Strategy Grand Tour
Stefano Mastrogiacomo
04.2007

What does strategy mean ?
Etymology
\"art of a general\"
from Fr. stratégie, from Gk. strategia \"office or
command of a general,\" from strategos \"general,\"
from stratos \"multitude, army, expedition \"
Based on the Online Etymology Dictionary. Douglas Harper, Historian. 22 May. 2007.

What does strategy mean today ?
A plan, method, or series of
maneuvers or stratagems for obtaining
a specific goal or result.
Based on the Random House Unabridged Dictionary, © Random House, Inc. 2006.
http://www.flickr.com/photos/11937586@N00/397343251/

Strategy is about
dealing with a
possible future …
and this is a matter
of perspective…
http://www.flickr.com/photos/jim-murphy/202064590/

Some people think
the future is
predictable.
Success is matter of
destiny.
http://www.flickr.com/photos/76329469@N00/312637677/

Some other think the future
is chaotic and unpredictable.
Success is a pure matter of
chance.
http://www.flickr.com/photos/29cm/487919076/

We think (and we’re not the only
ones) that the future is invented
and created every day. And there
are great tools for that.

Today’s Agenda
To have a better
understanding on
how to make right
assumptions about
the future in order to
gain a competitive
advantage.

Defining Corporate Strategy

“the direction and scope of an organization
over the long term, which achieves
advantage for the organization through its
configuration of resources within a changing
environment and to fulfill stakeholders
expectations”
Exploring Corporate Strategy, Johnson and Scholes, 2002

A simple strategic journey

Winners and losers

Vocabulary Resources/Core capabilites
Vision/Goals
Strategy/Plan
Point B
Environment/
Decisions Circumstances
Point A
Competitors
time
now the future

Different approaches, different tools,
different purposes
rivalry
alignment processes
A D1
strategy as… B C
D2 E
co-creation
free rider
environment
x
learning process
xx
x
xx
x
technology
cognition
manipulation

Strategy as rivalry

Michael Porter

Elements of industry structure

Productivity frontier

Value chain

Activity systems

Example: US automotive industry
(70’-80’)

Strategy as alignment
processes
A D1
B C
D2 E

Robert Kaplan and David Norton

The need for focus
Ok
Here
Here
CEOs
Managers
Staff

Strategy-Focused Organization principles
2. TRANSLATE STRATEGY TO 1. Mobilize CHANGE THROUGH
OPERATIONAL TERMS EXECUTIVE LEADERSHIP
2.1 Strategy map developed 1.1 Top leadership committed
2.2 Balanced Scorecard created 1.2 Case for change clearly articulated
2.3 Targets established 1.3 Leadership engaged
2.4 Initiatives rationalized 1.4 Vision and strategy clarified
2.5 Accountability assigned 1.5 New way of managing understood
1.6 Program manager identified
STRATEGY-
FOCUSED
5. GOVERN TO MAKE STRATEGY A
3. ALIGN THE Organization Organization
CONTINUAL PROCESS
TO THE STRATEGY
BEST PRACTICES 5.1 BSC reporting system established
3.1 Corporate role defined
5.2 Strategic review meetings conducted
3.2 Corporate – SBUs aligned
5.3 Planning, budgeting, and strategy integrated
3.3 SBU – Support units aligned
5.4 HR and IT planning linked to strategy
3.4 SBU – External Partners aligned
5.5 Process management linked to strategy
3.5 SBU – Board of directors aligned
4. MOTIVATE TO 5.6 Knowledge sharing linked to strategy
MAKE STRATEGY 5.7 Strategic Management Office
EVERYONE’S JOB established
4.1 Strategic awareness created
4.2 Personal goals aligned
4.3 Personal incentives aligned
4.4 Competency development aligned
Balanced Scorecard Collaborative • bscol.com

Strategy Map example
Maximize return on
assets
Financial
Manage Profitable
Leverage asset
operation costs growth
base
Customer
Residential, Commercial, Industrial
Socially
Innovative Reliable Supplier Competitive
responsible
solutions energy supply stability price
energy sources
Internal
Optimize Core Business Continued Public Support Customer Service Excellence Business Growth
Capitalize on
Seamless
Optimize Proactively build deregulation
cross-group
asset & manage opportunities
delivery of
utilization relationships
services
Use
alliances &
Trading
joint-
opportunities
Develop
Ensure reliable
Continued ventures
Max Returns innovative
service
cost
on resource service
management
Effective
allocation offerings
Understand
customer
drivers of
Enterprise- Communication service
customer value
wide risk and education processes
Cross-group
management programs
R&D
Learning & Growth
World-class
Ensure market-driven Industry leading
leadership
skill development employee satisfaction
effectiveness
© 2005 Balanced Scorecard Collaborative • bscol.com

Balanced Scorecard example
Targets
Measures (D=Drivers)
Objectives Initiatives
FY03 FY04 FY05
Financial
• Maximize returns • ROCE 14% 14.5% 15%
• Profitable growth • Revenue growth 6% 8% 12%
• Leverage asset base • Asset utilization rate 80% 85% 90%
• Manage operating costs • Operating costs / customer $150 $140 $125
• Industry leading customer loyalty • Customer satisfaction rating 80% 85% 90% • Customer loyalty program
Customer
Optimize Core Business
• Optimize core utilization • % revenue from deregulated products/services 5% 7% 10% • Telecom infrastructure development
• % trading revenue 10% 12% 15% • Trading risk assessment (work support)
• Max. return on resource allocation • Revenue from new services $500M $550M $600M
• % customers served through alliances and joint ventures 10% 20% 25%
• Continued cost management • NPV product/service pipeline $500M $550M $600M
• Enterprise-wide risk management • % R&D projects meeting protocol gates (D) 90% 95% 100% • Research alliance program
• Customer/partner satisfaction (5 point scale) 4.0 4.5 4.5 • Preventative maintenance
Continued Public Support
• Proactively manage relationships • Reliability index 90/100 92/100 95/100
• Ensure reliable service • Communication/education coverage (%) 100% 100% 100% • Community outreach program
Internal
• Communicate/educate customers • % communication/education plans executed (D) 80% 85% 90%
• Promised delivery % 90% 95% 97% • Cross-selling marketing program
Customer Service Excellence
• Seamless cross-group delivery • New product uptake rate 20% 25% 30% • Service dispatch automation
• Understand customer drivers • On-time market research projects (D) 90% 95% 100%
• Effective customer services
• Customer satisfaction rating – C.S. Center (see above) 85% 89% 95% • CIS upgrade
• Problem resolution cycle time – Customer Service Center (D) 6hr 4hr 3hr • Call center software integration
Business Growth
• Capitalize on deregulation
opportunities • % rated capacity attained 80% 85% 90%
• Optimize trading opportunities • Fossil maintenance benchmark
• Develop innovative services • Employee productivity improvement 2% 3% 4%
• Use alliances and joint ventures
• Leverage cross-group R&D
• % cost reduction 4% 5% 6% • Shared service benchmark/outsourcing
• Cost of disruption vs. plan +/-15% +/-10% +/-5% initiative
• Time to recovery (D) 8 hr 4 hr 2 hr • ERP implementation
• Ensure market-driven skill • Strategic skill coverage ratio 65% 75% 85% • Competency profiling
Learning &
• Hours in strategic skills training (D) 10 12 15
Growth
• Industry leading employee satisfaction • Employee satisfaction rating (5 point scale) 3.0 4.0 4.5 • Performance compensation link
• World-class leadership effectiveness • Leadership effectiveness rating (upward appraisal―5 point 4.0 4.5 4.5 • Leadership training program
scale)
© 2005 Balanced Scorecard Collaborative • bscol.com

Examples

Strategy as learning and
as an emergent process

Henry Mintzberg

Emergent strategy

And also Peter Senge (learning organization)

Strategy in a networked
society

Arnoldo Hax and Dean Wilde

Strategic Options
System lock-in
Total
Best
customer
Product
solutions
Total customer solutions System lock-in Best product
Competition for the Competition around the control Competition based on
of the ecosystem determinants
customer « interaction product ’s economic
system » attributes
Complementors lock-in
competitor lock-out
Redefining customer ’s Low cost or mere
experience differentiation
Proprietary standard

Example

Example

Strategy as a free rider
experience
x
xx
x
xx
x

Kim and Mauborgne

Kim and Mauborgne
“The only way to beat the
competition is to stop trying
to beat the competition”

Red and blue ocean strategies
Blue Ocean Strategy
Red Ocean Strategy
Compete in existing market space. Create uncontested market space.
Beat the competition. Make the competition irrelevant.
Exploit existing demand. Create and capture new demand.
Make the value/cost trade-off. Break the value/cost trade-off.
Align the whole system of a company’s Align the whole system of a
activities with its strategic choice of company’s activities in pursuit of
differentiation or low cost differentiation and low cost.

Strategic canvas
5 - high
value curve
performance
3 - medium
1 - low
2 3
1 8
te te
te te
bu bu
bu bu
…
tri tri
i i
ttr ttr
at at
a a

by Alex Osterwalder

Other examples

Strategy as co-creation with
customers

C.K. Prahalad

Collaboration as co-creation of value
discovering and
creating new
opportunities
shared destiny
sharing and
and co-creation
creating
prerequisites for collaboration
of value
knowledge
shared practices
sharing
and co-innovation
information
(transaction
data)
collaboration with
suppliers, key
customers, partners
arm’s-length
traditional
relationship
business
approach
Joint goals;
market-based, improved joint
development; joint leverage of
transaction business
competencies
driven; across processes; co-management
business unit across legal of the enhanced
boundaries network
boundaries
collaboration intensity

Strategy as environmental
configuration

Chris Anderson

Example
http://www.longtail.com/the_long_tail/2007/05/a_wall_street_a.html

Other examples

Strategy as cognition

http://www.flickr.com/photos/theimagegroup/369496139/

Ackermann, Eden, Finn, Bryson, …

Four Barriers to Strategy Execution
The Vision Barrier
Only 5% of the workforce
understand the strategy
The People Barrier The Management Barrier
9 of 10 companies
Only 25% of managers have 85% of executive teams
incentives linked to overall spend less than one hour
fail to execute strategy
strategy month discussing strategy
The Resource Barrier
60% of organizations do not
link budgets to strategy
© 2005 Balanced Scorecard Collaborative • bscol.com

18%
1% 300%
Strategy
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Development plan
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12%
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Words
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Causal maps

Military foundations of strategy

Strategy as persuasion and
manipulation

Sun Tzu – The Art of War (~500 BC)

Sun Tzu
“if they are strong, avoid
them”

any comment ?

Strategy as enemy
total destruction

Karl von Clausewitz (~1800)

On war
\"The complete or partial
destruction of the enemy must be
regarded as the sole object of all
engagements.”

Biological foundations

Daniel Dennett

Genotype and phenotype
genotype + environment → phenotype

Intentionality
The intentionality characteristic of humans is a result of
evolutionary processes. Humans have goals and desires
and tend to operate in order realize their goals
(according to their understanding of the world or their
beliefs).

Darwinian creatures
Kinds of Minds: Towards an Understanding of Consciousness
Daniel C. Dennett

Popperian creatures
Kinds of Minds: Towards an Understanding of Consciousness
Daniel C. Dennett

Gregorian creatures
Kinds of Minds: Towards an Understanding of Consciousness
Daniel C. Dennett

Summary

Different approaches, different tools,
different purposes
rivalry
alignment processes
A D1
strategy as… B C
D2 E
co-creation
free rider
environment
x
learning process
xx
x
xx
x
technology
cognition
manipulation

Quick checklist
Identify the strategic issues
1. What’s the problem ? What’s the context ?
Select the right method and tools
1. Read reference books
2. Ask questions to experts
3. Use the internet
Co-create strategy with all future participants
Operationalize: translate concepts into daily activities
Monitor execution (measure progress)
Update strategic destination if necessary

Thank you
www.arvetica.com

Many thanks to Flickr and
McMollie
Jimurphy
Grafixation
leonzerider
ayalan