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Strategy as Transformation

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True strategy always changes things - this presentation talks about the nature of strategic change and how that change might be led more effectively.

True strategy always changes things - this presentation talks about the nature of strategic change and how that change might be led more effectively.

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Strategy as Transformation Strategy as Transformation Presentation Transcript

  • “Strategy is the means for making changes that result in sustainable competitive advantage resulting in superior value added for customers and superior returns to shareholders.”
    11/09/2010
    1
    Successful Transforming Strategy
  • Strategy as Transformation
  • Discussion Outline
    What we are transforming (a 7-C model)
    Transformation of ends and means
    Transformation of gaps and risks
    Targets for strategic transformation
    Financial performance
    Structure
    Interaction
    Industry
    Generic strategies
    Resources and competencies
    11/09/2010
    3
  • Discussion Outline
    Targets for strategic transformation
    Competitors
    Diversification
    Management
    Business model
    Creative tensions
    46 realities of strategic transformation
    Essential outcomes
    Structural realities
    External forces
    Internal forces
    11/09/2010
    4
  • What we are Transforming – a 7C Model
    The Seven Dimensions of Every Organization:
    Core
    Culture
    Context
    Capability
    Capacity
    Competency
    Customer
    11/09/2010
    5
  • What we are Transforming – a 7C Model
    CORE: the central reason-for-being of the organization:
    Its PURPOSE – why the company exists in terms of excellence, discovery, and/or service
    Its IDENTITY – how the organization wants to be thought of by other stakeholders – its brand
    Its INTENTIONS – what values drive the long run sustainability of the organization and the legacy it will leave
    11/09/2010
  • What we are Transforming – a 7C Model
    CONTEXT: the fundamental operational framework for the organization
    Strategy – the comprehensive vision that defines the desired direction and impact of the organization’s operations
    Goals – desired/expected organizational end results
    Measures – metrics by which successful goal achievement is to be judged in-process and end-of-process
    Systems – mechanisms by which decisions are made and actions are carried out
    Structure – position descriptions and assignments and interactions between positions
    Technology – facilitation of decisions and actions through decision, production, and delivery tools or mechanisms
    11/09/2010
  • What we are Transforming – a 7C Model
    CAPABILITY: underlying strengths and limitations of the organization
    Portfolio management – the range and diversity of products and services to be offered
    Process management – the ability to produce desired products and services
    Program management – the ability to develop and deliver strategic initiatives
    Project management – the ability to develop and deliver tactical initiatives
    11/09/2010
  • What we are Transforming – a 7C Model
    COMPETENCY: competitively superior expertise in the organization
    Distribution of competency: individual, interpersonal and institutional
    Drivers of competency: observation, understanding, decision, action
    Disciplines of competency – marketing, management, finance, information systems
    11/09/2010
  • What we are Transforming – a 7C Model
    CAPACITY: the scalability of the organization or its ability to grow w/o damaging the other “C” factors
    Value-chain growth capabilities
    Strategic arena growth capabilities
    11/09/2010
  • 11/09/2010
  • What we are Transforming – a 7C Model
    CULTURE: the way people work together:
    Their ASPIRATIONS – what people want for and from themselves
    Their EXPECTATIONS – what people want from and for others
    The ANATOMY of the culture– structural characteristics including reporting and accountability paths, power and control sources and distribution [may be formal AND informal)
    The PHYSIOLOGY of the culture – relational characteristics including communication flows, decision flows, influence flows
    11/09/2010
  • What we are Transforming – a 7C Model
    CUSTOMER: the nature and nurturing-desires of those who purchase and/or use our products and services
    Product, place, price and promotion preferences
    Resource capacities (money, time information)
    Alternative or substitute sources of satisfaction
    Demographic trends
    11/09/2010
  • What we are Transforming – a 7C Model
    Observation 1: Much of what we “know” about an organization reflects informed judgments based on incomplete information. Transformation, therefore, is both:
    Art and science
    Fact and judgment
    Analytical and intuitive
    Proactive and reactive
    Trial and error
  • What we are Transforming – a 7C Model
    Observation 2: All organizations are undergoing both planned and unplanned transformation continuously in one or more parts of the organization. The decision to be made is whether that transformation will be systematically observed, understood, decisioned and acted upon purposefully and progressively.
  • What we are Transforming – a 7C Model
    Observation 3: Managers of the transformation process are neither
    Omniscient – they know things incompletely
    Omnipotent – they influence things incompletely
    So, effective transformational management requires imagination, risk taking, humility, dependence on others, learning the right lessons from failure and success, persistence and resilience.
  • What we are Transforming – a 7C Model
    Observation 4: While change may BEGIN in any of the 7C arenas, it ultimately must work its way through all the arenas in order for the organization to act in a coordinated way that is sustainable. All arenas exist in a mutually interdependent relationship.
  • Strategic Transformation of Ends and Means
    By its very nature, effective strategy is about deep and wide change – change that seeks to transform an entire organization.
    These transformations can be in what, where, how, for whom, and/or when an organization acts.
  • Strategic Transformation of Ends and Means
    • Tuning = incremental improvements in current markets and methods
    • Turning = seeking significant changes in what we market and who we market to
    • Tempering = seeking significant changes in how we operate, manage, market, finance, ...
    • Transforming = seeking significant changes in both markets and methods at the same time
  • Strategic Transformation of Gaps and Risks
    Strategy manages the risks that occur because of the gaps.
    We cannot (and would not choose to) eliminate the risks
    There is a clear and positive relationship between risks and return
    There is a real difference, however, between taking a risk, and taking a chance.
    Risks can, and strategically should be, managed.
  • Strategic Transformation of Gaps and Risks
  • Strategic Transformation of Gaps and Risks
  • Targets for Strategic Transformation - Financial
    Transforming strategy generates superior financial performance
    It allows an organization to obtain financial returns greater than its cost of capital
    It allows financial returns ( and reinvestment potential) greater than those of competitors
    It allows a company to achieve superior financial returns that are sustainable in the long run
    $
    S
  • Targets for Strategic Transformation - Structure
    F
    Transforming strategy fosters a Six-F Firm
    FAST: designed and operated to reduce process times and optimize reaction and pro-action speeds
    FOCUSED: built round core activities to which all other business units are truly related
    FLEXIBLE: willing and able to change whenever change is called for, and whatever needs changing
    FLAT: less hierarchic structure, with a broad span of control, and with authority given to expertise
    FRIENDLY: collaborative, trusting and relaxed both inside and outside the organization
    FUTURED: because it is well equipped for the best method of prediction: making the future happen the way you want.
    F
    F
    S
    F
    F
    F
  • Targets for Strategic Transformation - Interaction
    Transforming strategy fosters an organization-wide strategic planning interaction and communication
    The process encourages thinking about tomorrow in proactive and creative ways throughout the organization
    The process encourages establishing objectives throughout the organization
    The process encourages participation and collaboration throughout the organization
    The process encourages questioning and reflection throughout the organization
    The process encourages complexity and flexibility in thinking throughout the organization
  • Targets for Strategic Transformation - Industry
    Transforming strategy focuses on choosing an attractive industry
    Competition comes primarily from rival firms in the same industry
    Industries exhibit life-style stages (that can be challenged, but with difficulty)
    Every industry has attractive and unattractive segments, niches that can be reached through an effective business model
    S
    I
  • Targets for Strategic Transformation – Generic Strategies
    Transforming strategy examines generic strategies thoughtfully
    Cost control is essential for any strategy – but a simple lower price strategy is unsustainable over time
    Differentiation works when the difference is visible and valuable to buyers, financially attractive for both the company and the customer, and sustainable against competitors
    It is possible to balance value and costs in a unique business model – but this requires expertise in both conceiving and executing strategy.
    S
    G
  • Targets for Strategic Transformation – Resources and Competencies
    Transforming strategy recognizes the importance of resources and competencies
    Resource uniqueness, durability and competency in deployment are a crucial part of every strategy
    Competencies …
    … especially are embedded in the talents and attitudes of personnel
    … can also be embedded in organizational systems
    … can become liabilities if they lead to core rigidities leading to strategic momentum and/or inertia
    R
    S
    -
    C
  • Targets for Strategic Transformation - Competitors
    Transforming strategy seeks to outsmart, out perform and/or out maneuver competitors
    Competitive advantage is always temporary – so we must be prepared to adopt, act on and abandon strategies rapidly
    The advantage is found in fast thinking an innovative, agile action
    The key capabilities become speed, creativity and action-implementation
    S
    C
    C
    C
  • Targets for Strategic Transformation - Diversification
    Transforming strategy considers judicious diversification
    Competencies can be transferable
    There are limits to the expandability of a core business model
    Diversification leads to strategic complexity – different firms have different abilities to manage such complexity
    D
    S
    D
    D
  • Targets for Strategic Transformation - Management
    Transforming strategy encourages us to see strategic management is a dynamic process
    S
    M
    THE “E-ZONE:
    • Effectiveness
    • Efficiency
    • Efficacy
    • Elasticity
    • Energy
    • Emergence
  • Targets for Strategic Transformation – Business Model
    B
    Transforming strategy seeks to change the current business model
    A business model is comprised of:
    Financial returns to the business
    Value propositions to customers
    Character of inputs
    How inputs are transformed (including technology)
    Character of outputs
    Scope
    Vertical scope
    Horizontal scope
    Geographic scope
    Nature of customers
    How to organize
    S
  • Targets for Strategic Transformation – Creative Tensions
    Transforming strategy seeks to balance a variety of creative tensions inherent in successful organizations:
    Aiming vs Adapting
    Competition vs Cooperation
    Dreaming vs Doing
    Effectiveness vs Efficiency
    Fixed vs Flexible
    Incremental vs Innovative Change
    Individuality vs Integration
    Intuition vs Investigation
    Kapturing vs Keeping vs Killing
    S
  • Targets for Strategic Transformation – Creative Tensions
    Transforming strategy seeks to balance a variety of creative tensions inherent in successful organizations:
    Managing vs Marketing
    Navigating vs Negotiating
    Owning vs Outsourcing
    Opportunity vs Obstacle
    Performance vs Promise
    Past vs Present vs Possibilities
    Retrenchment vs Refinement vs Refocus vs Regeneration
    Systematic vs Serendipitous
    S
  • Targets for Strategic Transformation – Creative Tensions
    Transforming strategy seeks to balance a variety of creative tensions inherent in successful organizations:
    Today vs Tomorrow
    Usual vs Unusual
    Value Invested vs Value Added vs Value Returned
    Work vs Working vs Workers
    S
  • 46Realities of Strategic Transformation
  • 11/09/2010
    38
    46Realities of Strategic Transformation
  • 11/09/2010
    39
    46Realities of Strategic Transformation
  • 11/09/2010
    40
    46Realities of Strategic Transformation
    External Forces
    • Transience
    • Novelty
    • Diversity
    • Uncertainty
    • Complexity
    • Dependency
  • 11/09/2010
    41
    46Realities of Strategic Transformation
  • Transforming strategy honestly confronts 46 realities:
    11/09/2010
    42
    46Realities of Strategic Transformation
  • Organizational change interventions – creating meaning
    Strategy ALWAYS seeks to change things – those changes may be of different degrees:
    Change advocacy requires the leader to deal in meaning: what does the change mean, and how do we make it meaningful to each person?
    11/09/2010
    43
  • Organizational change interventions – transformation targets
    THINKING: Costs vs Benefits
    WILLING: Commitment vs Resistance
    FEELING: Pleasure vs Pain
    DOING: Familiar vs Foreign
    11/09/2010
    44
  • Organizational change interventions – transformation approaches
    Each approach carries its own unique
    Change perspectives
    Change problems
    Change points
    Change promoters
    Change perils
    Change promises
    11/09/2010
    45
  • Decision-focused change interventions
    Perspectives
    • Empirical
    • Rational
    Promises
    • Clear perceptions
    • Rational priorities and plans
    Problems
    • Ill-made decisions
    • Ill-informed decisions
    Points
    • Logic
    • Information
    Perils
    • Underestimating the people factor
    • Managing by the numbers
    Promotion
    • Robust information flows
    • Reasoned decisions
    11/09/2010
    46
  • Socially-focused change interventions
    Perspectives
    • Psychological
    • Sociological
    Promises
    • Emotional honesty and openness
    • Individual support
    • Interpersonal sensitivity
    Problems
    • Individual insecurity
    • Relational instability
    Points
    • Emotions
    • Relations
    Perils
    • Satisfaction>productivity
    • Managers ill-fitted to be counselors
    Promotions
    • Psychological affirmation
    • Social support
    11/09/2010
    47
  • Learning-focused change interventions
    Perspectives
    • Developmental
    • Instructional
    Promises
    • Enhanced abilities
    • Energized and expanded self confidence
    Problems
    • Undeveloped capacities
    • Weak self concept
    Points
    • Skills
    • Self concept
    Perils
    • Unlearning/learning resistance
    • Individual learning ceilings
    Promotions
    • Equipping
    • Encouragement
    11/09/2010
    48
  • Economics-focused change interventions
    Perspectives
    • Developmental
    • Instructional
    Promise
    • Strategic resource acquisition
    • Strategic resource allocation
    Problems
    • Inadequate resources
    • Unavailable resources
    Point
    • Resources
    • Distribution systems
    Perils
    • Things >People
    • Measuring short/long term costs/benefits
    Promotion
    • Resource development
    • Resource distribution
    11/09/2010
    49
  • Politically-focused change interventions
    Perspectives
    • Political
    • Alliances
    Promises
    • Power is acquired
    • Power is appreciated
    • Power is applied with principle
    Problems
    • Low power
    • Poor negotiation skills
    Points
    • Power
    • Networking
    Perils
    • Unprincipled manipulation
    • People treated as means rather than ends
    Promotions
    • Power development
    • Political maneuvering
    11/09/2010
    50
  • Entrepreneurially-focused change interventions
    Perspectives
    • Innovation
    • Alliances
    Promises
    • Quick on the OUDA Loop
    • Aggressive opportunism
    • Lean organizations
    • Appetite for risk taking
    Problems
    • Organizational timidity (risk aversion)
    • Organization bureaucracy
    Perils
    • Inadequate discussion and debate about options
    • Action prized over thinking
    Points
    • Opportunity recognition
    • Opportunity analysis
    • Risk management
    Promotions
    • Courage and creativity
    • Removing organizational structural and procedural impediments
    11/09/2010
    51
  • Bureaucratically-focused change interventions
    Perspectives
    • Incremental
    • Experimental
    Promises
    • Identifying small, high-success probability targets of opportunity
    • Achievable change expectations
    • Slow, steady progress up the learning curve
    Problems
    • Lack of experience with change
    • All-or-nothing mentality
    • Rush to judgment
    Perils
    • Too little change, too late
    • Assumes evolution will triumph over revolution
    Points
    • Phased, limited change
    • Feedback
    Promotion
    • A variety of small adaptations
    • Growing accumulation of small successes
    11/09/2010
    52
  • Value-focused change interventions
    Perspectives
    • Inspirational
    • Emotional
    Promises
    • Articulation of deeply held values
    • Alignment of personal values with group causes
    Problems
    • Lack of passion for change
    • Lack of sustained commitment for change
    Perils
    • Mere cheerleading
    • Triumph of emotion over substantive development
    Points
    • Ideals and values
    • Motivation
    Promotion
    • Charismatic leadership rooted in passionate vision
    • Compelling devotion to change
    11/09/2010
    53
  • Environmentally-focused change interventions
    Perspectives
    • Environmental
    • Catalytic
    Promises
    • Environmental opportunity perspective
    • Alignment of personal values with group causes
    Problems
    • Ignorance of environmental realities
    • Intransigence in the face of environmental pressures
    Perils
    • Inaction because of the desire for more certainty
    • Reactive rather than proactive responses
    Points
    • Environmental sensitivity
    • Environmental adaptability
    Promotion
    • Environmental awareness and analysis
    • Early and sustained adaptability
    11/09/2010
    54
  • Organizational change interventions: some observations
    Change is occurring somewhere, somehow, in every organization.
    Changes occur in different degrees and stages in various places throughout the organization
    11/09/2010
    55
  • Organizational change interventions: some observations
    However, change is also resisted – there are individual, interpersonal and institutional reasons for this resistance
    Not all resistance is bad – organizations are designed to bring stability and predictability
    11/09/2010
    56
  • Organizational change interventions: some observations
    Effective change management requires managing the meaning of the change
    What the existing state is and what the desired state is
    What elements need to be changed to reach the desired state
    How and when the changes needed can best be achieved
    11/09/2010
    57