Change happens faster and on a greater scale than ever before. Immense change has already happened – government interventions on unprecedented levels, global corporations crumbling, commodity prices crashing. Your organisation has probably already reacted – reduced costs, increased efficiency, re-focused on core markets. So is that it; do we now just keep our heads down, work hard and ride out the storm? If only!
Experience will count for little; the commercial landscape has been transformed. To succeed, or even survive, managers will have to create their own maps. There will be no substitute for observing, analyzing, thinking, innovating, testing. The distinction between the winners and the liquidated will be: speed and quality of learning.
Arie de Geus, author of The Living Company, said:
"The only way to sustain competitive advantage is to ensure that your organisation is learning faster than the competition."
In the outline below, you will see reference to many of the classic 'MBA' models. It's very easy when using these models to get tied-up in the analysis and lose sight of the real world. Rest assured that I'll keep it practical!
The models do not give us answers. They provide different perspectives and assist us in asking the right kind of questions.
Another issue is that many of these models were developed for use in very large organizations. However, the principles that underpin them are mostly still valid for the smallest business – and I will share lots of examples.
Perspective – Understanding the Future
Analysis – the Macro-environment
The macro-environment consists of forces that are beyond the control of even the largest organisations in the world. For those who interpret these forces correctly, they offer immense opportunities – for those who don’t, disaster awaits.
“If you do not know how to ask the right question, you discover nothing.”
W Edwards Deming
- the macro-environment – PESTLE analysis
- identifying trends, opportunities and issues
- scenario analysis and planning
- creating “future memory” and preparedness to gain first-mover advantages
- cultivating strategic foresight in the organisation
Analysis – Industry
A critical strategic question is: where shall we compete? Many other players are involved in the game – current and potential future competitors, suppliers and, of course, customers.
- Porter’s Industry Analysis – understanding how firms compete and the impact on profitability of:
- barriers to entry and exit
- potential entrants
- competitive rivalry
- competitive advantage – gaining and sustaining
- customer focus – the link between brand, culture and competitive advantage
Analysis – Markets
How segmentation can lead to success or failure:
- the art-science of segmentation
- identifying 'attractive' segments
- positioning within markets
- competitive analysis
- why everyone is in 'marketing'
Perspective – The Organisation
“It is important that top managers view the firm as a portfolio of competencies, for they must ask, “Given our particular portfolio of competencies, what opportunities are we uniquely positioned to exploit?”
Hamel & Prahalad Having gained an understanding of the wider environment and the industries in which the organisation operates, the next stage is to consider your organisation – what resources are available; how can the bundle of knowledge, skills, reputation, relationships, equipment etc be utilised to gain sustainable competitive advantage.
- Porter’s Value Chain – analysing how your organisation delivers value to the customer
- 'Core Competencies' – gateways to the future
- Strategic Fit – culture
Sustainable Competitive Advantage
“Some managers think, ‘The world is changing, things are going faster – so I’ve got to move faster. Having a strategy seems to slow me down.’ I argue no, no, no – having a strategy actually speeds you up."
Professor Michael Porter Porter identified three viable options for sustainable success. This section explores (and questions) these approaches, encompassing topics such as branding and culture. The investment implications of each are examined.
- thinking behind “Blue Ocean” strategies
- lowest cost
- understanding 'business models' – how do you get paid?
Brand and Culture
Brand and culture are the foundations of sustainable competitive advantage. They are difficult to copy and they enable organisations to escape the shackles of existing product-market combinations – in other words to adapt to the future competitive environment. A brand is how the phone is answered, the tone of voice in an email to a customer or the response when mistakes are made. And clearly, each of these is driven by culture – brand and culture are two sides of the same coin.
Techniques for Developing Plans
"However lean and fit an organisation, it still needs a brain. But the brain we have in mind is not the brain of the CEO or strategic planner. Instead it is an amalgamation of the collective intelligence and imagination of managers and employees throughout the company, who must possess an enlarged view of what it means to be 'strategic'."
Hamel & Prahalad A reminder that the planning process is not a linear sequence; it is an iterative process. Planning can often be perceived as a discrete, cerebral activity and removed from what managers do on a daily basis; this is a mistake. In this section, you will learn how to use a number of practical techniques that convert plans into specific tasks:
- understanding goals
- action mapping – identifying performance drivers, issues
- leveraging and developing core competencies
- next actions – a systematic approach
- the strategic staircase
Making it Happen
Here we consider how to translate plan into action, whilst integrating measurement into implementation.
Implementation – Scorecards
A scorecard is a framework for:"Organisations today need a language for communicating strategy… Success comes from having strategy become everyone's everyday job."
Kaplan & NortonA
- communicating plans throughout the organisation
- making strategy part of everyone’s everyday job
- aligning individual and organisational goals
- measuring and controlling the real performance drivers, including intangibles
- delivering shareholder value
Successful planners recognise that effective implementation depends on people:
- culture and values
- leadership behaviours
- winning hearts and minds
- creating a “sense of urgency”