strategic planning and implementation professor dr alex roberts phd mba fcca fcis mcibs december...

Strategic Planning and Implementation

Professor Dr Alex Roberts PhD MBA FCCA FCIS MCIBS

December 2005

Copyright © Alexander Roberts 2005 All rights reserved.

Professor Alexander Roberts

Professor Alexander Roberts PhD, MBA, FCCA, FCIS, MCIBS. • Professor Roberts lectures, researches, and consults for organisations on strategy development, implementation and

related issues. The practical relevance of his work is underpinned by 15 years in senior management, including 10 years at executive director level within multinational subsidiaries of American and European based businesses. In addition to being a qualified Accountant, Chartered Secretary and Banker, Professor Roberts holds MBA and PhD (1997) degrees from London Business School. He has extensive executive and postgraduate management development experience and founded both the Centre for Strategy Development and Implementation (CSDI) and the Doctorate in Business Administration (DBA) in Strategic Focus programme at EBS. More than 200 senior managers around the world are studying his research and ideas on Strategic Focus. Professor Roberts is also author/co-author of several MBA/DBA distance learning texts and forthcoming books in Making Strategies Work, Project Management, Strategic Risk Management, Alliances and Partnerships and Mergers and Acquisitions.

• Contact details. Edinburgh Business School, Heriot-Watt University, Edinburgh EH14 4AS• Tel: 0131 451 3922 (direct) 0131 451 3090 (office) Email: [email protected], [email protected]


Case Study – Xugong

• I enjoyed spending the day with you and hope we have the opportunity to meet up again in the future.

• The case study about Xugong, a Chinese company, has been developed solely to illustrate how the tools and techniques reviewed later in this presentation can be applied. It is not intended to be an illustration of either good or bad management. More information would be required before any conclusions could be reached. In particular, the author has not had any direct contact with the company nor its competitors. It is likely that the company possesses much more information and analysis than has been developed here, and hence may have developed strategy implementation intentions that cover the major issues.

• However, the case study is an example of what can be achieved quickly when the correct way of thinking is applied to a limited amount of information. The initial thrust of Xugong’s strategy was analysed from an article in the China Daily newspaper in November 2004. My knowledge of the Chinese environment, which has been gained over the past 5 years, plus a few questions to knowledgeable business people in China, provided additional information for analysis. An article in the China Daily in November 2005 (read when I was visiting China at that time) provided the information to update the case with the Chinese Government’s intentions on a range of environmental issues. It also allowed me to quiz my contacts about developments. The developments were consistent with the opinions expressed by knowledgeable people that I talked to when I was visiting China a year earlier (in November 2004). The earlier analysis proved sound.

• The initial analytical exercise was completed by me within a couple of hours. If I was advising a competitor of Xugong, then additional work would be undertaken to deepen the analysis and hence the quality of the conclusions. However, the exercise demonstrates what can be done quite quickly if you spend the time to learn the necessary tools and techniques, and practice applying these regularly.

• The case and references to China should not be taken as a criticism of Chinese business nor of the Chinese Government. I have a deep respect for them, just like the respect I hold for the people I have met in Iran during my three visits over the past year.

• Should you wish more information on applying the tools and techniques, then in the first instance please contact Mr Faghani at ICTEC in Tehran.

• I wish you well in your future endeavours.


Strategic Focus Engineering©

• Engineer our businesses to achieve and deliver competitive advantage through Strategic Focus

• 200 Senior managers around the globe

• Practice – efforts underway, no clear leaders, yet


Typical planning process perceptions

time

Optimistic

Pessimistic

“Let’s getgoing!”

“This takestime!”

“This isgetting hard!”

“Where arethe results?”

“An insight!”

“Another!”

“This is actually quite useful.“

“Everybody should

do this!”

“I’m lost!”


Strategic Focus Wheel

MakingStrategies

Work

Project ManagementOf Change

Strategic Risk

Management

Strategic Planning


Is Iran finished?

• Continue to compete in the same ways• Around 50% of you and your people

• Will be out of work within 5 years or so• Could mean - no money, no house, no car, no holidays, no wife, no children

• Ferocious competitor – the Tiger is coming• 20+ years learning to fight the toughest competitors• Very confident – joined the World Trade Organisation• Trade deal - $ billions – gas/oil

• Given them into your markets• “The Tiger is in with the lambs”

• Square/Bazaar• 300 years ago led the middle East, and now?• Shoes, clothes, Persian carpets, toys, cutlery – China• Cooking pots and pans – Germany• Which industries will be next


Training and development for tigers and tiger cubsIQ – intellectual intelligence

• Higher and higher qualifications

EQ – emotional intelligence • Motivate self, control impulses and moods, understand and empathise with others

EQ + IQ = 35% of the reason for a manager’s success

PI – practical intelligence• The Japanese approach to management development• Make things work• Recognise things that can, and cannot, work• TRIZ – Theory of Inventive Problem Solving

Only the most clever and CUNNING tigers survive.

How much practical intelligence does Iran have?


Practical intelligence – Iran/Iraq conflict

In theory Iran must lose • Equipment not modern• Not enough equipment• West – no new equipment• West – no spare parts• West – no repairs

Why did Iran not lose? – practical intelligence halted the Iraqi tiger• Adapted to resources available• Created own armaments capability

• Creative in repair and refurbishment• Utilised what was available innovatively

• Took some equipment from the Iraqis

What can you take from the West and others? • Harness your practical intelligence and our models• Soar like the Eagles


Overview

• One thing you would like out of today

• Learning from “Winners” and “Best Practice”

• Strategy Process Model

• Review the basic strategy models – PEST, 5 Forces, Value Chain

• What the research evidence is telling us

• Case study

• Scenario Planning

• Strategic Risk Management

• Making Strategies Work

Learning from “winners” – best practice

Professor Alexander Roberts PhD MBA FCCA FCIS MCIBS


Learning from “winners”

• “In Search of Excellence” Peters & Waterman – 1982

• Book Reprinted – 1989, 1990, 1991,1992, 1995, 1998, 2004• Successful book – managers followed the recipes

• Purpose• Top management consultants• Studied “everything” about the top financially performing companies• “Learned” the secrets of their success• Sold this to other companies

• Next few years• What happened?

• What happened to companies that tried to imitate the “Excellent Companies”?


“Successful Companies” (1)

• American Airlines, Amoco, Apple, Arco, Avon, Bank of America, Beatrice Foods, Bechtel, Bell & Howell, Bloomingdale’s, Blue Bell, Boeing, Braniff, Bristol Myers, Burger King, Cadbury Schweppes, Canon, Caterpillar, Chase Manhattan Bank, Cheesborough Pond’s, Citibank, Conoco, Consolidated Foods, Corning Glass, Crompton Corduroy, Crown Zellerback, Dana, Data General, (John) Deere, Delat Airlines, Digital Equipment Corp., (Walt) Disney, Dow, Du Pont, Emerson Electric, Exxon, Federated Stores, Fingerhut, Fluor, Ford, Foxboro, Frito-Lay, General Electric, General Motors, Harris Corp.,

• (Continued………


“Successful Companies” (2)

• Heineken, Heinz, HP, Holiday Inns, Honda, Honeywell, ICI, Intel, IBM, International harvester, ITT, Johnson & Johnson, K Mart, Kodak, Kyocera, Lambert Pharmacal, Levi Strauss, MacDonalds, Marts, Matsushita, Maytag, Mobil, Motorola, NASA, NCR, Nucor, Pepsi Co., Platt Clothiers, Proctor and Gamble, Raychem, Reliance Electric, RMI, ROLM, Royal Dutch Shell, Schlumberger, Sears, Sony, Standard Oil, Tandem, Texas Instruments, 3M, Scotch Tape, Toyota, Transamerica Corp., TRW, Tupperware, United Airlines, United Artists, United Technologies, Utah Consolidated, Wal-Mart, Wang Labs, Western Electric, Westinghouse.


Learning from “Winners” and “Best Practice”

• 2005 - “Research confirms there are no permanently excellent companies, just as there are no permanently excellent industries.”

• Blue Ocean Strategy 2005 – Kim and Mauborgne

• 1980s - In Search of Excellence – Peters and Waterman• Around one hundred excellent companies • Results over 25 years• Now – less than 10% still excellent Roberts –Edinburgh Business School

• What happened to the organisations that copied them?

• “Winners and Best Practice” – how to fight the battles of the past

• You will need to do it your own way – an Iranian way


Lesson from “Excellence”

• Be very careful what you “learn” from other companies

• Consultants sell the same solutions to everybody

• Your specific situation will be unique to your organisation

• Devise your own unique way to compete

• Develop your own way to support this

• Guide or process on how to develop approach


Strategic Planning guide or process

• A review of the past 50+ years shows• Organisations tend to make the same mistakes• The mistakes tend to be basic

• Being “modern” doesn’t make any difference

• Spend time, master the basics very thoroughly


Strategy Process Model © Prof A Scott

Strategists Objectives

The general environment

The industry & international environment

Internal factors

Competitive position

Analysis and

diagnosis

Who decides to do what

Generic strategy alternatives

Strategy variations

Strategy choice Choice

Resources and structure

Resource allocation

Evaluationand control Implementation


Strategy Process Analysis© Prof A Scott

Analysis and

diagnosis

Who decides to do what

Choice

Implementation

Principal AgentProspector Analyser Defender ReactorRisk aversionTeam composition

Mission Means and endsShareholder Wealth Profit MaximisationGap Analysis Growth VectorObjectives: credible, quantifiable, economic, financial

Strategists Objectives

Macroeconomic AnalysisForecastingPEST

Demand and supplyPrice determinationElasticityCompetition: perfect, oligopoly, monopolyCompetitive advantage of nationsExchange rates

Value Chain CompetenceArchitecture ExperienceRatios Cash flowScale economies SynergyScope economies BenchmarkingFinancial structure

Life cycle Market sharePortfolio DifferentiationETOPS SAPSWOT Five forcesCompetitive reaction Strategic groupsElements of competitive advantage

Environment Industry & Int Environment Internal factors Competitive position

Diversification: related and unrelatedVertical integrationMergers and AcquisitionsJoint ventures and alliancesPricing: leadership, limit, predatory

Corporate and Business StrategyStability, expansion, retrenchmentCost leadershipDifferentiationFocusSegmentation

Risk analysis Net present valueFamiliarity ScenariosBreak even PaybackSensitivity Game theory

Generic Alternatives Strategy Variations Choice

Divisional, functional, matrixManagerial styleCritical success factorsIncentives

Opportunity costMarginal analysisOptimisation

RatiosPlanning and control matrixMonitoring systems

Resources and structure Resource allocation Evaluation and control

CommunicationManagement style

Strategic Planning- Reviewing the basics



What are we trying to do?

• Figure out• What people will buy

• What price they are prepared to pay

• How to produce and deliver - • At a cost less than the price (a profit)• To the quality required i.e. In a way that customers will not return the

goods/services and want their money back • So that customers will buy again or recommend others to buy• In a way that competitors cannot copy

• How the above things will change through time


Corporate Strategy – What is it about?

• Direction and scope of an organisation over the long-term:

• Achieving advantage for the organisation through its configuration of resources

• Within a changing environment

• To meet the needs of markets

• To fulfil stakeholder expectations.

Johnson and Scholes 1997


China - Xugong Construction Machinery Group (1) – Nov 2004

• Position• Large in Chinese domestic market – US $2.1billion• Exports worth US $40 million per annum• Very small share of global market

• Ambition• Become a global player• Global brand• Exports worth US $1 billion by 2010

• How• Focus on developing and neighbouring countries• Gradually enter developed markets


Analysing the Environment – PEST - Xugong China 2004

• Political• Stable one party state, gradual change• Joined World Trade Organisation – more open markets

• Economic • Fiercely competitive markets – not a single market• High growth levels• Inflationary pressures• Skilled labour shortages• Energy shortages• Clean water shortages

• Social Values• Migration to the cities• Ageing population• High pollution levels becoming less acceptable

• Technologies• Mixed – quality still an issue• New technologies being introduced

• World class quality within 10 years


China – Additional PEST 2005• Products with high energy use in the manufacturing process

• To be discouraged in general - Discourage exports of such products• Deregulation

• Land use, water, coal, oil, electricity, gas and other related products• Windfall taxes if prices too high

• Let the markets dictate rates for utilities• Taxes will be imposed on inefficient use• Market forces already play a role in 90% of commodities and services

• More input into career training• Shortage of high quality technicians• Holding back industrialisation and modernisation

• In-flight internet service• Supply it or risk losing market share• 38% of frequent travellers willing to pay for high speed access – Internet/coporate nets access

• Relations with Europe• President – Hu Jintao – recent visit to Europe (2005)• Intensifying co-operation, signing business agreements, renewable energy technology• Avoiding trade war/sanctions??


Model for Structural AnalysisSource: Adapted from M E Porter, Competitive Strategy, Free Press, 1980

Potentialentrants

CompetitiveRivalrySuppliers

Bargainingpower

Threat ofentrants

Buyers

Bargainingpower

Substitutes

Threat ofsubstitutes


Analysing the Environment

Industry Structure - Porter’s 5 Forces - Checklist

Rivalry* Industry Growth * Capacity* Product Differences * Brand Identity* Switching Costs * Concentration and Balance* Exit Barriers

Buyer Power* Unique Products * Brand Strength* Buyer Switching Costs

Supplier Power* Differentiation * Supplier Switching Costs* Substitutes * Supplier Concentration* Volume Importance * Cost/Differentiation

Entry Barriers* Economics of Scale * Switching Costs* Proprietary Product Differences * Capital* Brand Identity * Cost Advantages* Government Policy


Changed competitive horizons- The World

• No Uncontested Markets

• Capacity Greater Than Demand

• Markets Less Forgiving

• Technology Advantages Short Lived

• Customers want it now

• Customers want it inexpensively

• Towards “perfect information” • Sources of supply • Prices • Tailoring and re-tailoring……………offerings

• Porter says – Innovation and Optimisation are Critical


WTO Tigers - healthy this time

Responses to date • Automation • Training and development • Cut costs • Outsourcing• Mergers and Acquisitions

The “cost frontier” is in sight• Big wins are over• “Corporate anorexia” if overdone

Searching for new ways to compete• “Blue Ocean” strategy• Managing change is key skill set

Healthy Tigers are getting more adventurous and going further afield to eat


The Generic Value Chain


Linking to customers value chainsAdvantages – Example

• 1) Technology development and sales and marketing• Invited to research labs • Opinions requested on new developments

• Advantage – advanced knowledge/closer to major customers requirements• 2) Alpha and Beta testing

• Early models• Advantage – building up experience

• 3) Procurement advantages• Privileged access to early supplies

• Advantage – first to market• 4) Production support

• Advantage – first to market• 5) Sales and marketing support

• Advantage – pull through using supplier’s brand image• Advantages

• Meeting needs more closely, faster time to market, experience curve and higher efficiency


Resources

• Financial• Substantial resources – time to build, train …..• Long-term commitment – likely losses in first few years

• Human• Strategic job families• Commitment, flexibility, skill levels• Teamworking• Leadership

• Physical• Level of Automation, Robotics, facilities• Flexibility, best fit with objectives

• Intangible• Manufacturing control systems, e.g. CIM, TQM (Six Sigma)• Supply chain management systems, Distribution management systems • Human management systems …• Facilities management

• Everything in the value chain and how it is to be integrated


Innovation and Optimisation

• Value Chain Re-configuration

• Value chain – the configuration of activities that takes a series of inputs and transforms them into the products and services customers DEMAND

• Example – Mortgages for house purchase

• 1980s Chain• Depositors Building Societies Borrowers

• 2005 Chain• Depositors …. Up to 40+ parties …….. Borrowers

• All value chains under constant re-evaluation


The Tiger is coming

The China tiger• Restless, hungry and very fierce competitor• Iran/China trade/oil deal• May pause to digest last meal

The world trade organisation (WTO) tigers• Deregulation – Open market competition

The WTO tigers’ environment is changing• Educated workforces, capacity > demand, the internet, unforgiving markets, technology

advantages short lived

……they are getting very hungry and you might be the next meal!!

China is not the first• Japan in the 1980s/1990s• The environment is much more hostile


Swatch strategies to fight the Japanese – 1980s/90s• One of the very few Western technological mass-production industries to successfully

compete with the Japanese

• From the most expensive country in the world – Switzerland

• 15 years – no quick fix!!

• Start – Quality – Swiss watch industry falling apart, many small producers• 1 - Consolidation of the industry (mergers) – reduce costs• 2 – Cost leadership – automation, chase industry volume, prices down• 3 – Product development – plastic watch• 4 – Differentiation – created a new category – Fashion item• 5 – Market penetration – back into main category • 6 – Differentiation – branding, rare designs • 7 – Diversification – Swatch mobile


New Opportunities Last 30 years – next 30 years

• Industries created in a “meaningful way” in the last 30 years• Mutual funds, cell phones, gas-fired electricity plants, biotechnology, discount

retail, express package delivery, minivans, snowboards, coffee bars, home videos ……… Source: Blue Ocean Strategy (2005) Kim & Mauborgne

• Faster speed of development or faster speed of global exploitation?

• Next 30 years• More new industries will appear – some will disappear• The technologies already exist

• Change will remain a constant


Stable Dynamic

Complex

Simple

Production systems

M Jensen (1993) – based on MIntzberg Market characteristics

How can you prosper in this

hostile environment?


Different structures for a different situation

Stable Dynamic

MARKET

Simple

ComplexP

RO

DU

CT

ION

From Jensen 1993 and Henry Mintzberg Paper 1982


Mintzberg’s Six Major Forms of Differentiation

• Reliability• Durability• Super performance


Back to basics

“Competitive strategy is about being different. It means deliberately choosing a different set of activities to deliver a unique mix of value” (Porter, 1996,p.64)

“…the essence of strategy is in the activities - choosing to perform activities differently or to perform different activities than rivals” (p.64).


What the research is telling us

• Some of the Strategists• 2004 – Successes in the turbulent times of the 1990s – Focus on the core Zook and Allen

• 2005 - Blue Ocean Strategy Kim and Mauborgne - - Innovate – seek clear water• 2005 - November – Michael Porter World Class Thinking - Birmingham, UK - Innovation and Optimisation Critical• 2005 – November – Gary Hamel World Class Thinking – Birmingham, UK - Innovation and Creativity through people• 2005 – December – HBR – Compete on complex systems or compete on volume

• Alignment with Strategic Intent• 2005 Managing Human Capital to Execute Strategy Workforce Scorecard - Huselid, Becker, Beatty (Ulrich)

• 2005 Organization design and control Levers of Organisation Design – Simons

• 2004 Creating Organizational Excellence by Identifying, Developing, and Promoting Your Best People Talent Management Handbook - Editors Berger and Berger

• …………….. Marketing, operations, logistics………..

• We need to change the way a generation of managers thinks

• Strategic Focus Engineering©• Engineer our businesses to achieve and deliver competitive advantage through Strategic Focus• 200 Senior managers around the globe• Practice – efforts underway, no clear leaders, yet


Komatsu versus Caterpillar – 1960/70’s• Komatsu of Japan

• An emerging economy• Large in domestic market place

• Caterpillar of USA • Advanced economy• Dominant player globally

• Plan of attack• Enter low volume - Developing markets

• Building volume and economies of scale• Improve product quality• Develop quality brand image• Attack developed markets

• Was successful• Badly damaged Caterpillar


China - Xugong Construction Machinery Group (1) – Nov 2004

• Position• Large in Chinese domestic market – US $2.1billion• Exports worth US $40 million per annum• Very small share of global market

• Ambition• Become a global player• Global brand• Exports worth US $1 billion by 2010

• How• Focus on developing and neighbouring countries• Gradually enter developed markets


China - Xugong Construction Machinery Group (2)

• Action• Consolidate (grow) positions in Southeast Asia, Middle East and North America• Gradually enter Africa, South America and Europe

• How• Partnerships with sales agents in new markets for sales and aftersales service

• Strategy • What

• Achieve internationally advanced levels in 5 to 10 years in• Product quality, Techniques and technology, Production equipment and productivity

• BY • Spending more on R&D• Purchasing or establishing new enterprises in foreign countries• Inviting foreign investment

• Question • Will it be successful just like Komatsu almost 40 years earlier?


Changed Competitive Horizons versus the 1960/70s

• No Uncontested Markets

• Capacity Greater Than Demand

• Markets Less Forgiving

• Technology Advantages Short Lived

• Impact of the internet

Optimisation and Innovation Critical

• Likely responses of Caterpillar, Komatsu and other competitors this time around??©AR


The problem for Xugong

• They have knowledge of the present and the past • BUT

• They must compete for the future and the future will always be uncertain

• What if the past is not a good guide to the future?

• What if there are different possibilities for the future and no way of estimating which is significantly more likely to occur?

• Problems• Getting some idea of what the alternative futures look like• Making use of this information – getting from analysis to action


Lesson from “Excellence”

• Be very careful what you “learn” from other companies

• Consultants sell the same solutions to everybody

• Your specific situation will be unique to your organisation

• Devise your own unique way to compete

• Develop your own way to support this

• Guide or process on how to develop approach


What to do about the Chinese

• Choices• Compete head on• Cooperate

• Value chain enhancing cooperations• Be careful who you choose

• Exit

• Decision making• Run scenarios• Company-by-company• Strategic objectives - sources of competitive advantage• Value chain analysis• Product-by-product• Market-by-market


Learning from “winners” and best practice - China• The foreign winners consistently to date

• Ignored the Chinese domestic market• Cheap base for manufacturing and export processing• There are a few exceptions

• The losers to date • Early wins• Misunderstood the market• Expansion problems – mass market

• Low prices• Fragmented customer bases• Unreliable distribution• Vicious domestic competition

• The “Myths”• China is one market

• There are regional and other sub-markets• The economy is still state run• A local partner is always needed


The problem for Xugong

• They have knowledge of the present and the past • BUT

• They must compete for the future and the future will always be uncertain

• What if the past is not a good guide to the future?

• What if there are different possibilities for the future and no way of estimating which is significantly more likely to occur?

• Problems• Getting some idea of what the alternative futures look like• Making use of this information – getting from analysis to action

Scenario Planning



Scenario Planning

• Uncertain future• Always risky

• No risk, no profit• How muck risk is the company taking on?

• Future looks clear• Future looks unclear

• Search for feasible alternative futures• Stories about the future• Look for common themes• Choose a strategy to follow• Make contingency plans for major alternatives• Environmental scanning


Example – Economic growth and fuel (Scenario 1)

• World economy grows strongly• Oil price stays high• Marginal oil fields become profitable• Exploration expands• In the longer-term

• Supply increases• Price stabilises or reduces

• Alternative fuels become viable• Investment in alternatives fuels increases

• Higher demand for fuel efficient cars• Pressure increases for cars using alternative fuels


Example – Economic growth and fuel (Scenario 2)

• World economy goes into recession• Oil price stabilises/reduces• Marginal oil fields become unprofitable

• Fields closed

• Exploration reduces• In the longer-term

• Supply decreases• Price stabilises or starts to increase

• Alternative fuels become less viable• Investment in alternatives fuels decreases

• Lower pressure to introduce cars using alternative fuels


Ask specific questions

• Should we invest in• Developing product xyz?• Developing market in abc?• Developing foreign sales and service subsidiaries or partnerships?• Developing foreign production units?

• What would we like to know before proceeding?

• Consider all elements of the value chain


Some scenarios for Xugong China - Geopolitical frameworks

• Question – What will the world’s market places look like 5 or 10 years into the future?

• Scenarios• 1) Open global economy

• 2) Patchwork• Trading blocks

• 3) Protected economies• Trading blocks/countries get stronger

• One part of solution to Scenarios• Set up foreign subsidiaries, partnerships of alliances • Consider on a country by country, and/or a trading block by trading block basis


Problems using scenario planning

• Dominant mindsets or wishful thinking• Knowing the questions to ask• Good facilitator to challenge the thinking as it evolves

• Trying to get one right answer• Not being acceptable to show we don’t know

• Not following through into action• Resource allocation• Budgeting • Value chain adjustments

• Problem • how to ensure critical changes take place?

Strategic Risk Management



The Risk Profile

• Strategic Risk• Risk of environment changing unexpectedly but strategy does not• Risk of environment changing as expected but implementation causes strategy to

drift

• Change Risk• Risks involved in bringing about the changes the strategy requires

• Operational Risk• Risks involved in normal day-to-day operations

• Unknowable Risk• Reduce levels of unknowables through Scenario Planning• Contingency planning


Xugong – Market places are highly competitive and likely to remain this way in future

• Using just this above piece of information, the earlier PEST analysis and Xugong’s expressed strategy

• What is the implication of this for strategic drift?


One example of possible Strategic Drift risks - Xugong China

• Market place is highly competitive• High quality sales and service partners difficult to recruit

• Lower quality partners recruited• Poor quality image is created

• Entry to developed markets damaged• May take a further decade to correct bad image• May require substantial additional funding

• The additional funding may not be available• Other parts of the strategy may start to drift • i.e. the drive for Product quality, Techniques and technology, Production equipment and

productivity to reach world class• Why?

• Spending on R&D reduced • Purchasing or establishing new enterprises in foreign countries reduced or restricted• Foreign investors may find the company less attractive when future stages of funding are

required

• Result – Strategy failure due to strategic drift


Managing Change Risk

• Strategic or operational change

• Project management to ensure changes take place

• Breakdown into work packages, contracts, resources, timescales


Unknowable risks

• Who can truly know the unknowable?

• Can reduce the problem by scenario planning but cannot eliminate it• We do our best to prepare our minds and our organisations to face the

challenges• The alternative is to assume we will always have fortunate circumstances

• What happens when this changes and we are not ready for it?

Making Strategies Work

Professor Alexander Roberts PhD MBA FCCA FCIS MCBS

Director – Centre for Strategy Development and Implementation


Making Strategies Work is difficult

• 80% failure rate of strategic change efforts

• Implementation failure a primary cause of CEOs getting sacked

• But very little direct guidance in management theory/writing


Beware of Consultants bearing Management Tools…

“The transformational strategy of Enron fits well with its skills in risk management, deal making, and finance.”

“Enron supports its visionary, first-mover strategies by poaching talent from investment banks commercial banks, consulting firms, and top-tier

business schools. Those managers know how to solve problems in creative ways...”.

- McKinsey Quarterly (1999)


Some Management Fashions

Management By Objectives (MBO)Capital Asset Pricing Model (CAPM)Theory X and Theory YT-GroupsManagement ScienceMatrix ManagementDiversificationDecentralizationConglomeratesOptimal Investment PortfoliosThe Systems ApproachThe Managerial GridEconometric ModelsStrategic PlanningS-curves and product life cyclesZero Based BudgetingPortfolio Matrix – BCG matrixAgile Management/organisationsVirtual OrganizationPIMSThe New Future Theory

Mission and Vision StatementsCustomer SegmentationOutsourcingCustomer surveysCustomer Relationship ManagementCorporate Code of EthicsGrowth StrategiesPerformance-related Pay (PRP)Contingency Planning Change Management ProgramKnowledge Management DownsizingSupply Chain IntegrationEconomic Value-Added AnalysisActivity-based ManagementMerger Integration TeamsCorporate Venturing Stock BuybacksValue Chain AnalysisCultural WebMcKinsey 7s Model

Centralized Corporate StrategyLimits to GrowthIntuitive/Analytical ManagementSearch for ExcellenceManagement By Walking AroundRestructuringEntrepreneurshipCompetitive StrategiesTheory ZQuality CirclesStrategic Alliances and PartnershipsGlobal RationalizationTotal Quality Management (TQM)Core CompetenciesSelf-directed TeamsBenchmarkingJust-in-Time (JIT)Cycle Reduction TimeRestructuringHorizontal OrganizationsEmpowerment

Scenario PlanningInternal Auditing (SWOT)Strategy ClockStakeholder MappingEmployee ParticipationRightsizing Joint VenturesDelayeringOne Minute ManagerManagement Process Re-engineeringInternal MarketsOrder Cycle ManagementTime Based CompetitionThe Learning OrganizationSix SigmaThe Balanced ScorecardBusiness Process Re-engineeringCorporate GovernanceRisk ManagementProject ManagementExperience Curves


The power of balance & alignment…


The Questioning Start

• What is the strategy?• How is it made to work? • Who else would give the same explanation?• What are the critical success factors?• What would make you fail to deliver them?• How do you measure these factors?• Are you rewarding failure?• Are you punishing success?

©AR


Current Issues

• 1 Which “fashion” to adopt• 2 Appropriate organisation structures• 3 Leadership from the whole team• 4 Teamworking and integration of strategic territory• 5 The “right” measurements• 6 Well articulated strategy• 7 Communication of objectives and priorities• 8 Setting ambitious goals• 9 Continuous and prioritised capability building• 10 Change sequence• 11 Appropriate control systems• 12 Better goal setting and rewards systems• 13 Aligned support systems• 14 Creating lines of sight for all organisational areas

©AR


Critical Activities (CAs)

Critical Success Factors (CSFs)

Making Strategies Work process

Strategic Review

Strategy

External environmental analysis Internal environmental analysis

Mission

KEIs

KPIs

Budgets, roles, competencies, structure, responsibility allocation


Process Model

• Vision/Mission Where the organisation wants to go

• Environmental scanning Forces outside the organisation that can cause diversions

• Strategy How the organisation is going to achieve its mission

• Critical Success Factors (CSFs) Things that must go well for the strategy to succeed

• Key Business Activities (KBAs) Activities that must be carried out to achieve the CSFs

• Support systems and structures Organising people, assets, and systems to operationalise KBAs

• Renewal Things change - regularly revisit

©AR


Strategic Focus Engineering©

• Engineer our businesses to achieve and deliver competitive advantage through Strategic Focus

• 200 Senior managers around the globe

• Practice – efforts underway, no clear leaders, yet


Strategic Focus Wheel

MakingStrategies

Work

Project ManagementOf Change

Strategic Risk

Management

Strategic Planning


Overview

• One thing you would like out of today

• Learning from “Winners” and “Best Practice”

• Strategy Process Model

• Review the basic strategy models

• What the research evidence is telling us

• Case study

• Scenario Planning

• Strategic Risk Management

• Making Strategies Work

• Summarise


• Do all of this better than your competitors

• Find a truly Iranian solution

• Leave the Tigers behind and soar with the Eagles!!

strategic planning and implementation professor dr alex roberts phd mba fcca fcis mcibs december...

Documents