Pretorius, M. & Herholdt, J. 2011.
Viable Business Strategies. Johannesburg: Knowres.
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... This is the third updated version
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Published by Knowres Publishing (Pty) Ltd P O Box 3954 Randburg 2125 Republic of South Africa Tel: (011) 880-8540 Fax: (011) 880-8700/9829 E-mail: [email protected] Website: www.kr.co.za
Should you wish to purchase a copy, the book can be ordered from The LittleBig Bookstore. Contact Vivian at: [email protected]. Alternatively order forms will be available in the morning.
Source: Ungerer, M., Pretorius, M. & Herholdt, J. 2011.
Viable Business Strategies. Johannesburg: Knowres.
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Target audience
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Source: Ungerer, M., Pretorius, M. & Herholdt, J. 2011.
Viable Business Strategies. Johannesburg: Knowres.
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Notes to 3rd edition
• Reactions on how to solve the financial crisis of 2008/2009 produced no real, innovative solutions – just more of the same. Most of the proposals aimed at solving the dilemmas caused by the crisis can be reduced to two basic solutions,
– the first being more rules, better rules and new rules, to control those now being identified as having been primarily responsible.
– The second response centres around an adaption of an old solution used in the past when things went wrong, namely to fix the incentives.
• The reality is that in a free-market system with democratic practices it is not possible to control complex adaptive systems – not with rules or with incentives.
• Winston Churchill once said: “It is not enough that we do our best; sometimes we need to do what’s required.”
• We need to seek solutions at a higher level of complexity.
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Source: Ungerer, M., Pretorius, M. & Herholdt, J. 2011.
Viable Business Strategies. Johannesburg: Knowres.
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Notes to 3rd edition …
• Principles to guide practices for sustainable longer-term performance: – Normative governance – Contextual sensitivity – Democratised workplaces – Personal relations as the new currency – Individual energy as the scarce resource
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Strategy, as the act of producing greater certainty for stakeholders at a particular point in time, is necessary but not sufficient for organisational survival. We need leaders who display both the moral will and the moral skill to lead us into an uncertain future (where there are few guarantees), with the necessary wisdom.
Source: Ungerer, M., Pretorius, M. & Herholdt, J. 2011.
Viable Business Strategies. Johannesburg: Knowres.
M U
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The logic of the book
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Source: Ungerer, M., Pretorius, M. & Herholdt, J. 2011.
Viable Business Strategies. Johannesburg: Knowres.
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Strategy is a systemic process
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Source: Ungerer, M., Pretorius, M. & Herholdt, J. 2011.
Viable Business Strategies. Johannesburg: Knowres.
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How is Strategy defined?
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• Organisational strategy is the collaborative and conscious behaviour people in organisations exhibit in an effort to ensure sustainable organisational survival.
• If we track organisational strategy over time, we can identify the main strategic choices that has been made to ensure a viable future.
• Viability is dependent on an organisation’s ability to compete and assert itself in a competitive business environment and to meet multiple stakeholder expectations
• Strategy is therefore the collective, emerging pattern of behaviour an organisation consciously exhibits over time to ensure its survival by differentiating itself in unique ways.
• Strategy-making is an organic emergent learning process of people relating on a shared future in a specific context which they have the power to influence.
• The central goal of strategy in a free market environment should be to achieve sustainable, superior long-term returns on investment.
Integration of the views of Porter, Hamel and Minzberg.
Primarily a process-orientation to strategy.
Strategy is rather something you do than something you have – aligned to Strategy-as-Practise view
Chapter 1
Source: Ungerer, M., Pretorius, M. & Herholdt, J. 2011.
Viable Business Strategies. Johannesburg: Knowres.
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A new metaphor for strategy
Sources: 1.Viable Business Strategies: A systemic People-Centric Approach by Ungerer, Pretorius & Herholdt, 2007.
The landscape provides the context for strategy, but its structure is constantly being changed by people’s strategic
structuring activities.
The challenge for organisational leadership is to create a strategic landscape where natural human energy is optimally utilised.
(1) Landscape as Context (External Topography)
(2) Landscape as underlying Structure (Internal Topography)
(3) Landscape as Structuring (Process)
Chapter 1
Source: Ungerer, M., Pretorius, M. & Herholdt, J. 2011.
Viable Business Strategies. Johannesburg: Knowres.
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What is scenario planning?
Scenario planning is a tool or technique designed to raise decision maker awareness of the range of possible futures and prepare companies for
shifts in the business environment.
DEFINITION OF SCENARIO PLANNING
Scenario planning in a nutshell
Description The creation and exploration of coherent and credible alternative stories/pictures of the futures
Time horison
5 to 20+ years
Nature of inputs
Qualitative (e.g. current political, economic, social, technological and industry trends, future uncertainties)
Nature of outputs
• Stories of the future describing a range of alternative outcomes
• Qualitative, complex end states
• Plausible outcomes
• Subjective interpretation/ analysis
• It is a group process which encourages:
– Knowledge exchange; and
– Development of mutual deeper
understanding of central issues
important to the future of your
business.
• It’s about identifying trends, discontinuities and
patterns that may influence and define future
business opportunities.
• Scenario work is a counterbalance from what
we learned from the past and offers learning
opportunity from a future perspective – useful
in developing viable road maps for long-range
planning.
Chapter 2
Source: Ungerer, M., Pretorius, M. & Herholdt, J. 2011.
Viable Business Strategies. Johannesburg: Knowres.
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Scenario development process
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Step 1: Demarcation of the context. This is done to determine the focus of the process.
Step 2: External environment analysis. During this phase the team gathers information (or commission somebody to do this on their behalf) related to the
environment in which the organisation operates. The information includes the macro, market and industry
environments.
Step 3: Identify the key issues to be addressed in the scenario’s given the external
environmental analyses
Step 4a: Identify the DRIVING FORCES in the environment
Step 4b: Identify the UNCERTAINTIES in the environment
Step 4c:Identify the CERTAINTIES in the environment
Step 4d: Identify the OVERRIDING KEY DRIVERS
Step 4e: Identify the critical 2 KEY DRIVERS
Chapter 2
Source: Ungerer, M., Pretorius, M. & Herholdt, J. 2011.
Viable Business Strategies. Johannesburg: Knowres.
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Step 5: PLOT the 2 key drivers and determine
Possible scenarios Step 6: Populate the identified scenarios.
Step 7: Test the scenarios for consistency and relevance.
Step 8: Using completed scenarios as learning tools
Step 9: STRATEGIC POSITIONING Implications
Step 10: SCENARIO DEVELOPMENT: The strategic
implications
Chapter 2
Source: Ungerer, M., Pretorius, M. & Herholdt, J. 2011.
Viable Business Strategies. Johannesburg: Knowres.
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• Six new ways to thinking about markets
- Look across alternative industries
- Look across strategic groups within industries
- Look across a chain of buyers
- Look across complementary products and service offerings
- Looking across functional or emotional appeal to buyers
- Look across time
In the home loans industry Bond Originators worldwide moved into the space between
the estate agent and the bank on the premise of providing value added services to home buyers.
Sony’s Walkman combined the acoustics and
the “cool” image of a hi-fi with the lower
price and convenience of a radio, creating the portable stereo market! New users are joggers
and commuters
MacDonald's targets the whole family, bringing the
influencing power of children into play and make that part of their offering by including
gifts to entice the whole family into buying from
them
CNN created the first real-time twenty-four-hour news service based on the trend of globalisation
Shell, BP and Engen, through their retail dealerships, opened on site convenience stores to extend their offering to customers on the move.
Swatch watches turned a functional timekeeping machine into a
fashion accessory. Customers now use their Swatch to communicate
their shifting moods and to complement their different “looks” and roles.
Ten different approaches to Creating NEW Market Space Chapter 3
Ten different approaches to Creating NEW Market Space
# 7 Digital space is a new opportunity that is available for the connected.
# 10 Creating Market space through Choke Points
# 9 Creating market space through Customer Empowerment or Giving Customers Control.
# 8 Creating Market Space through excellence in customer service quality
Chapter 3
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Efficacy of strategic control points vary
From most powerful….
1. Owning the standard (I.e. Microsoft)
2. Managing the value stream/or critical points in the value stream
3. String of superdominant positions (I.e. Coke)
4. Owning the customer relationship (EDS & GE)
5. Brand & copyright (Nike)
6. 2 Year plus product development leads (Intel)
7. Commodities with 20% plus cost advantage (Southwest Airlines)
8. First mover advantages
….to least. (Adrian Slywotsky)
An example of a hierarchy of control points, based on efficacy - but this
will vary from industry to industry Profit
Protecting
Power
Inde
x
Strategic Control Point Example(s)
High 10 Own the standard Microsoft,
Oracle
9 Manage the value chain Intel, Coke
8 String of superdominant
positions
Coke,
internationally
7 Own the customer relationship GE, EDS
Medium 6 Brand, copyright Countless
5 Two-year product
development lead
Intel
Low 4 One-year product
development lead
Few
3 Commodity with 10 to 20
percent cost advantage
Nucor, SW Air
None 2 Commodity with cost parity Countless
1 Commodity with cost
disadvantage
Countless
Chapter 3
Source: Ungerer, M., Pretorius, M. & Herholdt, J. 2011.
Viable Business Strategies. Johannesburg: Knowres.
M U
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The logic of the book
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Source: Ungerer, M., Pretorius, M. & Herholdt, J. 2011.
Viable Business Strategies. Johannesburg: Knowres.
M U
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Reinforcing loops at the core of Growth Engines
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Source: Ungerer, M., Pretorius, M. & Herholdt, J. 2011.
Viable Business Strategies. Johannesburg: Knowres.
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The concept of a Strategic Architecture – the Strategist as an Architect
• The strategic architecture serves as an integrating framework and view of the total strategic landscape, as the firm sees it at a specific point in time.
• The strategic architecture determines a firm’s strategic behaviour (thus its competitiveness and also its success), but again that will change and be influenced as we carry out our intent in the living present (p.143).
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Strategic structure/architecture determines strategic behaviour
Chapter 4
Source: Ungerer, M., Pretorius, M. & Herholdt, J. 2011.
Viable Business Strategies. Johannesburg: Knowres.
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Strategic Architecture: The Foundation
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Chapter 4
Source: Ungerer, M., Pretorius, M. & Herholdt, J. 2011.
Viable Business Strategies. Johannesburg: Knowres.
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The Business model: The Growth Engine
• In essence, a business model represents the choices a firm makes on where to compete in which market space, with what products or services, by leveraging resources and capabilities for competitive benefits, to support a defined competitive position.
• The cumulative results of a participation, resource and competitive strategy, is stakeholder value based on a profit strategy that benefits investors, employees, communities and regulators.
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Chapter 4
Source: Ungerer, M., Pretorius, M. & Herholdt, J. 2011.
Viable Business Strategies. Johannesburg: Knowres.
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The business model in context
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Chapter 4
Source: Ungerer, M., Pretorius, M. & Herholdt, J. 2011.
Viable Business Strategies. Johannesburg: Knowres.
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The business model: Participative strategy view
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Chapter 4
Source: Ungerer, M., Pretorius, M. & Herholdt, J. 2011.
Viable Business Strategies. Johannesburg: Knowres.
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The business model: Resource strategy perspective
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Chapter 4
Source: Ungerer, M., Pretorius, M. & Herholdt, J. 2011.
Viable Business Strategies. Johannesburg: Knowres.
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Competitive Strategy perspective: The basis for competitive advantage
Chapter 4
Source: Ungerer, M., Pretorius, M. & Herholdt, J. 2011.
Viable Business Strategies. Johannesburg: Knowres.
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An Activity System or Activity Map: The basis for competitiveness
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Source: Michael E. Porter “What is Strategy” Harvard Business Review, Nov-Dec 1966
Chapter 4
Source: Ungerer, M., Pretorius, M. & Herholdt, J. 2011.
Viable Business Strategies. Johannesburg: Knowres.
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Profit strategy / Profit model
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Product
Product Options Accessories Financing Services
The Profit Zone
Sell the Box, or
…
… Sell the Whole Solution
Chapter 4
Source: Ungerer, M., Pretorius, M. & Herholdt, J. 2011.
Viable Business Strategies. Johannesburg: Knowres.
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Strategic Architecture: The Foundation
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Chapter 4
Source: Ungerer, M., Pretorius, M. & Herholdt, J. 2011.
Viable Business Strategies. Johannesburg: Knowres.
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Sustainability starts with an ability to articulate the strategy of the firm
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• “I try for months to get an initiative off the ground, and then it is shut down because ‘it doesn’t fit the strategy.’ •Why didn’t anyone tell me that at the beginning?” •“I don’t know whether I should be pursuing this market opportunity. I get mixed signals from the powers that be.” •“Why are we bidding on this customer’s business again? We lost it last year, and I thought we agreed then not to waste our time chasing the contract!” •“Should I cut the price for this customer? I don’t know if we would be better off winning the deal at a lower price or just losing the business.”
Confusion Dis-empowerment Wait
Source: Ungerer, M., Pretorius, M. & Herholdt, J. 2011.
Viable Business Strategies. Johannesburg: Knowres.
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Elements to increase the robustness of a business model
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Chapter 5
Growth is not a never ending concept – Growth stalls is a reality Limits to success/growth Law of entropy
Main reasons for Growth stalls: Premium position captivity Innovation breakdown Premature core abandonment
Guidelines for sustainable growth
Clear articulation of strategy Solid theory of the business: Environment, mission, Core competencies Internal and external options to infuse energy Face the changing trends Fresh eyes reviews Business model reinvention Focus-areas for strategy robustness Leverage core capabilities/competencies
Source: Ungerer, M., Pretorius, M. & Herholdt, J. 2011.
Viable Business Strategies. Johannesburg: Knowres.
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The logic of the book
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Source: Ungerer, M., Pretorius, M. & Herholdt, J. 2011.
Viable Business Strategies. Johannesburg: Knowres.
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Balancing loops at the core of Strategy Execution
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Source: Ungerer, M., Pretorius, M. & Herholdt, J. 2011.
Viable Business Strategies. Johannesburg: Knowres.
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The strategy execution cycle
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Chapter 6
Source: Ungerer, M., Pretorius, M. & Herholdt, J. 2011.
Viable Business Strategies. Johannesburg: Knowres.
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The Strategy Map as a translation tool
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The Strategy Maps
consists of: • Strategic Goals
• Key Success Indicators
• Cause and effect
relationships
AGREE on
and
pursue
COMMON
targets
Chapter 6
Source: Ungerer, M., Pretorius, M. & Herholdt, J. 2011.
Viable Business Strategies. Johannesburg: Knowres.
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Strategic initiatives to change performance on Strategic Goals
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Chapter 6
Source: Ungerer, M., Pretorius, M. & Herholdt, J. 2011.
Viable Business Strategies. Johannesburg: Knowres.
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Strategy description on one page
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Chapter 6
Source: Ungerer, M., Pretorius, M. & Herholdt, J. 2011.
Viable Business Strategies. Johannesburg: Knowres.
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Strategic rhythm
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Chapter 6
Source: Ungerer, M., Pretorius, M. & Herholdt, J. 2011.
Viable Business Strategies. Johannesburg: Knowres.
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Chapter 6
Source: Ungerer, M., Pretorius, M. & Herholdt, J. 2011.
Viable Business Strategies. Johannesburg: Knowres.
M U
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The logic of the book
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Source: Ungerer, M., Pretorius, M. & Herholdt, J. 2011.
Viable Business Strategies. Johannesburg: Knowres.
M U
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Stimulating strategic conversations
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Chapter 7
Source: Ungerer, M., Pretorius, M. & Herholdt, J. 2011.
Viable Business Strategies. Johannesburg: Knowres.
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Hosting Strategic Conversations
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Chapter 7
Source: Ungerer, M., Pretorius, M. & Herholdt, J. 2011.
Viable Business Strategies. Johannesburg: Knowres.
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Chapter 7
Source: Ungerer, M., Pretorius, M. & Herholdt, J. 2011.
Viable Business Strategies. Johannesburg: Knowres.
M U
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Strategic success is the result of the choices we make (or not make),
and our ability to execute our plans
Source: Ungerer, M., Pretorius, M. & Herholdt, J. 2011.
Viable Business Strategies. Johannesburg: Knowres.
M U
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Any Questions and/or Comments?
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