sm 472.42 10 winter 2012. review strategy is: resolving tension between what a firm should do &...

SM

472.42

10

Winter 2012

Review

Strategy is: resolving tension between

• what a firm SHOULD do

&

• what it CAN do

&

• what it WANTS to do

How to get all 3 lined up and pulling in the same direction?

Management preferences

preferences are the junction between• needs

• beliefs

• reality


managers drive strategy• energy

• impetus

A forward—even a very good forward—will struggle on defence.


“Many top-level managers do not have an explicit and useful way of thinking about personal values…”

This is one place where you may have an advantage.


roots basic needs

• power

• achievement

• security

• recognition

beliefs

Most business-people think they don’t have beliefs—that they will (and can) do what’s necessary for the firm to succeed.


roots basic needs

• power

• achievement

• security

• recognition

beliefs

Preferences come from person’s core

In fact, they reveal the core of the person as a manager.


beliefs goals

• we must grow in volume and roi maintain a conservative financial structure be measured against the best


beliefs product market focus

• don’t diversify except where our technology can be applied

• we must not be dependent on one single product line run businesses where we not expert

• we can manage a range of industries


beliefs value proposition

• market share come through technically superior products a known brand name product quality innovation

» in processes and basic products price


beliefs core activities

• we’re a production company a sales company a profit-making company



• the product is everything

• no, marketing is everything

• no, customer happiness is everything

• we don’t make sales, we build relationships



• we must lead in keeping costs down and quality up control every input to our products

• we are prepared to pay a price to remain flexible


beliefs job context

• scope of job

• how success is measured how it’s rewarded

• what consequences of failure are


beliefs job definition

• What are you supposed to do?

• What am I supposed to do?


beliefs job relations

• What were people “promised?” Fun? Hard work? A fierce fight with competitors? Stability?

Employee expectations are powerful.

Preference Mismatches

proposedpreferred

reality


Your strategist is incompetent

proposedpreferred

reality


A simple problem—not easy to solve, but easy to outline.

proposedpreferred

reality


1st cause:Managers stick with old strategy even when conditions change.

proposedpreferred

reality


2nd cause:Managers become committed to new strategy that doesn’t fit capabilities or environment.

proposedpreferred

reality


Hardest problem:Managers don’t realize they have preferences

proposedpreferred

reality


2nd hardest problem:Frozen preferences

proposedpreferred

reality

Preferences Strategy

1. identify mismatch• What should management prefer?

• Do they?

• What needs to change?


2. test the linkages Can you sell this?

• Can they?

Do they even know what “this” is?


3. close the gap minimal conflict

Really?


3. close the gap moderate conflict

• test—flexibility

Can the old dog learn new tricks? Can he be enthusiastic about

them?


close the gap• serious conflict

Can organization survive change in leadership?


3.close the gap the challenge

• hold to the strategy

• change the organization

Compromise doesn’t work here

It will feel good but you’ll come to grief


3. close the gap middle managers

• dislike risk

• probably not consistent



• minimal conflict a nice possibility

But probably self-deception



• moderate conflict a better situation

Can be some give and take



• serious conflict probably looking at changing people

Mgmt preference analysis

purpose identify mismatches

• strategic necessities

vs

• beliefs

bring these to surface find a resolution to discrepancy

A happy note

this will also be true for competitors• most managers have limited repertoire

• enables you to predict

Also opens possibility of “fish out of water”

Stakeholder preference

Irrelevant? Hindrance? Legitimate? Essential?

To be implemented successfully over time, any strategy must command the creativity, energy and desire of the company’s members.

K. R. Andrews

Process

1. Identify stakeholders

2. Define their interests

3. Compare strategy to interests

4. Align strategy & interests

Process

1. Identify stakeholders Internal External

Process

1. Identify stakeholders Internal

• Owner

• Shareholders

• Lenders

• Management team

• Employees

• Unions

Process

1. Identify stakeholders External

• Customers

• Government

• Interest groups

• Community

• Suppliers

• Competitors?

Process

2. Define stakeholders’ interests• What’s “best” for each stakeholder

Do they know it?

• Should you deliver it?

• Does the strategy drive them towards their “best” interest? away from their “best” interest?

• Find potential alliances of interest

Process

3. Strategy ? Interests• Likely consequences of your actions?

What reactions will stakeholders have?

• Your personal feeling about your actions? How do you weigh interests of others? How do you set priorities? What are the effects?

• Are you prepared to defend your decision? Can you justify your action to others?

Process

Strategy = Interests• If likely to object

Can they be brought into alignment?

• Why not?

Don’t stakeholders have the same fundamental interests—to benefit from the success of the company?

sm 472.42 10 winter 2012. review strategy is: resolving tension between what a firm should do &...

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