Strategic Market Based Planning

Strategic Market‐Based Planning University of Wisconsin Executive Education Strategic Market-Based Planning Linda Gorchels Director, Executive Marketing Programs UW Fluno Center for Executive Education lgorchels@bus.wisc.edu (608) 441-7336 University of Wisconsin-Madison Wisconsin- Executive Education What Is Strategy? • Strategy is a long-term plan of action to achieve a particular goal. hi ti l l – Typical business goals include growth, market dominance, efficiency, etc. • Strategy is sometimes viewed as the plan taken to win a war whereas tactics are the actions taken to win a battle. University of Wisconsin-Madison Wisconsin- © Linda Gorchels 2002-2009 Executive Education http://exed.wisc.edu/marketing/ 1 © Linda Gorchels 2002‐2009

Strategic Market‐Based Planning University of Wisconsin Executive Education How long is “long-term?” • It varies by company and industry. However, h H here are some guidelines. id li – product: 2-3 years – business unit: 3-5 years – company: 5-10 years – industry: 8-10 years or more 8 10 University of Wisconsin-Madison Wisconsin- © Linda Gorchels 2002-2009 Executive Education Growth Strategies Inorganic growth Mergers, acquisitions, etc Mergers acquisitions etc. Corporate St t i C t Strategies Business Strategies Product/Service Strategies Organic growth Product development, Field strategies increased sales © Linda Gorchels 2002-2009 http://exed.wisc.edu/marketing/ 2 © Linda Gorchels 2002‐2009

Strategic Market‐Based Planning University of Wisconsin Executive Education Corporate Strategies Business Strategies Field Strategies Core mission, vision, values Mergers, acquisitions, divestitures Strategic market alignment Organizational structure Product line acquisition Operational strategies New product development Channel redesign Functional strategies Account selection Lead generation Selling, account management Fulfillment Sales support & service University of Wisconsin-Madison Wisconsin- © Linda Gorchels 2002-2009 Executive Education What is “market-based” strategy? • It is strategy that gives a balanced (or greater) emphasis on the external compared with the internal. • It implies an obsession on creating and delivering customer value – but in a long- term sustainable way. • St t i marketers must be d Strategic k t t b domaini spanners. University of Wisconsin-Madison Wisconsin- © Linda Gorchels 2002-2009 Executive Education http://exed.wisc.edu/marketing/ 3 © Linda Gorchels 2002‐2009

Strategic Market‐Based Planning University of Wisconsin Executive Education Why is it important? • “The demand from CEOs is for foresight rather than hindsight, for innovators, not tacticians, and for marketing strategists, not marketing planners.” • “In fact, most of the traditional activities under the control of marketing, such as market research, advertising, and promotions, are , g, p , perhaps the least important elements in creating customer value.” Nirmalya Kumar, Marketing as Strategy (Harvard Press, 2004) University of Wisconsin-Madison Wisconsin- © Linda Gorchels 2002-2009 Executive Education • “Leadership and management are two distinctive and complementary systems of action. Management is l t t f ti M ti about coping with complexity. Leadership is about coping with change. Leadership complements management; it doesn’t replace it. Companies manage complexity by planning & budgeting, by controlling & problem solving. By contrast, leading an organization b i b setting di ti i ti begins by tti direction, aligning li i people to the direction, and inspiring people to achieve a vision.” » John P. Kotter University of Wisconsin-Madison Wisconsin- © Linda Gorchels 2002-2009 Executive Education http://exed.wisc.edu/marketing/ 4 © Linda Gorchels 2002‐2009

Strategic Market‐Based Planning University of Wisconsin Executive Education What Really Works (according to HBR) • “Most of the management tools and techniques we studied had no direct causal relationship to superior business performance. What does matter, it turns out, is having a strong grasp of the basics. Without exception, companies that outperformed their industry peers excelled at what we call th f h t ll the four primary management i t practices – strategy, execution, culture, and structure.” – “What Really Works” (Nohria, Joyce, Robertson), Harvard Business Review, July 2003, pp. 43 University of Wisconsin-Madison Wisconsin- © Linda Gorchels 2002-2009 Executive Education Strategic market-based planning • Day 1: Laying the • Day 3: Implementation groundwork d k Guidelines G id li – Environmental scanning – Aligning the organization – Preparing for strategic – Establishing connections leadership – Managing change – Strategy philosophies • Day 2: Developing y p g strategy – Company evaluation – Strategic growth options University of Wisconsin-Madison Wisconsin- © Linda Gorchels 2002-2009 Executive Education http://exed.wisc.edu/marketing/ 5 © Linda Gorchels 2002‐2009

Strategic Market‐Based Planning University of Wisconsin Executive Education Strategy Framework Internal & external Strategic Mission, values & Environmental Scan input leadership vision Strategic goals Where to compete How to compete Market “fit” Environment Resources, competencies Industries, countries Products, services & segments & solutions Value creation Value creation Framework, policies & inspiration for implementation through Wisconsin-Madison business plans University of Wisconsin- Executive Education © Linda Gorchels 2002-2009 Stage one: Laying the groundwork Linda Gorchels UW-Madison Executive Education lgorchels@bus.wisc.edu (608) 441-7336 University of Wisconsin-Madison Wisconsin- Executive Education http://exed.wisc.edu/marketing/ 6 © Linda Gorchels 2002‐2009

Strategic Market‐Based Planning University of Wisconsin Executive Education Laying the groundwork 1. Environmental scanning • Working through a 4-step process 2. Preparing for strategic leadership • Understanding how cultures affect change 3. Strategy philosophies • Coalescing different approaches University of Wisconsin-Madison Wisconsin- © Linda Gorchels 2002-2009 Executive Education One … g Environmental scanning http://www.youtube.com/watch?v=8jWujAmLjS4&feature=fvst http://www.albinoblacksheep.com/flash/epic University of Wisconsin-Madison Wisconsin- © Linda Gorchels 2002-2009 Executive Education http://exed.wisc.edu/marketing/ 7 © Linda Gorchels 2002‐2009

Strategic Market‐Based Planning University of Wisconsin Executive Education Environmental scanning process • Scan: search primary and secondary data sources f external (industry, market, for l (i d k economy, etc.) and internal (company) issues that might affect your company • Monitor: track absolute and relative changes on an ongoing basis • Forecast: predict future directions of change or window of opportunity • Assess: evaluate strategy implications University of Wisconsin-Madison Wisconsin- © Linda Gorchels 2002-2009 Executive Education SCAN • A good starting point could be a traditional SWOT (strengths, weaknesses, opportunities & threats) analysis • Strengths and weaknesses refer to internal variables • O Opportunities and th t refer to external t iti d threats f t t l variables • (See appendix for a SWOT primer) University of Wisconsin-Madison Wisconsin- © Linda Gorchels 2002-2009 Executive Education http://exed.wisc.edu/marketing/ 8 © Linda Gorchels 2002‐2009

Strategic Market‐Based Planning University of Wisconsin Executive Education Rate internal SW • Look for competences, capabilities, resources and assets that satisfy the DIVE criteria: – Durable – Inimitable/non-substitutable – Valuable – E ploitable Exploitable University of Wisconsin-Madison Wisconsin- © Linda Gorchels 2002-2009 Executive Education What competence or capability drives each of the following? • Honda: engines polymer chemistry • 3M: adhesives paper mills • Kimberly-Clark: be y C a consumer marketing • Proctor & Gamble: University of Wisconsin-Madison Wisconsin- © Linda Gorchels 2002-2009 Executive Education http://exed.wisc.edu/marketing/ 9 © Linda Gorchels 2002‐2009

Strategic Market‐Based Planning University of Wisconsin Executive Education Understanding competencies Canon Optics and lens grinding Photo- Cameras Copiers lithography Source: Michel Robert, Strategy, Pure & Simple (NY: McGraw-Hill) pp. 78-82 University of Wisconsin-Madison Wisconsin- © Linda Gorchels 2002-2009 Executive Education Understanding competencies Honda Multilevel cylinder heads with self-adjusting valves Power Motorcycles Cars Lawn generation mowers equipment Source: Michel Robert, Strategy, Pure & Simple (NY: McGraw-Hill) pp. 78-82 University of Wisconsin-Madison Wisconsin- © Linda Gorchels 2002-2009 Executive Education http://exed.wisc.edu/marketing/ 10 © Linda Gorchels 2002‐2009

Strategic Market‐Based Planning University of Wisconsin Executive Education Understanding competencies 3M Polymer chemistry Coatings Adhesives Floppy ppy Post-it Electrical Overhead disks notes tape transparencies Compact Masking Sandpaper Video disks tapes tape Source: Michel Robert, Strategy, Pure & Simple (NY: McGraw-Hill) pp. 78-82 University of Wisconsin-Madison Wisconsin- © Linda Gorchels 2002-2009 Executive Education Assessing a firm’s resources Resource Example indicators* Financial resources Debt to equity ratio Credit rating Physical resources Resale value Scale of plants Technological resources Patents R&D staff Reputation Brand recognition Price premium Human resources Qualifications Turnover rate *See appendix University of Wisconsin-Madison Wisconsin- © Linda Gorchels 2002-2009 Executive Education http://exed.wisc.edu/marketing/ 11 © Linda Gorchels 2002‐2009

Strategic Market‐Based Planning University of Wisconsin Executive Education TIMES Reflection for external OT • Technological (science IT innovation) (science, IT, • Industry/competitive (general & specific) • Market (defining relevant markets) • Economic/environmental (macro & micro issues) • Socio-cultural (demographic, social) University of Wisconsin-Madison Wisconsin- © Linda Gorchels 2002-2009 Executive Education Technology analysis • Describe technology, science & innovation in i your i d t and i similar i d t i industry d in i il industries. – Can technologies from other industries be adapted? – Are novel applications possible? • What technological changes are expected g g p or anticipated? University of Wisconsin-Madison Wisconsin- © Linda Gorchels 2002-2009 Executive Education http://exed.wisc.edu/marketing/ 12 © Linda Gorchels 2002‐2009

Strategic Market‐Based Planning University of Wisconsin Executive Education Technology’s dance with society • Technology’s speed matches society s Technology s society’s speed. – How are you? Good (80s) Great(90s) Busy (now) – Gift cards more popular than gifts. – Speed dating on the Internet – Energy drinks are a $5 billion category – Disney has 5-minute bedtime stories University of Wisconsin-Madison Wisconsin- © Linda Gorchels 2002-2009 Executive Education Industry & competitive analysis • Strategic competitors their competencies competitors, competencies, and their strategies – See appendix for example worksheets • Key success factors • Changes in industry structure g y – Porter’s Five Forces Model (see appendix) University of Wisconsin-Madison Wisconsin- © Linda Gorchels 2002-2009 Executive Education http://exed.wisc.edu/marketing/ 13 © Linda Gorchels 2002‐2009

Strategic Market‐Based Planning University of Wisconsin Executive Education Market analysis • Is your primary market stable, growing, or declining? • How might it change in the future? • What articulated or unarticulated needs must you prepare for? • Have you saturated your existing market? • What geographic opportunities are emerging? • What are your most relevant markets? University of Wisconsin-Madison Wisconsin- © Linda Gorchels 2002-2009 Executive Education Market statistics examples • Segment characteristics • Size & projected growth rates • Market share (yours & the competition) • Profitability • Entry barriers • Cost structure • Distribution systems University of Wisconsin-Madison Wisconsin- © Linda Gorchels 2002-2009 Executive Education http://exed.wisc.edu/marketing/ 14 © Linda Gorchels 2002‐2009

Strategic Market‐Based Planning University of Wisconsin Executive Education Economic & environmental • What pending legislation might affect your future? • Are there existing laws or requirements that pose opportunities or threats? • What governmental and political changes might happen? g pp – World affairs, politics, and public policy • What environmental or sustainability issues should you consider? University of Wisconsin-Madison Wisconsin- © Linda Gorchels 2002-2009 Executive Education Socio-cultural analysis What social and cultural trends might impact your customers, your employees, or your competitors? – lifestyles – education – values – environmental – religion issues i – leisure – health issues University of Wisconsin-Madison Wisconsin- © Linda Gorchels 2002-2009 Executive Education http://exed.wisc.edu/marketing/ 15 © Linda Gorchels 2002‐2009

Strategic Market‐Based Planning University of Wisconsin Executive Education The generational continuum 1945 1963 1979 Seniors Boomers Gen X University of Wisconsin-Madison Wisconsin- © Linda Gorchels 2002-2009 Executive Education Upstream business goals • In addition to the SWOT, if the strategy is being b i prepared f a b i d for business unit or a it product line (as opposed to a corporate strategy), the scan should assess upstream business goals. • Are your goals determined or affected by higher-level corporate, division or business unit goals? University of Wisconsin-Madison Wisconsin- © Linda Gorchels 2002-2009 Executive Education http://exed.wisc.edu/marketing/ 16 © Linda Gorchels 2002‐2009

Strategic Market‐Based Planning University of Wisconsin Executive Education Strategic goals should be linked Corporate Corporate head office strategy Business Division A Division B strategy R&D R&D Functional HR HR strategies Finance Finance Production Production Marketing/Sales Marketing/Sales Contemporary Strategy Analysis, by Robert Grant, (Blackwell Publishers, 1998) p. 20. University of Wisconsin-Madison Wisconsin- © Linda Gorchels 2002-2009 Executive Education MONITOR • While the initial scan is a beginning step of strategic planning, monitoring i an t t i l i it i is ongoing part of strategy implementation University of Wisconsin-Madison Wisconsin- © Linda Gorchels 2002-2009 Executive Education http://exed.wisc.edu/marketing/ 17 © Linda Gorchels 2002‐2009

Strategic Market‐Based Planning University of Wisconsin Executive Education FORECAST • The intent of this step is to determine the probability and ti i of f t b bilit d timing f future eventst – Which technologies will be disruptive? – When will patent expirations (either yours or the competition) occur? – How quickly will markets transform due to q y demographic or other shifts? University of Wisconsin-Madison Wisconsin- © Linda Gorchels 2002-2009 Executive Education ASSESS • Try to determine – If the event or trend from the prior step occurs, how significant will be the impact on your firm? – How should the events and trends be prioritized? – How might I build on strengths resolve strengths, weaknesses, exploit opportunities and minimize threats? • Need to obtain commitment and buy-in University of Wisconsin-Madison Wisconsin- © Linda Gorchels 2002-2009 Executive Education http://exed.wisc.edu/marketing/ 18 © Linda Gorchels 2002‐2009

Strategic Market‐Based Planning University of Wisconsin Executive Education Two … Preparing for Strategic p g g Leadership University of Wisconsin-Madison Wisconsin- © Linda Gorchels 2002-2009 Executive Education Strategic marketing leaders … p . . .must be domain spanners! University of Wisconsin-Madison Wisconsin- © Linda Gorchels 2002-2009 Executive Education http://exed.wisc.edu/marketing/ 19 © Linda Gorchels 2002‐2009

Strategic Market‐Based Planning University of Wisconsin Executive Education What is the role of strategy? • Strategy is the art and science of attaining sustainable competitive advantage t i bl titi d t through the most appropriate utilization of resources and assets. It starts with an internal and external scan, then requires leadership in defining a company’s future direction, making trade-offs, and structuring an implementation plan. University of Wisconsin-Madison Wisconsin- © Linda Gorchels 2002-2009 Executive Education • Vision without action is a daydream. Action without vision is a nightmare. • Japanese proverb University of Wisconsin-Madison Wisconsin- © Linda Gorchels 2002-2009 Executive Education http://exed.wisc.edu/marketing/ 20 © Linda Gorchels 2002‐2009

Strategic Market‐Based Planning University of Wisconsin Executive Education • Strategic leadership requires both vision and action. Leaders may need to be change agents. University of Wisconsin-Madison Wisconsin- © Linda Gorchels 2002-2009 Executive Education • “If we could predict the future with certainty, it would mean that the future could not be changed. … Yet this is the main purpose of studying the future: to look at what may happen if present trends continue, decide if this is what is desirable, and if it’s not, work to change it. … The ability to see and create the future is the y essence of leadership.” • From literature of the World Future Society University of Wisconsin-Madison Wisconsin- © Linda Gorchels 2002-2009 Executive Education http://exed.wisc.edu/marketing/ 21 © Linda Gorchels 2002‐2009

Strategic Market‐Based Planning University of Wisconsin Executive Education Change agents are able to … • Shape the vision • Determine and understand the need for change – Gather market knowledge – Predict the future • Demonstrate leadership commitment – Establish strategy – Align structures, systems and incentives – Implement strategy University of Wisconsin-Madison Wisconsin- © Linda Gorchels 2002-2009 Executive Education Leaders shape the vision • Core values – Beliefs your firm’s members hold in common • Mission – Defines why your firm exists • Strategic vision – A description of the desired future state of your firm University of Wisconsin-Madison Wisconsin- © Linda Gorchels 2002-2009 Executive Education http://exed.wisc.edu/marketing/ 22 © Linda Gorchels 2002‐2009

Strategic Market‐Based Planning University of Wisconsin Executive Education Core values • Are enduring principles that guide the “culture” f fi “ lt ” of a firm • May be part of the mission statement or a separate pronouncement • Generally link to your positioning and brand identify University of Wisconsin-Madison Wisconsin- © Linda Gorchels 2002-2009 Executive Education Example core values Walt Disney No cynicism Nurturing and promulgation of “wholesome American values” Creativity, dreams, and imagination Fanatical attention to consistency and detail Preservation and control of the Disney magic University of Wisconsin-Madison Wisconsin- © Linda Gorchels 2002-2009 Executive Education http://exed.wisc.edu/marketing/ 23 © Linda Gorchels 2002‐2009

Strategic Market‐Based Planning University of Wisconsin Executive Education Example core values Sony Elevation of the Japanese culture and national status Being a pioneer -- not following others; doing the impossible Encouraging individual ability and creativity University of Wisconsin-Madison Wisconsin- © Linda Gorchels 2002-2009 Executive Education Example core values Nordstrom Service to the customer above all else Hard work and individual productivity Never being satisfied Excellence in reputation; being part of something special thi i l University of Wisconsin-Madison Wisconsin- © Linda Gorchels 2002-2009 Executive Education http://exed.wisc.edu/marketing/ 24 © Linda Gorchels 2002‐2009

Strategic Market‐Based Planning University of Wisconsin Executive Education Mission • Communicates the essence of your organization t your stakeholders i ti to t k h ld • Generally includes – A purpose statement (why your firm exists) – A business statement (what your firm does to achieve its purpose) • May also include the core values University of Wisconsin-Madison Wisconsin- © Linda Gorchels 2002-2009 Executive Education Core purpose: examples 3M: To solve unsolved problems innovatively Nike: To experience the emotion of competition, winning and crushing competitors Sony: To experience the joy of advancing and applying technology for the benefit of the public Walt Disney: To make people happy Source: Collins, James C., and Jerry I. Porras, “Building Your Company’s Vision”, Harvard Business Review, September-October 1996, p. 38. University of Wisconsin-Madison Wisconsin- © Linda Gorchels 2002-2009 Executive Education http://exed.wisc.edu/marketing/ 25 © Linda Gorchels 2002‐2009

Strategic Market‐Based Planning University of Wisconsin Executive Education Mission statement -YMCA • The YMCA of San Francisco, based in Judeo-Christian heritage [ l J d Ch i ti h it [values], seeks to ] k t enhance the lives of all people [purpose] through programs designed to develop spirit, mind and body [business]. Source: VolunteerMatch website, January 2008 (descriptors – values, purpose, business – added). University of Wisconsin-Madison Wisconsin- © Linda Gorchels 2002-2009 Executive Education Dow Chemical, Inc. Mission • To constantly improve what is essential to human progress by mastering science and technology. » Corporate website, February 2009 University of Wisconsin-Madison Wisconsin- © Linda Gorchels 2002-2009 Executive Education http://exed.wisc.edu/marketing/ 26 © Linda Gorchels 2002‐2009

Strategic Market‐Based Planning University of Wisconsin Executive Education Dow’s Essential Elements Source: Corporate website, Feb. 2009 University of Wisconsin-Madison Wisconsin- © Linda Gorchels 2002-2009 Executive Education OneAmerica Financial Partners Mission • The essence of the OneAmerica enterprise however enterprise, however, is to help protect the future of our customers. We help individuals and businesses create and protect assets through trusted advisors. Our Values • Being a mutual holding company organization allows us to focus first on the needs of our companies’ policyholders. Corporate website, February 2009 University of Wisconsin-Madison Wisconsin- © Linda Gorchels 2002-2009 Executive Education http://exed.wisc.edu/marketing/ 27 © Linda Gorchels 2002‐2009

Strategic Market‐Based Planning University of Wisconsin Executive Education Strategic vision Strategic vision is the “mental picture” of what the company will be in the future. It is the answer to the questions: – Where is the company going? – What will it “look” like? – What will we do differently to attain profitable competitive advantage? f ? Martin Luther King, Jr. started his vision statement with, “I have a dream …” University of Wisconsin-Madison Wisconsin- © Linda Gorchels 2002-2009 Executive Education Strategic vision example • Komatsu – Encircle Caterpillar – Date Corporate Challenge Activities – 1960s Protect home market Licensing deals Begin quality efforts Quality programs – 1970s Build export markets Industrializing nations – late 70s Create new products Future and Frontiers markets program University of Wisconsin-Madison Wisconsin- © Linda Gorchels 2002-2009 Executive Education http://exed.wisc.edu/marketing/ 28 © Linda Gorchels 2002‐2009

Strategic Market‐Based Planning University of Wisconsin Executive Education W.W. Grainger Our Vision • To be the leader in the distribution of maintenance, repair, and operating supplies and related information to commercial, industrial, contractor, and institutional customers. • Corporate website January 2008 website, University of Wisconsin-Madison Wisconsin- © Linda Gorchels 2002-2009 Executive Education Interface Inc. Vision • To be the first company that by its that, deeds, shows the entire industrial world what sustainability is in all its dimensions: People, process, product, place and profits — by 2020 — and in doing so we will become restorative through the power of influence. Corporate website, February 2009 University of Wisconsin-Madison Wisconsin- © Linda Gorchels 2002-2009 Executive Education http://exed.wisc.edu/marketing/ 29 © Linda Gorchels 2002‐2009

Strategic Market‐Based Planning University of Wisconsin Executive Education DuPont • Our vision is to be the world's most dynamic science company, creating d i i ti sustainable solutions essential to a better, safer and healthier life for people everywhere. Corporate website, February 2009 University of Wisconsin-Madison Wisconsin- © Linda Gorchels 2002-2009 Executive Education American Physical Therapy Assoc. • By 2020, physical therapy will be provided by physical therapists who are doctors of physical therapy, recognized by consumers and other health care professionals as the practitioners of choice to whom consumers have direct access for the diagnosis of, interventions for, and prevention of impairments, functional limitations, and disabilities related to movement function movement, function, and health. Association website, February 2009 University of Wisconsin-Madison Wisconsin- © Linda Gorchels 2002-2009 Executive Education http://exed.wisc.edu/marketing/ 30 © Linda Gorchels 2002‐2009

Strategic Market‐Based Planning University of Wisconsin Executive Education Determine the need for change • Marketing is charged with the task of influencing d i fl i demand i a way th t will h l d in that ill help your firm achieve its objectives – Gather market knowledge – Predict the future University of Wisconsin-Madison Wisconsin- © Linda Gorchels 2002-2009 Executive Education • Marketing leaders demonstrate leadership commitment. –Establish strategy –Align structures & incentives –Implement strategy Implement University of Wisconsin-Madison Wisconsin- © Linda Gorchels 2002-2009 Executive Education http://exed.wisc.edu/marketing/ 31 © Linda Gorchels 2002‐2009

Strategic Market‐Based Planning University of Wisconsin Executive Education Establish strategy • Build on firm’s core strengths & core business b i • Establish market-based goals that help accomplish firm goals – Which customers to target – Which competitors to target – What problems and opportunities to leverage – How/when to compete and collaborate University of Wisconsin-Madison Wisconsin- © Linda Gorchels 2002-2009 Executive Education Align structures & measures Strategic goals Tactical plans Operational activities Marketing Sales Profitability Performance standards effectiveness Marketing mix Customer satisfaction • Structural alignment with • Customer retention • Customer satisfaction index strategic customers g • Profitability activity and Profitability, • Timeliness of response •Long-term brand equity productivity ratios • # calls per week • Growth & profitability • Actual to budgeted trends performance University of Wisconsin-Madison Wisconsin- © Linda Gorchels 2002-2009 Executive Education http://exed.wisc.edu/marketing/ 32 © Linda Gorchels 2002‐2009

Strategic Market‐Based Planning University of Wisconsin Executive Education Strategy implementation • People need to know – How is this change relevant to what I do? – What, specifically, should I do? – How will I be measured and what consequences will I face? – What tools & support are available? pp – What’s in it for me? University of Wisconsin-Madison Wisconsin- © Linda Gorchels 2002-2009 Executive Education The purpose of strategy is to p p gy help individuals choose among competing priorities. University of Wisconsin-Madison Wisconsin- © Linda Gorchels 2002-2009 Executive Education http://exed.wisc.edu/marketing/ 33 © Linda Gorchels 2002‐2009

Strategic Market‐Based Planning University of Wisconsin Executive Education Three … Strategy Philosophies & Goals gy p University of Wisconsin-Madison Wisconsin- © Linda Gorchels 2002-2009 Executive Education Strategic Goals • Leaders set strategic goals based on the environmental scan and on knowledge of the mission, vision and values. Different “gurus” have presented different approaches as catalysts to this strategic thinking. – Growth from the core – Seeking competitive advantage – Seeking untapped market space – Anticipating disruption University of Wisconsin-Madison Wisconsin- © Linda Gorchels 2002-2009 Executive Education http://exed.wisc.edu/marketing/ 34 © Linda Gorchels 2002‐2009

Strategic Market‐Based Planning University of Wisconsin Executive Education Growth From The Core • Develop strategies that strengthen and grow your core business – Profit from the Core (Chris Zook) – Beyond the Core (Chris Zook) • Move toward BHAGs that build on core ideologies and identity – Built to Last (James Collins & Jerry Porras) – The Soul of the Corporation (Hamid Bouchikhi & John Kimberly) • Leverage core competencies – Competing for the Future (Gary Hamel & C.K. Prahalad) University of Wisconsin-Madison Wisconsin- © Linda Gorchels 2002-2009 Executive Education Seeking Competitive Advantage • Define the competitive structure of an industry, identify the key i d t id tif th k success f t factors, and work to either change the structure in your favor or gain superiority in the key success factors – Competitive Strategy ( p gy (Michael Porter) ) – Market-Driven Strategy (George Day) University of Wisconsin-Madison Wisconsin- © Linda Gorchels 2002-2009 Executive Education http://exed.wisc.edu/marketing/ 35 © Linda Gorchels 2002‐2009

Strategic Market‐Based Planning University of Wisconsin Executive Education Seeking Untapped Marketspace • Move away from the boundaries of comparative competitiveness and l k f ti titi d look for products and services to fulfill a yet unmet demand – Blue Ocean Strategy (W. Chan Kim & Renee Mauborgne) – MarketBusters (Rita Gunther McGrath & Ian C. MacMillan) University of Wisconsin-Madison Wisconsin- © Linda Gorchels 2002-2009 Executive Education Anticipating Disruption • This is another look at new marketspace, but f b t from the perspective of estimating th ti f ti ti when an emerging trend will take off, and building a strategy to take advantage of it – The Tipping Point (Malcolm Gladwell) – The Innovator’s Solution (Clayton Christensen ( y & Michael Raynor) University of Wisconsin-Madison Wisconsin- © Linda Gorchels 2002-2009 Executive Education http://exed.wisc.edu/marketing/ 36 © Linda Gorchels 2002‐2009

Strategic Market‐Based Planning University of Wisconsin Executive Education From Goals To Strategies • After strategic thinking, leaders must move to strategic planning i e move from goals planning, i.e., to strategies. • Where to compete: – Target industries, accounts, countries, etc. • How/when to compete: – Focus on specific products, opportunities – Build specific competencies and skills – Choose appropriate timing University of Wisconsin-Madison Wisconsin- © Linda Gorchels 2002-2009 Executive Education Laying the groundwork - summary 1. Environmental scanning • Working through a 4-step process 2. Preparing for strategic leadership • Understanding how cultures affect change 3. Strategy philosophies • Coalescing different approaches University of Wisconsin-Madison Wisconsin- © Linda Gorchels 2002-2009 Executive Education http://exed.wisc.edu/marketing/ 37 © Linda Gorchels 2002‐2009

Strategic Market Based Planning

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