Organisational strategic framework & road map


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Developing vision, mission, shared values, motto, objectives, critical success factors, Key Performance Indicators, as well as using veritable tools for scanning the environment in order to craft effective strategy while evolving workable strategic road map

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Organisational strategic framework & road map

  1. 1. Organisational Strategic Framework & Road Map Dr. Elijah Ezendu FIMC, FCCM, FIIAN, FBDI, FAAFM, FSSM, MIMIS, MIAP, MITD, ACIArb, ACIPM, PhD, DocM, MBA, CWM, CBDA, CMA, MPM, PME, CSOL, CCIP, CMC, CMgr
  2. 2. Learning Objectives At the end of this course, participants should be able to do the following: Craft appropriate vision and mission statements, as well as shared values and motto Establish clearly structured objectives Identify the right tools for conducting environmental scanning Identify suitable strategies for repositioning a firm Establish a feasible strategic road map for a firm
  3. 3. “If we could first know where we are, then wither we are tending, we could then decide what to do and how to do it.” - Abraham Lincoln
  4. 4. “Strategic planning is the process that comprises the procedures of defining objectives and creating strategies to attain those objectives.” - Qadar Baloch & Maria Inam, Strategic Thinking: Catalyst to Competitive Advantage
  5. 5. “The strategic planning process helps an organisation clarify, consolidate or establish its strategic framework. Embedded in the strategic framework are the values and vision of the organisation.” - Janet Shapiro, Strategic Planning Toolkit
  6. 6. Strategic Plan is the outcome of Strategic Planning Process and serves as Organisational Road Map for leading a firm from current to desired future state.
  7. 7. Strategic Plan A strategic plan maps out the short and long range performance targets and necessary action points of management for achievement of outcomes. It consists of a vision, mission strategic and financial objectives, in addition to comprehensive strategy for accomplishing the objectives.
  8. 8. The Strategic Planning Process Develop Vision, Mission, Shared Values, Motto, Goals and Objectives Strategy Implementation Crafting Strategy Environmental Scanning Evaluation and Control
  9. 9. Developing Vision and Mission Think strategically about the organisation’s future in 5 to 10 years. Build a sense of purpose Resolve the firm’s identity Ascertain who we are, what we do, and where we are going to.
  10. 10. “Vision is the art of seeing things invisible.” - Jonathan Swift
  11. 11. Vision This is the greatest aspiration of a firm, which shows what it intends to be. It stands for a view of supposed or assumed destiny that signifies a Big Hairy Audacious Goal.
  12. 12. Mission It describes a firm in terms of its business, showing the purpose of its existence, and serves as a means of inspiration to the top management and other employees.
  13. 13. Vision Statement Versus Mission Statement Vision towers as instrument of guidance for a firm over long period, while mission may change after periodic attainment. Therefore, mission statements are timely hurdles that need to be attained in order to advance towards the timeless target expressed by the vision.
  14. 14. Example of Vision/ Mission (Sony) Vision: Become the company most known for changing the worldwide poor quality image of Japanese products. Mission: To experience the joy of advancing and applying technology for the benefit of the public.
  15. 15. Example of Vision/ Mission (Volvo Car Corporation) Vision: To be the world’s most desired and successful premium car brand. Mission: We create the safest most exciting car experience for modern families.
  16. 16. Example of Vision/ Mission (Pfizer) Vision: At Pfizer, we're inspired by a single goal: your health. That's why we're dedicated to developing new, safe medicines to prevent and treat the world's most serious diseases. And why we are making them available to the people who need them most. We believe that from progress comes hope and the promise of a healthier world. Mission: We will become the world's most valued company to patients, customers, colleagues, investors, business partners, and the communities where we work and live.
  17. 17. Example of Vision/ Mission (Avon Products) Vision: To be the company that best understands and satisfies the product, service and self-fulfillment needs of women - globally. Mission: We will build a unique portfolio of Beauty and related brands, striving to surpass our competitors in quality, innovation and value, and elevating our image to become the Beauty company most women turn to worldwide.
  18. 18. Benefits of Communicating Vision/Mission Inspire, challenge and motivate workforce Arouse strong sense of organisational purpose, and induce employee buy-in Fosters unity of purpose in the firm Influences adherence to pragmatic organisational culture
  19. 19. Shared Values These are acceptations of a firm and its people pertaining to the right way to act in relation to people, situations and other things. They represent acceptable behaviour in an organisation, and determine standard organisational culture, business philosophy and leadership principles therein. They provide driving force for evolution of corporate character and serve as compass for code of ethics.
  20. 20. Shared Values in Practice Shared values should be linked to vision and mission, thereby providing enabling platform for accomplishment. Shared values of a firm should be accepted, imbibed and practiced so as not to become a dead-print. Albeit, the shared values of Enron were respect, integrity, communication and excellence, it sank due to disregard and malpractice by top management.
  21. 21. Example of Shared Values (Molson Coors Brewing Company) 1. Integrity and Respect 2. Quality 3. Excelling 4. Creativity 5. Passion
  22. 22. Example of Shared Values (Fuji Xerox) 1. Customer Satisfaction 2. Environmental Consciousness 3. High Ethical Standards 4. Scientific Thinking 5. Professionalism 6. Team Spirit 7. Cultural Diversity 8. Trust and Consideration 9. Joy and Fulfillment 10. Adventurous/ Pioneer Spirit
  23. 23. Motto This is also known as a Slogan. It should be a brief and impressive phrase or sentence which is used for projecting a firm’s identity and indicating its character. This aids effective branding, customer experience management, differentiation of character and evolution of shared values.
  24. 24. Example of Motto (Boeing) Forever New Frontiers Example of Motto (Google) Google is the closest thing the web has to an ultimate answer machine
  25. 25. Example of Motto (Nike) Just do it Example of Motto (Sun Microsystems) We put the dot in dot-com
  26. 26. Goal This is a preferred achievement, on which efforts should be focused.
  27. 27. Objectives These are desired results which must be achieved within a specific period. They must be S.M.A.R.T.
  28. 28. Criteria For Setting Objectives • Objectives should further the purpose and strategic aims of the organisation. • They should also conform to the organization's values and policies. • Objectives should be realistic in the circumstances. • Their achievement (or otherwise) should also be measurable (in terms of time, quantity, quality, cost or a relevant ratio). • Objectives should preferably be set by agreement, so that those responsible for carrying them out have some ‘ownership’ of them. • Objectives should set clear and challenging targets for individuals. • Objectives should be open to adaptation in the light of changing circumstances, especially where these are unforeseen. • Groups of objectives set for individuals, or groups, should not be in conflict with each other, but should serve a common purpose and direction. Source: G.A. Cole, Strategic Management
  29. 29. Setting Objectives The rationale for setting objectives: • Convert goals/ mission to performance targets • Establish yardsticks to track performance • Establish stretched targets • Enable the firm to be resourceful, purposeful and focused • Avoid internal confusion • Keep away from complacency and vagueness
  30. 30. Clearly Structured Objective A clearly structured objective highlights critical success factors for its achievement, key performance indicators, and target. CSF ObjectiveKPI Target + + =
  31. 31. “Critical Success Factors are the limited number of areas in satisfactory results will ensure successful competitive performance for the individual, department or organisation. Critical Success Factors are the few key areas where things must go right for the business to flourish and for the manager’s goals to be attained.” - Christine Bullen & Jack Rockart, A Primer on Critical Success Factors
  32. 32. Critical Success Factors are few key features that must be adequately obtained in order for objectives to be achieved.
  33. 33. Sources of Critical Success Factors for a Manager • Industry • Strategy • Environmental Factors • Pressing Situation • Manager’s Job Position
  34. 34. CSF and KPI Process • Determine vision of a firm. • Set-up the firm’s goals and objectives. • Identify key factors (CSF) that influence each objective. • Establish a measure (KPI) for each CSF. • Determine target for each CSF.
  35. 35. Process of Identifying and Monitoring Critical Success Factors
  36. 36. How to Identify Industry Related Critical Success Factors • Use industry analysis to determine critical success factors of the industry in which a firm operates. • Evaluate the CSF and rate them in terms of degree of influence to the firm. • Identify the 3 topmost CSF.
  37. 37. Deriving Objective, Target, KPI, and Critical Success Factors from A Goal Goal Increase in customer loyalty Critical Success Factors 1. Increase innovative response to customer needs 2. Positioning to fulfill customer needs 3. Keeping product cost at a low level 4. Increasing value deliverables to customer 5. Boosting effective customer service and response to feedback 6. Increase brand image and awareness 7. Increase magnitude and impact of promotion Key Performance Indicator for “Increase innovative response to customer needs” Rate of product enhancement for catching up with changing customer needs Target 100% integration of identified key-features requirements of customers within a period of 6 months First Objective Increase innovative response to customer needs by ensuring rate of product enhancement catches up with customer needs through 100% integration of identified key-features requirements of customers within a period of 6 months.
  38. 38. Group Task Evaluate the other critical success factors and identify Key Performance Indicators, Targets and ensuing Objective.
  39. 39. Performance Indicator It’s a tool enabling the effectiveness of an operation or organisation to be measured, and allows an achieved result to be gauged or evaluated in relation to a set of objectives. Source: OECD
  40. 40. Properties of Performance Indicators i. Relevant to the purpose, policy and practice ii. Clearly defined iii. Reliable iv. Worth measuring v. Measurable vi. Galvanize action vii. Reflect results of action viii. Precisely defined as possible ix. Readily available within a reasonable time frame
  41. 41. Advantages of Performance Indicators i. Means of measuring organizational progress toward set objectives. ii. Give room for benchmarking and comparing various units, sections, departments and subsidiaries.
  42. 42. Disadvantages of Performance Indicators i. Act as bad measures if not well defined ii. Some vital indicators cant be easily measured iii. Issuance of complexity due to number of indicators
  43. 43. Criteria for Selecting KPI i. Strong linkage to objectives ii. They should be connected to areas of the business that can be controlled iii. They should be quantifiable
  44. 44. Types of KPI 1. Directional Indicators 2. Quantitative Indicators 3. Actionable Indicators 4. Practical Indicators
  45. 45. Developing Targets based on KPI A Key Performance Indicator should drive managerial effort towards a mark of achievement, which is a target in accordance with set objective. KPI…….Reduce waste Target……50% by end of March
  46. 46. Two Types of Objectives Financial Objectives: These are outcomes that relate to improving a firm’s financial performance. Strategic Objectives: These are outcomes that will result in greater competitiveness and stronger long-term market position
  47. 47. Examples of Elementary Financial and Strategic Objectives Financial Objectives 1. Increase earnings growth from 5% to 10% per year. 2. Increase return on equity from 8% to 15% per year. 3. Increase return on asset from 4% to 11% per year. Strategic Objectives 1. Increase firm’s market share from 13% to 25%. 2. Overtake rivals on quality or customer service effectiveness. 3. Achieve lower overall costs than rivals. 4. Become leader in introduction of new products. 5. Achieve technological superiority.
  48. 48. Examples of Combined Objectives Quaker Oats Company To achieve return on equity at 20% or above, “real earnings growth averaging 5% or better over time, be a leading marketer of strong consumer brands, and improve the profitability of low-return businesses or divest them. Apple Computer To offer the best possible personal computing technology, and to put that technology in the hands of as many people as possible.
  49. 49. Environmental Scanning Environmental Scanning consist of the following: • Internal analysis of the firm • Analysis of the task environment (industry and sector) • External Analysis (STEEPLED)
  50. 50. Using Root Cause Analysis For Identification of Causalities Declining Sales Marketing Production Human Resource Materials Management Dull Product Image Deficiency in Promotion Reduced Quality Inappropriate Planning High Staff Turnover Lack of Vital Expertise Poor Inventory
  51. 51. Using SWOT Analysis Environmental Scan Internal Analysis External Analysis Strengths Weaknesses Opportunities Threats
  52. 52. Conducting SWOT Analysis • Indicate objectives of analysis • Identify all the strengths and weaknesses of the firm (weighing resources and competencies) in line with stated objectives. • Identify all the opportunities and threats pertaining to stated objectives. • Examine the interplay of strengths and weaknesses versus opportunities and threats (SO, WO, ST & WT). • Identify action points for achievement of stated objectives. • Assess & Align
  53. 53. Problems of SWOT Analysis • The structure stresses occurrence of all opportunities and threats must be external, meanwhile in reality some are within a firm. • Contradictory inputs give rise to error • It’s too mechanistic
  54. 54. Porter’s Five Forces This tool was developed by Michael Porter for analysing a firm’s industry structure in strategic processes. Wherefore, it provides room for ascertainment of market attractiveness by assessing total effect of the five forces on a firm’s ability to make profit while relating with its customers.
  55. 55. Potential Entrants Substitutes Suppliers Buyers Competitive Rivalry Using Porter’s Five Forces for Industry Mapping Threat of Entrants Threat of Substitutes Bargaining Power Bargaining Power Source: Michael Porter, Competitive Strategy
  56. 56. Applying The Five Forces Bargaining Power of Buyers Threat of Entrants Bargaining Power of Suppliers Threat of Substitutes Extent of Competitive Rivalry Force Factors for Consideration •Concentration of Customers •Level of Fixed Cost in Industry •Size of Customers •Switching Cost •Ease of Substituting Product •Availability of Substitutes •Switching Cost •Ease of Forward Integration •Network among Suppliers •Dearth of key resources •Economies of Scale •Customer Loyalty •Initial Investment Level •Intellectual Property •Control of Channels •Legislation •Switching Cost •Quantity of Goods Purchased •Importance of Product to Buyers •Level of Customer Relationship •Customer Loyalty •Switching Cost •Price to Performance Ratio •Exit Barriers •Level of Differentiation •Growth Rate of Market •identicalness of Strategy
  57. 57. Problems of Porter’s Five Forces • It can’t be easily used for very complex industries with diverse and hidden networks. • It can’t cope with the cuff of dynamic markets. • It can’t fit into a highly regulated industry
  58. 58. STEEPLED Analysis • Social Factors • Technological Factors • Economic Factors • Ecological Factors • Political Factors • Legal Factors • Ethical Factors • Demographic Factors
  59. 59. Steepled Analysis is used for identifying attributes of keystone variables that make up an organization's external environment, in terms of current and future operations.
  60. 60. In application of STEEPLED Analysis, the implication of each factor would be ascertained, then rating system deployed to mark impact on the firm. Impact by type and impact over time would be determined.
  61. 61. Crafting Strategy This focuses on the following: 1. Achieving desired strategic and financial objectives. 2. Out-compete rivals and obtain competitive advantage. 3. Respond to changing industry and competitive conditions. 4. Defend against threats to firm’s well-being. 5. Grow the business.
  62. 62. “If you don’t have a competitive advantage, don’t compete.” - Jack Welch
  63. 63. Three Levels of Strategy 1. Corporate Level Strategy 2. Business Unit Level Strategy 3. Functional/Operational Level Strategy
  64. 64. Corporate Level Strategy This comprises overall strategy elements for the firm. Resolving issues pertaining to mix of businesses and means for coordination and integration of individual unit strategies. It’s concerned with the following: Managing Activities and Business Interrelationships. Corporate Responsibilities. Management Practices. Competitive Contact.
  65. 65. Business Unit Level Strategy This involves translation of the corporate level strategy into suitable strategies for individual business divisions or portfolios, required to develop and sustain competitive advantage for products or services of the firm. This is concerned with the following:  Influencing the layout of competition by means of action such as vertical integration.  Positioning the firm’s business against competitors.  Modifying actions to cope with changes in demand, supply, regulations and technology.  Developing useful partnerships with customers and other business units.
  66. 66. Functional/ Operational Level Strategy This involves development of strategies for functional catchments such as business development, production, finance, human resource and materials management. This is concerned with implementation of the strategic plans established at corporate and business unit levels.
  67. 67. Developing Strategic Options A strategy portfolio consists of strategic options which enable a firm to take advantage of distinctive leveraging points in order to ensure appropriate alignment to objectives while reacting to competitors or exploring opportunities. Examples of leveraging points are as follows:  Talent  Alliances  Financial Linkage  Intellectual Property  Organizational Culture  Processes  Channels  Cost Efficiency  Technology  Economies of Scale  Assets  Innovation
  68. 68. Classes of Strategy Attack Strategy Defense Strategy 1. Guerilla Attack 2. Bypass 3. Flanking Attack 4. Frontal Attack 5. Undifferentiated Circle 6. Differentiated Circle 1. Signaling Defense 2. Creating Entry Barriers 3. Global Service 4. Pre-emptive Strike 5. Blocking Entry 6. Counter-Attack 7. Holding the Ground 8. Withdrawal Adapted from Jorge Vasconcellos, Strategy Moves
  69. 69. “Never follow the crowd” -Bernard Baruch
  70. 70. Growth Strategies Concentration • Vertical Integration • Horizontal Integration Diversification • Related (Concentric) Diversification • Unrelated (Conglomerate) Diversification
  71. 71. Organic and Inorganic Growth Organic Growth This occurs when the growth strategy is executed internally. Inorganic Growth This occurs when a firm opts to implement growth strategy externally through merger, acquisition or alliance.
  72. 72. Motivations for Global Strategies GLOBAL STRATEGIES Access Strategic Markets Access National Incentives Cross- Subsidize Create Global Associations Obtain Scale Economies Access Low-Cost Labour/Materials Dodge Trade Barriers Source: David Aaker, Developing Business Strategies
  73. 73. Situation Audit Data Base Strengths Weaknesses Opportunities Threats Mission Goals Cash Flow Product Line Competition Facilities etc Suggest Strategies Tested Against Source: George Steiner and John Miner Using SWOT Analysis to Suggest and Test Strategies
  74. 74. Mintzberg & Quinn Model for Strategy ImplementationMintzberg & Quinn Model for Strategy Implementation
  75. 75. Strategic Choice (The Strategy) Organizational Structure (Framework) Managerial Authority & Power (Leadership) Financial & Physical Resources ( Resources) Organizational & Individual Values ( Culture) Personnel Skills & Development ( Resources) Strategy Implementation Cole’s Model for Strategy Implementation
  76. 76. Evaluating Performance Balanced Scorecard or Performance Prism can be used for evaluating performance. At the corporate level, the following measures are useful for ascertaining performance. i. Return on equity ii. Return on sales iii.Return on asset iv.Return on capital employed v. Compound asset growth vi.Average market to book value
  77. 77. Case Study Crevice & Annuity is a manufacturing firm operating in the food & Beverages subsector. The turbulence which forced some operators in the same subsector into moribundity became its reason to opt for a new CEO, who would provide appropriate leadership for organisational excellence and overhaul the status quo. As the new CEO, you are required to establish a strategic road map for the firm to escape from that quandary.
  78. 78. Dr Elijah Ezendu is Award-Winning Business Expert & Certified Management Consultant with expertise in Interim Management, Strategy, Competitive Intelligence, Transformation, Restructuring, Turnaround Management, Business Development, Marketing, Project & Cost Management, Leadership, HR, CSR, e- Business & Software Architecture. He had functioned as Founder, Initiative for Sustainable Business Equity; Chairman of Board, Charisma Broadcast Film Academy; Group Chief Operating Officer, Idova Group; CEO, Rubiini (UAE); Special Advisor, RTEAN; Director, MMNA Investments; Chair, Int’l Board of GCC Business Council (UAE); Senior Partner, Shevach Consulting; Chairman (Certification & Training), Coordinator (Board of Fellows), Lead Assessor & Governing Council Member, Institute of Management Consultants, Nigeria; Lead Resource, Centre for Competitive Intelligence Development; Lead Consultant/ Partner, JK Michaels; Turnaround Project Director, Consolidated Business Holdings Limited; Technical Director, Gestalt; Chief Operating Officer, Rohan Group; Executive Director (Various Roles), Fortuna, Gambia & Malta; Chief Advisor/ Partner, D & E; Vice Chairman of Board, Refined Shipping; Director of Programmes & Governing Council Member, Institute of Business Development, Nigeria; Member of TDD Committee, International Association of Software Architects, USA; Member of Strategic Planning and Implementation Committee, Chartered Institute of Personnel Management of Nigeria; Country Manager (Nigeria) & Adjunct Faculty (MBA Programme), Regent Business School, South Africa; Adjunct Faculty (MBA Programme), Ladoke Akintola University of Technology; Editor-in-Chief, Cost Management Journal; Council Member, Institute of Internal Auditors of Nigeria; Member, Board of Directors (Several Organizations). He holds Doctoral Degree in Management, Master of Business Administration and Fellow of Professional Institutes in North America, UK & Nigeria. He is Innovator of Corporate Investment Structure Based on Financials and Intangibles, for valuation highlighting intangible contributions of host communities and ecological environment: A model celebrated globally as remedy for unmitigated depreciation of ecological capital and developmental deprivation of host communities. He had served as Examiner to Professional Institutes and Universities. He had been a member of Guild of Soundtrack Producers of Nigeria. He's an author and extensively featured speaker.
  79. 79. Thank You