29 Moves to a Breakthrough Business StrategyHow to Create and Exploit a Unique Strategic Positionby Andrew PearsonTurning ...
01280 844966 info@coaching-business.co.uk www.coaching-business.co.uk Page 2Project direction b29 MOVES TO A BREAKTHROUGHB...
01280 844966 info@coaching-business.co.uk www.coaching-business.co.uk Page 329 MOVES TO A BREAKTHROUGH BUSINESS STRATEGY© ...
01280 844966 info@coaching-business.co.uk www.coaching-business.co.uk Page 4CONTENTSPAGEPreface 4Forward 61. Managers and ...
01280 844966 info@coaching-business.co.uk www.coaching-business.co.uk Page 5PREFACEMuch of what is emphasised here reflect...
01280 844966 info@coaching-business.co.uk www.coaching-business.co.uk Page 6Cook himself said: “Press on. Nothing in the w...
01280 844966 info@coaching-business.co.uk www.coaching-business.co.uk Page 7FORWARD29 Moves To Formulate And Exploit A Sup...
01280 844966 info@coaching-business.co.uk www.coaching-business.co.uk Page 81. MANAGERS AND STRATEGYThe challenge facing m...
01280 844966 info@coaching-business.co.uk www.coaching-business.co.uk Page 92. STRATEGIC REALITIES1. The Customer is the F...
01280 844966 info@coaching-business.co.uk www.coaching-business.co.uk Page 10ii. What does the customer buy altogether – i...
01280 844966 info@coaching-business.co.uk www.coaching-business.co.uk Page 11Let us now address these four vital moves.2. ...
01280 844966 info@coaching-business.co.uk www.coaching-business.co.uk Page 12must also diversify. It is necessary to obser...
01280 844966 info@coaching-business.co.uk www.coaching-business.co.uk Page 13give a configuration that equals at least fiv...
01280 844966 info@coaching-business.co.uk www.coaching-business.co.uk Page 145. Structure and StrategyThere are conflictin...
01280 844966 info@coaching-business.co.uk www.coaching-business.co.uk Page 154. STRATEGIC MANAGEMENT6. Establish How Strat...
01280 844966 info@coaching-business.co.uk www.coaching-business.co.uk Page 16Clearly, the challenge facing managers involv...
01280 844966 info@coaching-business.co.uk www.coaching-business.co.uk Page 17facilitating mechanisms or as background. And...
01280 844966 info@coaching-business.co.uk www.coaching-business.co.uk Page 185. CREATING STRATEGY9. Determine the Vision o...
01280 844966 info@coaching-business.co.uk www.coaching-business.co.uk Page 1910. Establish the Mission of the BusinessUlti...
01280 844966 info@coaching-business.co.uk www.coaching-business.co.uk Page 2011. Decide the Purpose of the BusinessMaking ...
01280 844966 info@coaching-business.co.uk www.coaching-business.co.uk Page 21One way of simplifying the issue is to consid...
01280 844966 info@coaching-business.co.uk www.coaching-business.co.uk Page 22a larger range of aircraft, as well as provid...
01280 844966 info@coaching-business.co.uk www.coaching-business.co.uk Page 23• Service – availability, pre-sales advice, w...
01280 844966 info@coaching-business.co.uk www.coaching-business.co.uk Page 2414.Use Creativity to Make Superior Strategies...
01280 844966 info@coaching-business.co.uk www.coaching-business.co.uk Page 2515.Design a Supportive Organisational Environ...
01280 844966 info@coaching-business.co.uk www.coaching-business.co.uk Page 26company’s progress against all aspects of its...
01280 844966 info@coaching-business.co.uk www.coaching-business.co.uk Page 27reside in the parent company, and deprivethei...
01280 844966 info@coaching-business.co.uk www.coaching-business.co.uk Page 28• Innovation – the ability to come up with ne...
01280 844966 info@coaching-business.co.uk www.coaching-business.co.uk Page 29iii. The mistake that established competitors...
01280 844966 info@coaching-business.co.uk www.coaching-business.co.uk Page 306. EVALUATING STRATEGYOnce the hurdle of desc...
01280 844966 info@coaching-business.co.uk www.coaching-business.co.uk Page 31In fact, failure to do so will probably resul...
01280 844966 info@coaching-business.co.uk www.coaching-business.co.uk Page 32such questions. Where problems exist, possibl...
01280 844966 info@coaching-business.co.uk www.coaching-business.co.uk Page 33• Costs incurred by the hostile reaction of c...
01280 844966 info@coaching-business.co.uk www.coaching-business.co.uk Page 3424. Ensure Targeted Customers are Offered a C...
01280 844966 info@coaching-business.co.uk www.coaching-business.co.uk Page 35The answer to this question is invariably an ...
01280 844966 info@coaching-business.co.uk www.coaching-business.co.uk Page 36Consequently, it is necessary for managers to...
01280 844966 info@coaching-business.co.uk www.coaching-business.co.uk Page 37Traditionally, implementation has been viewed...
01280 844966 info@coaching-business.co.uk www.coaching-business.co.uk Page 38Entrepreneurship may be described as a manage...
01280 844966 info@coaching-business.co.uk www.coaching-business.co.uk Page 39Thus strategic innovator can only stay ahead ...
29 Moves to a Breakthrough Business Strategy
29 Moves to a Breakthrough Business Strategy
29 Moves to a Breakthrough Business Strategy
29 Moves to a Breakthrough Business Strategy
29 Moves to a Breakthrough Business Strategy
29 Moves to a Breakthrough Business Strategy
29 Moves to a Breakthrough Business Strategy
29 Moves to a Breakthrough Business Strategy
29 Moves to a Breakthrough Business Strategy
29 Moves to a Breakthrough Business Strategy
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29 Moves to a Breakthrough Business Strategy

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29 Moves To Formulate And Exploit A Superior Business Strategy’ is designed to be an easy read and a concise overview of a subject of considerable importance to managers responsible for business strategy.
The format is designed to address issues that many managers tend to overlook. The moves themselves are intended to offer insight and to prompt discussion. The comments that accompany each shift provide managers with a basis for assessing their own responses to what are actually tough questions.
Each comment embodies current thinking on the subject in question and signals the practices of successful companies, together with fresh insight on the subject. Although the shifts apply to every company, the response will vary according to the size, complexity and sophistication of individual businesses.
This paper itself sets out the moves mangers can consider in order to create and exploit superior business strategies.

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29 Moves to a Breakthrough Business Strategy

  1. 1. 29 Moves to a Breakthrough Business StrategyHow to Create and Exploit a Unique Strategic Positionby Andrew PearsonTurning good businessinto unique businesses
  2. 2. 01280 844966 info@coaching-business.co.uk www.coaching-business.co.uk Page 2Project direction b29 MOVES TO A BREAKTHROUGHBUSINESS STRATEGYbyAndrew M. Pearson MBA© Copyright 2012 Andrew M. PearsonCoaching Business
  3. 3. 01280 844966 info@coaching-business.co.uk www.coaching-business.co.uk Page 329 MOVES TO A BREAKTHROUGH BUSINESS STRATEGY© Copyright 2012 Andrew M. PearsonALL RIGHTS RESERVED.No part of this report may be reproduced or transmitted in any form whatsoever, electronic, or mechanical,including photocopying, recording, or by any informational storage or retrieval system without express written,dated and signed permission from the author.DISCLAIMER AND/OR LEGAL NOTICES.The information presented herein represents the view of the author as of the date of publication. Because of therate with which conditions change, the author reserves the right to alter and update his opinion based on the newconditions. The report is for informational purposes only. Whilst every attempt has been made to verify theinformation provided in this report, neither the author nor his affiliates/partners assume any responsibility forerrors, inaccuracies or omissions.
  4. 4. 01280 844966 info@coaching-business.co.uk www.coaching-business.co.uk Page 4CONTENTSPAGEPreface 4Forward 61. Managers and Strategy 72. Strategic Realities 83. Strategic Management 144. Creating Strategy 175. Evaluating Strategy 29APPENDIX I: Sources of Strategic Innovation 40APPENDIX 2: Strategic Planning 42APPENDIX 3: Objectives 44Additional Sources of Information 46Notes 47About the Author 48
  5. 5. 01280 844966 info@coaching-business.co.uk www.coaching-business.co.uk Page 5PREFACEMuch of what is emphasised here reflects the story of Andrew Cook, who, in the late 1970sand early 1980s transformed William Cook, a well-established family manufacturer of steelcastings, into a market leader when all was against him.At that time, the UK economy was really tough; output in the industry had been falling for anumber of years. On taking over the company, Cook went completely against the trend andinvested in increased efficiency, qualityand capacity in the lowest-value segment– all at a time when capacity was doublethe volume of industry sales. Rivalsthought he was mad. Indeed, conventionalthinking would have dictated that Cookmilk the business and leave the industryor switch to a higher-value anddifferentiated niche.Remember, too, that William Cook couldn’t boast the image of a BMW or an Apple among itscustomers; neither was it a technological leader, nor did it possess some secret process toguarantee extra income. Nonetheless, Andrew Cook backed his intuition. In a few months,his efforts began to yield results.His investment, within a hostile environment, transformed the business. Within a few years,sales had risen by 10% against industry losses. He was the first to invest in BS5750. Within acouple of years, he had acquired two of his major competitors and by the 1990’s, he hadbecome the market leader.“What did he do?” you ask. It’s really quite straightforward. Andrew Cook took advantage ofharsh conditions to provide precisely what customer’s wanted – a fast service and even moreaffordable quality product! His improvements saved customers money, which naturallyincreased demand for his product.When others saw what he had achieved, they changed too. They sought to catch up andtriggered intense battles in a long-lasting… but that’s another issue.What an outstanding story! But what is the worth of its telling? True, there are talks ofdownturn as I write. Indeed, Andrew Cook provides us with insights into how to manage insuch times: concentrate on the core business, customers and value-differentiating activities.Whatever else, we can be sure that Andrew Cook acted with tremendous tenacity andcourage to save his company and give it primacy in his industry. His actions reflectcapabilities not often mentioned in boardrooms or training rooms – the hidden hallmarks ofpersistence, determination and sincerity of action, which are often overlooked when eagerimitators review pioneers’ strategic innovations and successes.Research shows that successful strategies sharethe same fundamental principles. Thus, AndrewCook’s strategy shares the same principles thatenabled Apple to succeed in revolutionising theway we listen to music.
  6. 6. 01280 844966 info@coaching-business.co.uk www.coaching-business.co.uk Page 6Cook himself said: “Press on. Nothing in the world can take the place of persistence. Talentwill not; nothing is more common than unsuccessful men with talent. Genius will not;unrewarded genius is almost a proverb. Education will not; the world is full of educatedderelicts.”But are the great qualities of persistence and determination alone omnipotent? I think not,even though they are the stuff of legend.There is more. This book, a shortened version of a larger casebook1What is involved in making a good strategy? And what is involved in implementing one?, forms the subject ofanother vital element of formulating and exploiting a superior strategy. It takes on theperspective of a senior manager, like Andrew Cook, about to develop a new strategy, orimprove the current one. It asks how a manager should think about strategy and what he orshe should address.The focus of this work is strategic management and the result of my own research and study,and indeed business experience, of the past 20 years or so. In seeking to establish why somebusiness strategies are more successful than others, my own observations show thatsuccessful strategies share the samefundamental principles.Thus the principles of Andrew Cook’ssuccessful strategy are fundamentally thesame as those that enabled Apple tosucceed in revolutionising the way welisten to music quite recently and which propelled Marks and Spencer to leadership 100years ago.The basic tenet of this book and that of its bigger brother then, is that a superior strategy isall about finding and exploiting a unique strategic position, while always seeking newstrategic positions. Thus strategy formulation is a never ending quest.In addition to the principles of strategy, the book also explores the principles of strategymaking. Here it is important to note that designing a strategy is not a science. It is an art. Itis the art of asking the right questions, of exploring possible answers and experimenting withpossible solutions in a creative way. Often formulating the questions is more productivethan finding a ‘solution,’ thinking through an issue from a variety of angles is often moreproductive than collecting and analysing unlimited data and experimenting with new ideas isoften more productive than conducting extensive analysis and discussion.If managers understand the principles of strategy and strategy making they will be morelikely to craft a superior strategy in good as well as harsh times.1How to Craft Breakthrough Business Strategies for Your BusinessIf managers understand the principles of strategyand strategy making they will be more likely tocraft a superior strategy in good as well as harshtimes.
  7. 7. 01280 844966 info@coaching-business.co.uk www.coaching-business.co.uk Page 7FORWARD29 Moves To Formulate And Exploit A Superior Business Strategy’ is designed tobe an easy read and a concise overview of a subject of considerable importance to managersresponsible for business strategy.The format is designed to address issues that many managers tend to overlook. The movesthemselves are intended to offer insight and to prompt discussion. The comments thataccompany each shift provide managers with a basis for assessing their own responses towhat are actually tough questions.Each comment embodies current thinking on the subject in question and signals thepractices of successful companies, together with fresh insight on the subject. Although theshifts apply to every company, the response will vary according to the size, complexity andsophistication of individual businesses.This paper itself sets out the moves mangers can consider in order to create and exploitsuperior business strategies.The first section; Managers and Strategy provides the background to the 29 Moves. Thesecond section Strategic Realities covers the first 5 Moves. Then the third; StrategicManagement addresses 3 Moves concerned with the process of strategy formulation. Sectionfour; Creating Strategy, comprises 10 Moves and the last section Evaluating Strategypresents the final 10 Moves to assess the efficacy of a superior strategyWhile each Move is presented in a particular order, it is important to note that individualmanagers might prefer to begin at different points within the framework. It is stronglyrecommended though, that managers consider all of the Moves.
  8. 8. 01280 844966 info@coaching-business.co.uk www.coaching-business.co.uk Page 81. MANAGERS AND STRATEGYThe challenge facing managers is how to reinvent business, design new ways of doingbusiness, lead the way in creating value for customers and stakeholders, and cope with majorchange as the only real way to survive and move forward.However, little has been said about how such superior strategies can be created or howmanagers can develop innovative strategies. It is fair to say that, after decades of research onthe subject, there is surprisingly little agreement on what strategy really is. Similardisagreements also surround the process for developing effective strategies. This debate hasraged for years. It disputes whether or not a company can proactively choose its strategythrough a process of rational thinking or whether it must allow its strategy to emergethrough a process of creativity, planning and experimentation.But strategic formulation need not be so confusing!Increasingly, the really devastating competition does not come from expected andanticipated sources – the traditional ‘me-too’ same-technology competitor – invariably itcomes from someone that no one has heard of before.Did we really think easyJet could change the face of air travel in Europe? Did we really thinktraditional travel agents actually expected Travel.com to happen and work? Not in the least!Strategic innovators, such as Swatch, Lego, Starbucks, Direct Line and countless others haveall ‘broken the rules of the game’ and achieved unique strategic positions. The question is:how did they do it?The answer is that they all created a unique strategic position based on:• a clear purpose and vision• a targeted customer need and profile• an offer of superior customer value and loyalty• a reinforcing system of activities and strategic assets to support its chosenpositioning• an organisational environment to support the development and implementation ofsuperior strategies.Clearly, for this to happen, business leaders and managers responsible for the strategicdirection of their companies need to adopt a questioning attitude; an approach thatcontinually challenges the status quo – no matter how successful the business is.Like a latter-day Francis Drake, each business leader must set out, with his or her colleagues,to explore their industry’s changing seascapes, in search of new and unexploited strategicpositions to colonise.
  9. 9. 01280 844966 info@coaching-business.co.uk www.coaching-business.co.uk Page 92. STRATEGIC REALITIES1. The Customer is the FocusThe essence of business diagnosis is an analysis of its result areas; that is its revenues,resource allocation and leadership position, its cost centres and cost structure. Yet thisanalysis answers the question: How are we doing?After all business is a process which converts a resource, distinct knowledge into acontribution of economic value in the market place. The purpose of a business is to create acustomer. And knowledge alone gives the products of any business that leadership positionon which success and survival ultimately depend.But how would we know whether we are doing the right things? What is our business – andwhat should it be? The questions call for a different analysis, an analysis that looks at thebusiness from the outside.The view of a company’s products or services from the outside begins with the knowledgethat every company serves either customers, or markets or end –uses. It is a view that hasthree dimensions. It asks; Who buys? Where is it bought? And What is it bought for? Whichof the three is the appropriate dimension for a given business requires study.Quite often managers overlook a dimension because it is considered to be inappropriatewhen in fact it is actually veryimportant and thereforesuperimpose the findings ofanalysis of one of these dimensionson another one. Even where there isa clearly identifiable customer, it isas well to examine the business inrelation to its markets or the end-uses of the product or service. Thisis the most effective way to becertain of defining adequately whatsatisfaction it serves, for whom andhow and ultimately to determinethe developments and factors its future will depend.Thus these market realities prompt a single deduction; that the most important questionsabout a business are those that attempt to enter the real domain of the customer – a sphereof influence in which they seldom have sway!Even though the standard questions should be asked the emphasis should be on differentquestions that are rarely asked! These include:i. Who is the non customer even though he is or might be in the market and why is he anon customer?The standard questions to ask of market research shouldinclude: Who is the customer? Where is the customer?How does he buy? What does he consider value? Whatpurposes of the customer do our products satisfy? Whatrole in the customers life and work does our particularproduct play? How important is it to him? Under whatcircumstances - age, for instance, or structure of thefamily - is this purpose most important to the customer?Under what circumstances is it least important to him?Who are the direct and the indirect competitors? Whatare they doing? What might they be doing tomorrow?
  10. 10. 01280 844966 info@coaching-business.co.uk www.coaching-business.co.uk Page 10ii. What does the customer buy altogether – in other words what share of his disposableincome goes on products or services like ours? The findings actually prompt two furtherquestionsiii. What do customers and non-customers buy from others? And what value do thesepurchases have for them? Two lines of• Do they actually or potentially compete with the value and satisfactions our productsor services offer?• Or do they give value and satisfactions our products or services - or those we couldoffer – could also offer, and perhaps better?iv. What product or service would fulfil the satisfaction areas of real importance - both thosewe currently serve or might serve? Four further lines of questioning open up:• What would enable customers to do without our products or services? Is iteconomics? Is it such trends as shifts from low price to convenience? Are we ready toaccommodate these influences?• What product or service perceptions influence the customer’s mind and economy?Often the configurations of the supplier and the customer are often very differentbecause they have dissimilar experiences and they look for different things.• Who are our non competitors - and why? There is nothing that changes an industry -that yesterday seemed so solid - faster than the effective competition of a totalnewcomer! So where are the opportunities that others see and will exploit that wecan’t - or won’t - see and exploit?• Whose non competitor are we? Where are the opportunities we neither see - norexploit - because we do not consider them part of our industry at all?As these questions show compelling us to find the realities of the customer situation andto see the business from the perspective of the market and customer and get a businessinto market focussed action.Whatever a company’s agenda it must decide what strategy making should achieve and howthe outputs of this activity should be managed. At the end of the day it is obliged to make anumber of choices based on:• The opportunities it wishes to pursue and the risks its willing to accept.• The right balance between specialisation, diversification and integration• The decision to ‘build or buy’ to achieve its goals• The organisational structure, capabilities and activities to exploit its opportunitiesand plans for performance.
  11. 11. 01280 844966 info@coaching-business.co.uk www.coaching-business.co.uk Page 11Let us now address these four vital moves.2. Pursuing right opportunitiesThe actions of a business should be selected so as to maximise opportunity. These arederived from a combination of economic, organisational and market analysis andexperimentation. There are three kinds of opportunities:• Additive,• Complementary,• Breakthrough.i. An additive opportunity more fully exploits already existing resources. It does notchange the nature of a business. Such an opportunity would take the form of anextension of an existing product line into a new and growing market. The pharmaceuticaldistributor who extends his marketing from distribution management to logistics andinformation management for hospitalpharmacies avails himself of anadditive opportunity - even thoughhis products and his selling methodsmay need considerable change.ii. The complementaryopportunity is something newwhich, when pooled with the presentbusiness, results in a new total largerthan the sum of its parts. Theopportunity of pharmaceuticaldistributor establishing a drugadministration business in patientcare, through acquisition of acompany that made machines thatautomated much of the drugadministration process, is acomplementary opportunity.iii. The breakthrough opportunity changes the fundamental economic characteristicsand capacity of the business. A breakthrough opportunity requires great effort. Itrequires le employment offirst-c1ass resources, research and development and especiallyhuman resources. And the risk is always great.3. Specialization, Diversification And IntegrationEvery business needs a competence – a hub from which leadership will result. Everybusiness therefore must specialize and moreover obtain the most from its specialization. ItThe story of the IKEA - one of Europe’sspectacular recent growth companies in - is abreakthrough story. IKEA’s business modelwas developed to provide customers with apremium and economic offer in homefurnishings. It was first offered to a good manylarger retailers, all of whom turned it down astoo contentious and risky to develop. Yet itpersisted and through considerable oppositionit developed a business model that worked.And then the rewards were extraordinary andcame quickly.No company that wants to have a future canafford to spurn the breakthrough opportunity.This classically is the opportunity to make thefuture happen. But the effort needed is sogreat that the breakthrough, if it issuccessfully realized, should always be capableof creating a new market rather than anadditional product.
  12. 12. 01280 844966 info@coaching-business.co.uk www.coaching-business.co.uk Page 12must also diversify. It is necessary to observe that the balance between these two qualitiesdetermines the scope of a business.Yet we must also note that specialization and diversification in isolation from each other areseldom productive. The business that is only a specialty is rarely much more than a lifestylebusiness. As a rule it will not grow and is likely to pass away with its owner. The businessthat is diversified without specialization or specific competence becomes unmanageable andultimately unmanaged.A business needs to integrate itsactivities into one central resource– one area of knowledge or onemarket. This is important becausemanagement must remain intouch with the root competenceand makes the appropriatebusiness decisions. Besides this, abusiness needs diversification togive it the flexibility needed in aworld of rapidly changing marketsand technologies.A company should either bediversified in products, market,and end-uses or highlyconcentrated in its basicknowledge area; or it should be diversified in its knowledge areas and highly concentrated inits products, markets and end-uses. Anything in between is likely to be unsatisfactory.The best examples are the classical entrepreneurs. These were the business builders inEurope, the United States and Japan in the nineteenth and twentieth century’s. They aretoday’s business builders in Russia, China, Brazil and India. India’s Tata family, for instance,has built one of the most diversified entrepreneurial empires of the world. Typically, theseentrepreneurs start, control and manage a host of businesses, sugar mills, textile companies,banks, and cement plants, small steel fabricating plants, and so on.The scope of a business also has to be redefined when there is a major change in knowledge.Any change, finally, in the idea of business and its excellence calls for a redesign of thebalance of specialization and integration. Forward or backward integration is often used as ameans to diversify or to concentrate.Specialization, diversification and integration are strategies of high impact but also of highrisk. They should be subject to two tests: the test of economic results, and the test ofeconomic risk.The configuration and scope chosen should make the business capable of so much greaterperformance as to change the characteristics of the business altogether. Two plus two shouldTesco, Britain’s biggest supermarket chain exemplifieseither balance -or the complete shift from one to theother. For many years the company concentratedsuccessfully on one knowledge area; food and drinkretailing. In its customers and markets, however, it waswidely diversified, selling to consumers all over theworld.In recent years Tesco’s has diversified into homeentertainment, computers and white goods. It runs abank, a telecoms company and a legal-services firm andit even has its own container port. Thus Tesco’s hasshifted from concentration on one type of product toconcentration on one customer, and fromdiversification in markets and customers todiversification in knowledge and product.
  13. 13. 01280 844966 info@coaching-business.co.uk www.coaching-business.co.uk Page 13give a configuration that equals at least five. And the risk incurred if anything changes inmarket or knowledge, products or process, should be one the business can afford to take.4. Build or BuyThe main thrust of development in a business comes from within - and therefore requirestime. But capital can replace time: a business can buy rather than build. And in a number ofinstances where there is neither the time nor the knowledge to build, a business has to resortto finance: whether through the sale of a subsidiary business or product line, or viaacquisition, merger, and joint venture.Sale is always to be considered when a business or a product line has come to have morevalue for somebody else. The main line of business growth may have by-passed a product, forinstance. In 1986 Cadbury’s sold a number of brands that no longer fitted its focus ofconcentration to Premier Brands owned by its employees in a management buyout.A joint venture is often the best way to enter a market different from that of either parentcompany, or to bring two separate knowledge resources to bear on a new opportunity. Again,building would take time. Thus a joint venture offers a British company attempting to entera culture such as Japan, Saudi Arabia or China for example would benefit from knowledge ofthe local market, of traditions - and above all of language. On the other hand the hostcompany would save time by acquiring relevant and valuable technology, product andprocess knowledge, and technological research. Each partner, therefore, contributessomething unique.Acquisition is often able to changethe balance between specializationand diversification. It can bring newcompetence and new knowledgeinto the business. However, buyingtime is never cheap. If one buys thetime which somebody else has putinto knowledge, resources, products,markets, one pays a premium price.Unless the acquisition promises toadd a great deal to the business, itwill never justify its cost.Finally, buying time never succeeds unless it is followed by purposeful internal efforts. Everycompany that has put its trust in financial planning as a substitute for management, itscompetence, and its willingness to face up to tough decisions will fail. Careful financialmanagement may save time and telescope years of growth and development into one legaltransaction, however they can also compound years of problems into a very short timescale!There has never been a strategic alliance that has not created as many problems in terms ofpeople issues and relationships, habits and expectations as would have been created bydeveloping a new and larger business from within. Thus financial planning is tool of businesspolicy; not a substitute for it.Acquisition is similarly used for the business thatcannot grow for want of resources and capabilities.In 1995 Channel Express acquired Fowler Welch inseeking to expand its fresh produce distributionbusiness on mainland UK, faced major changes inthe industry imposed by the supermarkets. It wasforced to move quickly to become accredited andacquire relevant channels, technology and knowhowby the retail chains. Only acquisition of anotherbusiness could bring about the rapid expansionnecessary.
  14. 14. 01280 844966 info@coaching-business.co.uk www.coaching-business.co.uk Page 145. Structure and StrategyThere are conflicting views concerning the relationship between organisational structure andthe ability of a company to produce results and to grow. Writers including Chandler2 believethat structure follows strategy and others that growth demands the right structure.3This means that structure must support the results that are relevant to the purpose of thebusiness, its excellence, its priorities and its opportunities. There is, therefore, no point insetting up as businesses activities which do not deliver a distinct product or service to adistinct market. Yet no matter how well suited to the needs of todays business, organizationmust be reviewed as the business changes. Therefore questions concerning how best tostructure the business to serve the goals of the business arise. These include such choices aswhether or not to decentralise the company into separate components or whether or not toorganize specific responsibilities aroundimportant capabilities.Thereality, according to Peter Drucker is that the right structure does not guarantee results butthe wrong structure can suffocate even the best-directed efforts.These questions even though exercisedin large companies need to be addressedin smaller companies and in thedevelopment of entrepreneurialventures in established companies.2Professor Alfred D. Chandler3Edith PenroseThe areas of opportunity and risk; scope; make orbuy and organization are essential issues for thedevelopment a programme for performance becausethe strategic decisions in these four areas will largelydetermine whether the means chosen by a businessare adequate to its goals.
  15. 15. 01280 844966 info@coaching-business.co.uk www.coaching-business.co.uk Page 154. STRATEGIC MANAGEMENT6. Establish How Strategy Is Defined In The BusinessWhile this question is easy to ask, it is often difficult to answer because numerous anddiverse definitions of ‘strategy’ abound. As a result, managers frequently come to companieswith different and competing definitions of business strategy. This often causes confusionand sometimes leads to conflict when managers come together to revise or formulate newstrategies.Rather than state and debate alternative definitions, this document imparts a modern-dayapproach to strategic management, which strikes the balance that many directors aresearching for. It contends that to besuccessful a company must create andexploit a unique strategic position in itsindustry.This means that a company must decidewhich customers group to target, whatproducts and services to offer them andhow it will archive this in an efficient way. Moreover, since even the best strategies havelimited life, managers must search for new strategic positions on an ongoing basis.The precept necessarily involves the determination of long-term goals (vision and mission)as well as medium term objectives that exploit a company’s sources of competitive advantageand which address important stakeholder needs.This particular view of strategy answers the essential questions which managers responsiblefor the strategic direction of their businesses should be concerned. It is practical anddynamic and puts creativity and innovation back into strategic management – somethingthat has been sadly lacking for a number of years.7. Establish the Basis of Strategic Management in the BusinessIf it was pertinent to demonstrate that a company was being managed effectively from astrategic point of view it would be necessary to show first that its managers appreciated fullythe dynamics, opportunities and threats present in its competitive environment, andsecondly that the company’s resources were being managed strategically bearing in mind itsstrengths and weaknesses and that the company was exploiting its opportunities. In otherwords key success factors and distinctive capabilities would be matched. Moreover, aspotential new opportunities need to be sought, resources and capabilities need to bedeveloped to take advantage of them.A third important issue is that the values of the business match the needs of the environmentand key success factors. It’s actually the values and culture of a company that determinewhether the environment and the company’s resources are correctly matched and remain soin changing circumstances.Effectiveness in strategic management may beassessed by managers’ ability to continually seek outand take advantage of new opportunities and ensurethat their company’s resources are developed so thatits core capabilities remain congruent with changingconditions in the environment.
  16. 16. 01280 844966 info@coaching-business.co.uk www.coaching-business.co.uk Page 16Clearly, the challenge facing managers involved in strategic management is to ensurecongruence between each of these three essential elements of strategic management. Inpractice many companies experience a level of ‘drift’ from this ideal. J.L. Thompson suggeststhree examples of drift:• A commonplace form of drift is ‘strategic drift’. A company might be so internallycohesive that changes in customer demands and the emergence of fresh competitionmake the company’s products or services less attractive than formerly. The challengeis to realign the business with its environment, something that a change of leadershipand new ideas would resolve.• A company might be aware of what constitutes success in its market but just not beable to deliver suitable levels of quality and service, for want of key skills andcapabilities. Owing to its customer orientation, the business might fire fight its wayout of quality and service problems. A more proactive and entrepreneurial approachwould strengthen the resource and capability base to achieve congruency.• A business might enjoy strategic positioning without a culture of empowerment,creativity and improvement. Even though such a company might experience a periodof success, perhaps as a result of good fortune rather than judgement, it reallyrequires a change of leadership to redefine culture and values, and thereby sustainand advance the company’s positioning.All managers have implicit or explicit models for their companies, including assumptionsabout the environment, specifically markets, customers and essential technologies; businesspurpose or mission, and the distinctive capabilities required to fulfil the mission.What is more these assumptions must be realistic, congruent, communicated andunderstood so as to achieve this they must be evaluated frequently and rigorously.8. Choose Effective Strategic Planning ProcessesMany authorities present the process of strategic planning as an arranged sequence of steps,involving the application of rational and analytical techniques [Invariably their interest is inincreasingly sophisticated analysis and the output of carefully constructed strategic plansproduced to a blueprint. They state that such approaches provide the means to:• Identify areas of strategic opportunity where there are identifiable markets andwhere profit, management and resources are largely independent of other sectors• Draw up strategic plans based on a ‘comprehensive analysis of market attractiveness’,competitors’ long-term goals, key strategies, operations and fund requirements• Review these plans with a 7 to 10-year planning horizon, assess total risk,profitability, cash flow and resource requirements, and allocate priorities againstspecific targets and funds. [See Appendix 2 for such a model.]A feature of this approach is that matters of corporate culture, management style,information flow, organisational structure, participation and so forth are regarded either as
  17. 17. 01280 844966 info@coaching-business.co.uk www.coaching-business.co.uk Page 17facilitating mechanisms or as background. And as such they are set aside as unimportantcompared with the real business of complex analysis and plan writing. But this perspectiveactually misses the point.The truth is that such matters are far from being mere background – they are the process!Moreover, they offer strategic planners a powerful source of leverage because the way thestrategic planning process is designed and managed will have a direct impact on what goesinto the plan and, even more to the point, whether anything useful happens as a result ofplanning.Apart from anything else, it is one of the few opportunities managers have to do somethingpractical to move their company’s organisational development, learning and culture towardsthe business’ chosen strategic positioning, rather than vice versa. Thus a managed planningprocess offers the means to guide organisational development, because the planning processis a further form of organisational ‘learning’ and adaptation.This is a crucial point to appreciate because a managed planning process promotes amanagement agenda that actually achieves results in the targeted marketplace. The planningfocus is ‘ownership’ and commitment – not the techniques and formal methods ofconventional strategic planning. There are few rewards for well-written and nicely boundplans incorporating the latest computerised models. The real rewards come from excitingand motivating people enough to help create and exploit the business strategy and do thethings that really matter for customers.
  18. 18. 01280 844966 info@coaching-business.co.uk www.coaching-business.co.uk Page 185. CREATING STRATEGY9. Determine the Vision of the BusinessSuccessful managers and business owners rarely stumble on success; success is a reward fordirecting their actions in an appropriate way towards some opportunity. Effective businessleaders know where they are going and why. They are focussed on the achievement of suchgoals.The concept of vision specifies a destination rather than a route to act out or pass along. Asmanagers manage more than just organisations; they manage THE CREATION OF A NEWAND BETTER WORLD. This world offers the possibility that value will be generated andmade available to the ventures stakeholdersVision, therefore is a picture of the new world a manager or business owner wishes to create.It is a picture of the source of new value, why people will be better off, and the relationshipsthat will exist. Ultimately it is a picture of why people will be attracted to their ventures.The picture may be detailed and painted with fine brush strokes or the detail may be limitedand the picture drawn from broad brush strokes. Whatever the scope and shape of the detail,vision draws a venture forward and willtake on an existence all of its ownVision is the starting point for givingshape and direction to a businessventure. Thus some sense of vision mustexist before strategy development andplanning can start. Vision flows from the notion that things might be different from, andbetter than they are presently.A vision might present itself to a manager quite suddenly or it might emerge quite slowlytaking shape as he explores an opportunity and recognizes it’s potential. But no matter howit comes about vision is something that is put together personally.It is primarily a communication with oneself. As such this is akin to communicating withanyone else. The purpose of any communication is that it should be understood, thoughtthrough and effectively articulated. If it is to be used effectively as a guide to setting goals,developing strategy and attracting support then the manager must become aware of hisvision, isolate it and communicate it to themselves.As vision conveys the manager’s proposals for a new and better world, it behoves him tocommunicate and share his vision to attract other people to the venture and what it canoffer. But such a message must be communicated so that it does not purely impartinformation about the vision – it must also elicit action on the part of the listener. In otherwords communication must get stakeholders to do somethingEffective business people understand this. They identify what the new world will offerstakeholders and assess its attractiveness to them.A vision is a picture of a new and better world that abusiness wishes to create which draws stakeholderstowards the venture and motivates them to work forits success.
  19. 19. 01280 844966 info@coaching-business.co.uk www.coaching-business.co.uk Page 1910. Establish the Mission of the BusinessUltimately, a mission statement provides the answer to the question: ‘What, exactly, is thebusiness all about?’ We may say in addition that a mission statement not only asserts whatthe venture is, but states why it exists, what it will do and what it hopes to achieve!Many mission statements fall short of real value and prove worthless, one reason being thatthey consist of loose expressions such as ‘maximise growth potential’ or ‘provide products ofthe highest quality’.A well crafted mission achieves anumber of important advantages. First itoffers managers an opportunity to shapeand articulate their company’s vision.Then it encourages analysis and offersbusiness leaders a chance to questionand analyse their business purpose aswell as the resources required to realize it. This sort of analysis also helps to define the scopeof the business in respect of an opportunity to be exploited with a particular innovation.It provides a guide for setting objectives, clarifies the paths strategies should take andevaluates their consistency in achieving objectives and for judging demands for resources.Mission facilitates communication with external and internal stakeholders as missionexplains what the business is all about.As the venture grows and develops an effective mission statement offers a constant point ofreference during change. And finally a mission statement locates the venture in the minds ofcustomers & suppliers & reminding them of what it offers and the commitment being madeto themBut what should a good mission statement include? Opinions differ on the subject but in ouropinion there are six potential dimensions of missionFirst of all a mission statement must define a company’s product and market scope. In otherwords what products and or services it will offer a specific group(s) of customers. Secondly, itshould include the benefits offered and the needs served. This is important becausestatements here show how the business connects customer needs to the company’sinnovation.Next is the issue of innovation! The mission statement will express the special and uniquefeatures of products offered by the business and any common product feature that links it tothe company’s range which serves as a platform for new product development in the future.The company’ values may also be included. These reflect its unique ethical or moral stancethat makes the company’s offering particularly attractive to customers and or codifies thespecific belief system of the business. Then finally there is the subject of aspiration. Thiscomponent will state what the venture aims to achieve in the future and as it reachesmaturity.The principal purpose of a mission statement iscommunication, both externally and internally, and,arguably, a major benefit for organisations is thethinking they are forced to do in order to establishsound statements.
  20. 20. 01280 844966 info@coaching-business.co.uk www.coaching-business.co.uk Page 2011. Decide the Purpose of the BusinessMaking this shift might seem simple enough to tackle but, actually, it isn’t. In fact, it can bequite a difficult to do.To begin with it’s important to appreciate that business purpose is not determined by whatthe owners or managers decide to produce, or what they decide to name the company. It isthe customer who determines business purpose, or, more precisely, it is what customers’value that determines what the purpose of a business is.But most managers rarely ask the question at all. And if they do they don’t go on asking it!Most important for successful business is that this question be asked at its inception, in itsdecline and when the business is successful.If managers fail to answer it on the way to success and when successful, they will, even withthe best of products, find themselves spending most of their time selling, rather than gettingon with the job of colonising new positions in the market.The manufacturer of batteries who sees himself in competition only with other batterymanufacturers may have close to down when there is no demand for batteries! But thecustomer doesn’t buy a battery; he buys best way to help him see (amongst many uses). Thismay be in the form of 1 volt, 5 volt or 10 volt batteries. Candle light in the UK at least, hasbeen ruled out. Tomorrow he might use solar power or some yet to be discovered technology.Since the customer decides what the manufacturer really produces, managers have to regardtheir business as that of supplying an easy way to see, his market as the viewing implementmarket and his competition as all suppliers of acceptable ways of viewing things.Demand for batteries therefore depends substantially on managements action in creatingmarkets, in finding new uses, and in spotting, well in advance, market or technologicaldevelopments that might create opportunities for better viewing - or threaten existing uses.This means deciding which of the wants that customers most wish to satisfy fits with thecompany’s most important or most promising products. Thus it is important to talk tocustomers, they hold the answer. Don’t try to second guess them! Find out; Who is the actualand the potential customer? What do they buy? Why do they buy? Where are they? How dothey buy? How can they be reached?12. Sustain Customer Value with Competitive DifferentiationAnother issue of importance to work on is that of competitive differentiation, and the resultthat it achieves in positioning a company’s offering as providing distinctive value in thecustomer’s judgement that is better and preferable to alternatives obtainable fromcompetitors.
  21. 21. 01280 844966 info@coaching-business.co.uk www.coaching-business.co.uk Page 21One way of simplifying the issue is to consider the remarks of a leading light on competitivestrategy, namely Michael Porter.4This line of reasoning raises three important questions when building a business strategy.What differences between the company and others can be created and exploited? In whatways would these represent superior value for customers? Can these differences be defendedand sustained in the face of competition?Porter tells us that there are two sources of competitiveadvantage: low cost and differentiation. He also tells us that a company can compete on anarrow or broad scope, but either as a low-price leader or as a differentiator. He reminds usthat a company can only outperform competitors if it can sustain greater value for customersor create comparable value at lower cost.Superficial differentiation of products or services that are effectively identical is notsustainable. Direct Line introduced telephone-based insurance sales. It changed the wayinsurance was sold in the UK, and drastically reduced policy prices. But virtually everycompetitor can imitate telephone selling – and this is what they did.So what can be done to find and establish real and sustainable differences which matter tocustomers? The answer lies in a company’s operations. In other words if business strategy isabout being different, then the essence of positioning is to select and perform activitiesdifferently, or to perform activities that are different to those of competitors.Approaching sustainable competitive differentiation in this way is also dependent on twofurther conditions. First, competitors cannot imitate or equal a company’s positioning withtheir current operations. Second, the activities needed to support the position shouldactually fit to each other and to the company’s capabilitiesThis means that for a strategy to be superior, it needs to reflect what the business does best –not what its competitors can do just as well.This means that, in attempting to imitate a company’s strategic position, any rival will beforced to replicate not only the company’s key activities, but also the way it carries them out.In other words, the activity system itself!This is not easy because it is much harder for a rival to replicate an array of interlocking andreinforcing systems than it is to copy a product and match a process technology. Forexample, easyJet’s strategic positioning, as a short-haul, ‘no-frills’, low-cost service forbusiness travellers, tourists and students in Europe, rests on an interlocking system of theactivities it performs to support its low-cost convenience positioning. These include fast gateturnarounds, frequent departures with few aircraft, automated ticketing, self seat selection,meals at cost price, and low maintenance and fuel costs.In contrast, a full-service airline performs activities to support a high-cost, full-serviceprogramme. It will provide customers with services to reach any number of destinations with4Michael Porter (1995), Competitive Advantage: Creating and Sustaining Superior Performance. New York:Free Press
  22. 22. 01280 844966 info@coaching-business.co.uk www.coaching-business.co.uk Page 22a larger range of aircraft, as well as providing comfort, offering in-flight meals, arrangingconnecting flights, and checking and transferring baggage.Both types of airline operate viable and valuable strategic positions that are built on entirelydifferent systems of interlocking activities.13. Combine the Company’s Model of Competitive Differentiation andPositioning with What it is Good at DoingThe means to achieve a unique strategic position a company must combine what it is good atdoing, its capabilities, with the model of competitive differentiation and positioning. Then itis possible to focus on the issue of value to the customer and the differentiating capabilitiesavailable to the company to create the value to underpin the company’s competitivepositioning.After examining the characteristics of companies that successfully developed new markets,Pralahad and Hamel5, two important writers on competitive strategy, concluded that thesecompanies understand, exploit, invest to create and sustain differentiating capabilities. 6• Honda – in small enginedesign and manufacturingExamples of such companies include:• Federal Express – in logistics andcustomer service• Google – in providing Internet-rich applications• Microsoft – in user-friendly officesoftware• Sony – in miniaturisation • Coca Cola – in its patent to produce apopular drinkThis view of capability can be combined with competitive differentiation by consideringwhich distinctive capabilities create value for customers and differentiate the business fromthose competitors around which managers can build a sustainable strategic position.The important thing is to decide what value the company’s distinctive capabilities have in aparticular market. Among the chief issues to consider are whether a capability creates valuefor the customer and whether competitors will find it hard to replicate this capability.In the real world, competing with distinctive capabilities is a moving feast; but with creativityand a focus on innovation and novelty in what matters to the customer, there areopportunities for differentiation everywhere. At its simplest level competitive differentiationcomes from three potential sources:• Product – quality, price, performance, features5Pralahad C.K and Hamel Gary (1990) The Core Competence of the Organisation, Harvard Business ReviewMay/June.6 C.K Pralahad and Gary Hamel (1990) The Core Competence of the Organisation, Harvard Business ReviewMay/June.
  23. 23. 01280 844966 info@coaching-business.co.uk www.coaching-business.co.uk Page 23• Service – availability, pre-sales advice, warranties• Capabilities – reputation, value perceptions, buying experience, recommendations.However, this still leaves the issue of deciding which differentiating capabilities create valuefor customers, achieve competitive differentiation and build sustainable competitiveadvantage. Ultimately, of course, it is about the primacy of value; companies that dominatetheir chosen strategic positions do so because they achieve the highest value in theircustomers’ eyes.Zara’s positioning as a fast and affordable fashion retailer is sustained by small and frequentdeliveries that keep product stocks fresh and scarce. This compels customers to frequentstores in search of what’s new and to buynow…because it will be gone tomorrow.Zaras global average of 17 visits percustomer per year is considerably higherthan the three visits to its competitorsoperating with seasonal offers.7Market leaders achieve the highest valuewhen they offer specific value to aparticular group of customers, improve value standards as customer expectations changeand operate a specific operating model, or ‘discipline’, of value involving one of threepossible approaches:• Operational excellence – these companies deliver a combination of quality, price andease of purchase that rivals cannot match. Their value proposition is low price andgreat service. Prime examples include the no-frills airlines and discount retailers.• Product leadership – these companies push back the barriers, they take products intothe realms of the untried or highly desirable. Examples include Intel, Canon andApple.• Customer intimacy – the business that pursues this value discipline seeks to offer thebest solution to meet customer needs, as Dell and Amazon have done.Therefore, any examination of competitive differentiation and positioning should applyconsiderable attention to the company’s capabilities, its strategic positioning options and theroute to achieving higher value for targeted customers through the company’s differentiatingcapabilities.7 A.M. Pearson (2008) The Story of Zara –the Speeding Bullet: How a Business can Achieve SustainableCompetitive Differentiation and Positioning, UBS.Companies that invented new markets generallyentered existing ones and altered the way customersthink about the products and services they buy arethose that understand, exploit, invest to create andsustain strategic assets.
  24. 24. 01280 844966 info@coaching-business.co.uk www.coaching-business.co.uk Page 2414.Use Creativity to Make Superior StrategiesMost people involved in strategy have been taught systematic approaches to structuringstrategic decisions – a discipline that has been taught increasingly to countless MBAstudents and business executives [Ss 3, 9]. Yet it is not easy to reconcile methodical androutine approaches to the sheer ingenuity, inventiveness and originality of theachievements of some really great strategic innovators.It is creativity that offers the means to create superior customer value and build a newmarket or wrong-foot competition with a new process of going to market. Creativity isfundamental to developing a unique strategic position.Creativity offers the strategist the opportunity to break free from obsessions with operationalefficiency, as well as industry dogma and sameness. Genuine innovation that makes a bigdifference to customers with something they can use in a way that has not previously beenpossible follows creativity – not systematic analysis!However, creativity is accepted and embraced by only a few companies because innovation isgenerally viewed as a function of research and development, not, as it should be, as anelement of strategic of change. Yet companies that have realised the value of innovation aremore profitable than those that have not recognized its potential.If strategy making is to create and exploit a unique strategic position, then any companyinvolved in strategy making must raise questions, identify possible answers, evaluate theanswers and make choices about customer wants, value and operational activity.Consequently, the challenge for any company is to use its strategy-making process toconsistently come up with innovative ideas that provide value for customers and differentiatethe company from its competitors.The more creative the ideas the better. Strategic ideas can be conceived by anyone,anywhere, at anytime. In the right kind of environment, new ideas can ‘fizz’ throughout thebusiness.However, for this, a company needs aprocess that will enable it to; generateinnovative strategic ideas in a numberof ways, given the right environment,get these ideas to decision makers asquickly as possible, allow fair evaluationof each one through a detailed cost-benefit analysis and see if they really work as intended, through market tests andexperimentation. Depending on how the selected ideas fare in the market, they can be eithermodified or changed altogether.It is clear that experimentation (or trial and error) is used for two separate purposes: togenerate ideas; and to test and evaluate them in order to return to a previous stage or moveon to the next. Thus, the evaluation-experimentation-learning-modifying cycle continuesuntil a unique set of activities that defines a unique strategic position emerges.Great strategies that can’t easily be copied createspace. Space is about breaking free – free from anobsession with management tools, free to change, freeto break away from sameness and free to dosomething new – free to create the future!
  25. 25. 01280 844966 info@coaching-business.co.uk www.coaching-business.co.uk Page 2515.Design a Supportive Organisational Environment to Create andExploit Superior StrategiesGiven sufficient time, vision and enterprise any company is capable of designing superiorstrategies. The tough part occurs when it comes to implementation [. The translation ofstrategy into action is usually an incredibly weak link in exploiting a superior strategy.There are two main ways in which strategies are implemented. The first is through thecompany’s operating plan . The second is to create an environment in the company thatprovides people with a source of stimulation, energy and empowerment so that they can beinnovative, customer orientated and more productive – in short, emotionally involved intheir strategyTo achieve the emotional commitment of people, managers must confer with people in theplanning and implementation process. Why? Simply because people are more likely to agreewith an idea, and go along with it, if they are consulted on and are involved in itsdevelopment. This, of course, requires managers to first establish an organisationalenvironment that is conducive tosecuring ‘emotional commitment’ toinnovative and creative behaviourdesigned to support any strategicinitiative.To do this, managers must stage-manage four basic organisationalelements: people, culture, structureand incentives. The challenge is tocombine these elements so that theysupport and reinforce one another,while also supporting the company’sstrategy.The four elements appear in outline below, beginning with the people themselves,particularly their motivation, skills and capabilities.• People must be made aware, even involved in, the development of the strategy interms that are meaningful and understood by ALL company members, so that theycan, in turn, put forward a united and concerted effort towards the strategy’srealisation.• The culture of the company includes its norms, values and unquestionedassumptions. Thus, people can be encouraged to spend their time on developingprojects, inspired to take initiative and empowered to make decisions and feel aresponsible part of their team or division.• The structure of the company, which comprises its formal hierarchy, physical setup,activities and systems can champion, encourage, sponsor, assess and report on theWinning peoples emotional commitment is aleadership matter... it actually requires managers tothink differently about the role of strategicmanagement and view themselves as makers ofmeaning and vision, rather than as planners ofspecific programmes to be followed. This sort ofenvironment fosters creativity and support forstrategy development and is at the heart of anyattempt to secure emotional commitment.
  26. 26. 01280 844966 info@coaching-business.co.uk www.coaching-business.co.uk Page 26company’s progress against all aspects of its strategy, as well as the contributions ofindividual members towards its achievement.• Financial and non-financial incentives encourage people to perform well. Managersmight consider career paths, rewards for new ideas and successful products that canbe ‘spun off’ into new divisions.This approach to securing emotional commitment in strategy innovation and design is polesapart from the rational commitment required of people, by managers, when a change instrategy is involved, as it is in fact of many decisions implemented in business today.16. Managing the New Strategic Position Alongside the Existing OneWhen an established company discovers a new and unique strategic position the question ishow to manage both the new business model and the existing business one in the sameindustry! It should come as no surprise to learn that this is easier said than done becauseconflicts and trade-offs between the two positions makes their ordered coexistence difficult.Thus a consumer goods company that attempts to move into private label brands while stillmarketing its branded products risks cannibalising its existing brands and diluting theorganization’s culture for innovation and differentiation. And this is not all. When acompany attempts to compete in two positions simultaneously it is possible that the cost ofmanaging two positions can far outweigh any potential benefits emerging from exploiting themarket created by a new business model.The decision to adopt two business models is a sensitive one. Many suggest that competitiveadvantage in an industry can only be achieved by choosing to focus in one strategic positionand perform a tailored and different set of activities from those of their rivals. All this impliesthat broadening a company’s strategy to adopt a new strategic position will lead to trouble.The solution, advocated by many writers, is to establish stand-alone units, each with its ownidentity and underlying value chain. Keeping the two businesses separate achieves a numberof benefits:• A company can prevent its existing processes and culture from overpowering the newbusiness. By establishing a separate unit the new business can develop its ownculture, processes, and strategy without interference from the parent.• A new market requires an autonomous business unit to enable a company to exploitentrepreneurial spirit and organizational flexibility in order to succeed in a freshoperating environment.• The task of creating competences required to extend into chosen markets is alsodependent on a great deal of latitude and independence from encumbrances imposedby parent companies.Logical as separation might be, it is not without problems and risks of its own. Even thoughnew businesses need space to develop simply separating a new business from themainstream can prevent it from obtaining invaluable assets, resources and knowledge that
  27. 27. 01280 844966 info@coaching-business.co.uk www.coaching-business.co.uk Page 27reside in the parent company, and deprivetheir parents of the vitality they cangenerate.On balance there is no one right answer tothe problem. This suggests that rather thanadopting an either or stance, a companymay be better off deciding how it can bestadapt its new strategic position to best fitthe demands of its immediateenvironment.This is that the underlying context orenvironment a company must create that supports and promotes the behaviours thatreinforce its strategic decisions. Thus a company should attend to such issues as founding astrong vision and culture, fostering shared values, recruiting the right people, creating thestructures, processes and incentives to ensure the appropriate fit between a company’sstrategy and its organisational environment.17.Sustaining Competitive AdvantageThe key point to note is that competitive advantage is something a business does that createsvalue for customers in a way that competitors do not. Moreover competitive advantage issustainable if competitors find it difficult (i.e. expensive) to imitate.A fundamental distinction should be drawn between competitive advantage as somethingthat a company offers in the marketplace and the source of that advantage in something ithas or the way it does things.In general terms competitive advantage can be gained by offering the customer a lowerprice or by achieving greater differentiation. Such distinctiveness may be achieved bydifferentiating the product through features, quality or performance, differentiating theproduct through add-on service, differentiating through branding or brand imagery anddifferentiating through distribution or access to the product.These market based sources of competitive advantage are in fact underpinned by thecompany’s own strategic assets and distinctive capabilities; the source of competitiveadvantage as mentioned earlier. These strategic assets and distinctive capabilities may bedescribed like this:i. Strategic assets may be described as something the new business owns, for example aunique product or technology, patents and copyrights, government-awarded monopolyrights.ii. Distinctive capabilities may be described in terms of the business’s;• Productivity - the ability to deliver value to the customer at a lower cost;Like all strategic innovations, disposablesentered the razor market by emphasizing adifferent value proposition based on price andease of use. This allowed them to grow quicklyand claim a large segment of the market in ashort time. But how did Gillette, an establishedplayer respond to this innovation? Well it choseto produce disposable razors in a defensive waybut focused its energy and resources on‘closeness of shave,’ its main business andcreated two successful new products, the Sensorand the Mach-3.
  28. 28. 01280 844966 info@coaching-business.co.uk www.coaching-business.co.uk Page 28• Innovation – the ability to come up with new and valuable ideas faster thancompetitors• Reputation – being better thought of than competitors and taking advantage of thelower costs that arise from trust• Channel relationships or architecture – the general organisation of the venture andits relationships with supporters making the business more responsive and flexible.Specifically for any new business strategy, these may be thought of in terms of four types ofadvantage:iii. Cost advantages. These may be derived from obtaining lower input costs – throughhaving access to unique suppliers; economies of scale – dilution of fixed overheadsover output; experience economies – cost reductions gained through organisationallearning; and economies of scope – dilution of fixed costs over a wide product–marketdomain.iv. Knowledge advantages can be derived from the design and promotion of products,market knowledge and product and production technologyv. Relationships. Unique and valuable relationship advantages can be built with,customers, investors, suppliers and employeesvi. Structural sources can be gained from a unique and particularly productiveorganisation of the new business in terms of its structure, systems and routines.Clearly the building of future competitive advantage should take a central position instrategic planning. This means evaluating the potential for each source of competitiveadvantage in order to find the drivers and their magnitude in relation to developing cost,knowledge relational and structural advantages are required.18.Tackling New EntrantsWhat would you do if your competitors beat you to it and invaded your market with a newbusiness model? There are five possible solutions:i. Concentrate on the Current Strategy. The incumbent player could invest in itsexisting business to make the traditional way of competing more competitive relativeto the new way of competition. This might seem obvious, but many establishedcompetitors seem to overlook it.ii. Ignore It! From the perspective of an established competitor, the key question toask is whether the new market created by the new business model is "strategicallyrelated" to the existing business. In other words, could it transfer strategic assetsfrom its existing business to this new business, or are the two businesses only relatedin a superficial and cosmetic manner?
  29. 29. 01280 844966 info@coaching-business.co.uk www.coaching-business.co.uk Page 29iii. The mistake that established competitors make is to assume that because the newmarket lies on the periphery of their industry, it would be easy for them to compete init. This may be far from the real situation that they find should they enter the newmarket. If, therefore, the answer is an unqualified yes, the incumbent company maybe better off ignoring the new businessmodel.iv. Counterattack. A feature of strategicinnovation is the introduction of a secondvalue proposition. This means that thenew entrant can claim to be good enoughin the value proposition of the establishedcompetitors and better in some other area.v. Established competitors could respondwith an alternative, or third, valueproposition by accentuating a different setof attributes from those promoted by theinnovators. This means that they can then‘attack their attackers’ by claiming parity in the innovators value proposition andsuperiority in a further desirable attribute.vi. Adopt the New Innovation. For the most part an established firm views strategicinnovation as an opportunity to improve (not just defend) it’s existing competitiveposition in its industry and increase its market share. Thus an important issue for anestablished company having decided to embrace the new business model is to find away to adopt it next to its existing business model could be problematic.vii. Take Over and Scale Up the Strategic Innovation. The last option is for anestablished firm to embrace the new business model wholeheartedly and abandon itsexisting one. This requires the established company to differentiate the new modeland to scale it up and grow it into a mass-market.A key question facing established companies in responding to business model innovation iswhich of the five responses is the right one for a specific firm to pursue? The answer dependson a number of business specific issues such as a company’s position in its industry, itscompetences, the rate of growth in the new market, time, the size, threat and character of theinnovator who introduced the new business model and so on, but they also depend on thecompany’s ability and motivation to respond.Amazon, generally recognized asthe innovator in online bookselling,was actually third or fourth,opening its Web site two years afterCharles Stack, an Ohio-basedbookseller, in 1995. Amazon’ssuccess highlights a key pointregarding successful innovation.One company may come up with anew and disruptive way of playingthe game yet another may take theidea and scale it up into a massmarket.
  30. 30. 01280 844966 info@coaching-business.co.uk www.coaching-business.co.uk Page 306. EVALUATING STRATEGYOnce the hurdle of describing and understanding an organisation’s strategy has beennavigated, managers and business leaders are faced with their most important question: howto test the efficacy of their strategies.19. Establish Means to Assess and Evaluate Superior StrategiesWhile every company has a strategy (whether explicit or implicit), not every businessnecessarily has a good one. Given the management team’s responsibility for reviewing,assessing and approving its company’s strategy, it is incumbent upon managers to do theirutmost to create, exploit and sustain superior strategies.To do this managers and business owners must continually innovate around a combinationof 3 factors:• A new offer of superior value to targeted customers?• A new point of difference with competitors?• A new way to sustain this form of differentiationWhat really separates the strategic winners from the rest is the approach taken to devisingstrategy. Strategic innovators spend most of their time and effort on seeking new ways tosatisfy their customers while most concentrate on trying to improve the positions they have!Strategic innovators continually ask questions, about the way they do business and how andreach new positions, through a combination of creativity, planning and trial and error.The problem with much strategic planning today is that it is often rooted in past success,wedded to analysis, and traditional ways of doing things. What is required is a far moredynamic view of strategy that puts creativity and innovation into the heart of strategyformulation to help companies discover viable new business.Where the management team discovers a new strategic position, it should address the task ofmanaging both the current and new strategic positions simultaneously.20. Ensure Management Commitment to Strategy DefinitionA vital issue is to ensure that every manager appreciates what strategy making is to achieveand how it should be managed.This important issue is one that every manager must concern himself with early on, withrespect to assessing and approving the company’s strategy. Managers in businesses thatoperate in a number of strategic positions need to feel comfortable in asking strategicquestions. And manager needs to feel that it can be forthcoming in its responses to thosequestions.
  31. 31. 01280 844966 info@coaching-business.co.uk www.coaching-business.co.uk Page 31In fact, failure to do so will probably result in poor communication, confusion and evenconflict whenever the topic of the company’s strategy is raised. So management agreementconcerning how to define and articulate the organisation’s strategy is vital. This is requiredin order to clearly distinguish between decisions that are strategic and those that are not.Strategy definition, together with a company’s commitment to it, as outlined above covers avariety of conditions. For example, it might describe the company’s current strategy and anew one that is planned for the future. Primarily, business strategy should address thepurpose of a business and what it has chosen to do in order to thrive. It should be positive,visionary and motivational.More specifically, any definition of strategy should describe the positioning and competitivedifferentiation that the company has adopted, expressed in terms of the specific product orservice offered to a specific type of customer in a specific market and how it will achieve thisin an efficient way.21.Involve All Managers in Strategy CreationToday, the responsibility to actively participate in the development and approval of theoverall strategy, to monitor the strategy’s progress, and to oversee and guide the businessstrategy represent some of the quintessential activities of management.As managers respond to their tasks and duties in strategy development, there will be a shiftin both the role and the manner in which they interact with one another and with theirpeople. Unfortunately, many senior executives view strategic responsibilities as incursionsinto daily decision making; but times have changed, and astute managers will recognise andanticipate the potential resistance they might encounter from other managers and teammembers as they attempt to become more involved participants in their company’s strategicdecision making.In a sense, they have no choice. Managers must now participate in, develop, assess andapprove their company’s strategy. Nonetheless, it is in no one’s best interest if therelationship between managers and staff is adversarial, especially when it comes to plottingthe company’s future direction.Consequently, managers should seek to avoid creating such situations and ask whether theyare constructively involved in the company’s strategy. To achieve a state of constructiveinvolvement, managers might, as a first step, come to a new understanding and agreement asto:• ‘Who does what’ in terms of formulating, assessing and approving the company’sstrategy and strategic plan• What areas constitute strategic and, therefore, management decisions• What areas represent operational/tactical – or management – decisions.Of course, constructive involvement ultimately depends on the level of trust and mutualrespect that exists between managers before they can be forthcoming in their response to
  32. 32. 01280 844966 info@coaching-business.co.uk www.coaching-business.co.uk Page 32such questions. Where problems exist, possibly identified through some form of self-assessment, senior management can consider the steps needed to improve collaboration andinvolvement in strategy development.22. Assess each Strategic Innovation with Specific YardsticksA critical theme of this book is the assumption that strategic innovation is the right wayforward. The fact is, of course, that any new strategic position might not be the right thing todo! An array of factors should be well thought-out before any ‘green-light’ decision is taken.Moreover, the issue might not necessarily be whether the business should attemptsomething new but rather when itwould make sense to do something newand different.For a start-up business, market entry isbest achieved with something new,rather than something that establishedbusinesses are already doing adequately. Conversely, for an established ‘player’, the questionis whether it should take on a further strategic position or abandon the old one in favour ofthe new.Some writers, including Michael Porter, suggest that managing two strategic positions isimmensely difficult, but examples of businesses that have, in fact, broken this rule abound.Apple, Virgin, Black & Decker and Amazon are examples.Thus far, it should be evident that any decision to develop a new strategic position must bebased on a thorough cost-benefit analysis. For each new innovation, managers must ask:‘How much will it cost to adopt this position and what return will it generate?’ Thus inundertaking a cost-benefit analysis the following should be assessed:i. The benefits of strategic innovationThe relative benefits of adopting a new strategic position will be determined by suchfactors as:• Current business position,• Market size and potential,• Competition and the• Company’s own competencies and capabilitiesii. The costs of strategic innovationThe relative costs of adopting a new strategic position will be determined by thefollowing factors:• Potential dilution of effort and investment in the current business for the sake ofprofits in the new position• Costs of setting up a new system to manage the new position.Business leaders seek and try all kinds ofinnovation, but while this is happening, it is not clearwhich one of these many innovations will grow andemerge as a sizeable and profitable strategic position.
  33. 33. 01280 844966 info@coaching-business.co.uk www.coaching-business.co.uk Page 33• Costs incurred by the hostile reaction of competitors, and even buyers, to a strategicinnovationIt is to be expected that entrepreneurs will try to create new niches for their businesses. Theproblem is deciding which ones to turn into strategic positions. Clearly, the imperative is toavoid the temptation of diving headlong into any new position, but to weigh up thepossibilities through cost-benefit analysis to effect a reasoned assessment.23. Ensure that Customers have been TargetedA critical part of building a superior strategy rests on the choices a manager makes about thecompany’s markets. This is a matter of strategic choice, as the decisions arising determinethe parameters within which the business operates or does not operate.In order to formulate decisions about which customers to concentrate on, managers need toconsider two questions:• Who are all its potential customers?• Which customers will be right for the business, i.e. the ones to target?While every business has a customer base, not every business necessarily has an effectiveappreciation of broad customer needs in its market, or ways of identifying specific customersto target for development.It is also worth mentioning that one of the biggest difficulties facing managers is coming toterms with segmentation. Many managers think they know what segmentation is and what todo to segment markets. Most don’t. Moreover, few managers think that segmentation isstrategic. And it is. The issue is so important that segmentation should be viewed bymanagers as a major strategic task and, therefore, one that should not be wholly delegated tothe marketing department!Unless a management team succeeds in identifying a viable market segment for its productsand services, it will never achieve differential advantages and will become just anothercompany selling ‘me too’ products. Thus, segmentation is a fundamental aspect of creating aunique strategic position. It has far-reaching effects; indeed, the only real logic behind how abusiness should be organised is a thorough understanding of market structure (i.e.segmentation) and what matters most to customers.Most breakthrough strategies start at this point. Such advances require creativity and thismeans getting right away from stereotypes and existing ways of doing things to find newcustomers, otherwise it is conceivable that a company will end up at square one, with thesame customers that the businesses and its competitors have been serving for so long.The question of whether or not the target customer group is right or wrong for the businesscan also be tackled by finding out whether the company’s stock of differentiating capabilitiesmatches customers’ needs. At the end of the day, a good customer is one that values what abusiness can uniquely provide. It is the fit between capability and product or service deliverythat forms the basis of sustainable strategy, and it follows that this fit determines whetherthe customer will be a profitable one.
  34. 34. 01280 844966 info@coaching-business.co.uk www.coaching-business.co.uk Page 3424. Ensure Targeted Customers are Offered a Clear Proposition ofValueThe value challenge is probably just about the most important issue for managers toconfront.Customer value is much more than tilting the business towards lower prices and higherquality. It is accepted that to-day’s more sophisticated customer wants high quality and lowprices, yet it is necessary to accept constant surprise and paradox in what actually createscustomer value.As shown, customer value is defined by the customer not by companies and the drivers ofvalue change over time and vary fordifferent customers. Value is alsoinfluenced by how customers are treated,how companies respond to them and howthey judge the qualities of a company, aswell as its products and prices. One of thekey tasks for managers is to identify andtrack the value drivers for different typesof customers (or segments).Customers develop value expectations and make purchases based on their assessment of aproduct or service’s benefits compared to the total cost of the purchase (in terms of price aswell as time, effort, difficulty etc). Thus superior customer value is created when thecustomer’s total experience is really positive compared to equivalents offered by competitors.The main sources of superior customer value flow from a company’s:• Organisational processes: of service delivery and value creation to do and offer thethings customers want as opposed to what is more suitable and convenient to thecompany• Commitment and service to people: offering experiences that please and delightcustomers• Inventiveness: doing what is right to continually improve the things that matter andto uncover new ways to delight customers• Unique capabilities: identifying which of the things the company is good at doing, andcan do, that matters most to its customers.All this may mean huge changes in the process of ‘going to market’, but concentrating onwhat adds up to value for customers is exceedingly powerful.Given a good idea about the customers to target and an offer of superior value for them, thequestion remains: Is the business able to articulate a proposition of value to a targeted groupof customers?Superior customer value is created when acustomer’s total experience is really positivecompared to expectations, and weighed against theirperceptions of an alternative offered by competitors.
  35. 35. 01280 844966 info@coaching-business.co.uk www.coaching-business.co.uk Page 35The answer to this question is invariably an emphatic YES! Many managers think they canarticulate a value proposition when asked to, but the reality is that they are often unable tostate what makes their company’s offer more attractive to their customers than the next. Andif they cannot, it follows that they should not expect customers to decide to buy from theircompanies, other than on price. Ultimately the significance of this is that they will not have asuperior strategy.25. Provide Managers with Timely Feedback on the Company’s ProgressAgainst its StrategyIn fulfilling their strategic and governance responsibilities, it is incumbent upon managers tomonitor the company’s progress against its strategic objectives and related risk factors [M19]. Consequently, managers need to ensure that their company’s progress against each of itsstrategic objectives (along with an update on any significant business risks) is reviewedregularly.What then, should these strategic objectives be?Surely the starting point is this. Objectives are needed in every area where performance andresults affect the wealth and survival of the business. Peter Drucker826. Identify and Quantify all Significant Internal and External StrategicRisks, a favourite businesswriter and consultant of mine,advocates eight areas in whichobjectives of performance and resultsshould be set, with appropriatemeasures: market standing, innovation,productivity, resources, profitability,management performance anddevelopment, worker performance and attitude, and public responsibility. [Appendix 3contains a summary of the principle decision areas in strategic planning].In the course of developing a strategic plan, there is always uncertainty surrounding itsultimate attainment. Moreover, with uncertainty comes risk, i.e. possible events (withvarying degrees of probability attached) which, if realised, will have an adverse effect on thebusiness and interfere with its ability to either achieve its business opportunities orovercome organisational weaknesses.The presence of risk can also significantly affect which opportunities to pursue, get in theway of certain business arrangements and make the accomplishment of objectives related tothe mission, vision and values extremely difficult.8Peter Drucker(1985), Management, HeinemannManagers should understand those risks associatedwith a particular strategy, their probability orlikelihood of occurrence and their potential impact onthe organisation.
  36. 36. 01280 844966 info@coaching-business.co.uk www.coaching-business.co.uk Page 36Consequently, it is necessary for managers to understand the nature of the risks associatedwith a particular strategy, their probability or likelihood of occurrence and their potentialimpact on the business.While there are many different types of risk that a company might face, the main strategicrisk areas of concern to managers parallel those that drive its strategy, namely, the risksthat:• Stated objectives will not be realised• Market potential perceived to exist will not materialise (e.g. due to changes incustomer demand/satisfaction, input prices, competitive intensity, regulations,government etc.)• Internal resources necessary for strategic success either disappear or cannotreasonably be secured (e.g. the loss of key employees, a decline in company morale,the inability to secure a patent/technology or to innovate, failed marketing/salesinitiatives, fraud and asset theft etc.)• Organisational arrangements chosen to implement the strategy will not function asintended (e.g. the benefits of increasing centralisation or decentralisation do notmaterialise).These risks should be spelled out in the strategic plan and managers should approve onlythose strategies where the associated risks – and their impact – are deemed to be tolerable,given the potential for return.Managers should also be assured that the company has put in place a risk-managementsystem for measuring and monitoring known risks, estimating their impact, mitigating theiroccurrence or effect (e.g. through insurance, hedging, codes of conduct or assigned riskmanagers), and identifying emerging dangers.27. Make ‘Strategy Happen’ with Plans for ImplementationThe focus here is simply ‘making strategy work’ and identifying the things that are needed toturn plans into action. However, there is a problem. While some managers are acquaintedwith theories of strategy and tools for analysis, much less attention is given to the processesinvolved in implementing strategies.The urgency of this subject is underlined by the frequent failure of plans, and the strategiesthey represent, to reach the marketplace and achieve the results promised. The fact is borneout by evidence which suggests that up to 80% of company change initiatives fail. Thus,implementation issues cannot be avoided. Indeed, implementation is strategy – on the basisthat, without a systematic approach to the implementation of plans and strategies, theysimply will not happen and so remain ideas that never become strategy in any real sense.The underlying problem is that, in most situations, business strategies have to survivebarriers raised by the people, the systems and procedures, the departments, and themanagers whose commitment and participation are needed to implement strategieseffectively, i.e. the internal customers for a company’s plans and strategies.
  37. 37. 01280 844966 info@coaching-business.co.uk www.coaching-business.co.uk Page 37Traditionally, implementation has been viewed as what follows after business strategies havebeen created, so that it is simply a matter of telling people what to do, allocatingresponsibilities and resources, creating new organisational arrangements, producing actionplans and developing control systems. However, there are problems with approachingimplementation in this way.To start with it is not practical to plan strategies that are not rooted in the company’scapabilities. Structure and resource allocation is slow and constitute unwieldy approaches tochange. And strategies for market share increases, product market penetration anddevelopment and so forth are driven by people who in turn have an impact on customerservice and sales activity which suggests that the focus is really to do with behaviour notoutcome.A more effective approach to implementation comprises two elements: buildingimplementation plans for the new strategy, then turning these into a collective effort todeliver the strategy. The starting point is to begin with the issues managers need to grapplewith when planning for implementation. There are 4 areas to tackle:• Basic aims: What resources are necessary to exploit the new strategy? And whocontrols them?• Critical elements: What are the critical factors for success? Who controls them? Whowill co-operate and respond? Who will counter and resist?• Game plan: What is the implementation plan? Is there a champion who can drivechange? What collective effort can be harnessed?• Timescales: What is required for development, communication, negotiation anddelays involved with the implementation plan?Such a programme anticipates implementation barriers as early as possible, identifies thekey players who would support (or hinder) progress, and fosters credible and budgetedimplementation strategies to develop the behaviours required to achieve a collected effort tosupport and create a new strategy.28. Maintain Entrepreneurship in the Top TeamIt should be evident that by now all that has been said requires a particular skill set – evenchanges in leadership - be built into the top team.The first of these is to stay alert! Group Think can be disastrous. It is important therefore towork with those that challenge accepted wisdom such that closing the shutters on originalthinking is avoided. The second is to foster lofty aspiration, if not coupled withdissatisfaction. This is the force that seems to cause companies to continue to reach out toseek out fresh domains, respond to competitors and stretch capabilities.These characteristics may be ascribed to entrepreneurship; a particular approach to wealthcreation that distinguishes entrepreneurs from other types of management by what they do.
  38. 38. 01280 844966 info@coaching-business.co.uk www.coaching-business.co.uk Page 38Entrepreneurship may be described as a management style founded on three fundamentals,as follows:i. Change. Entrepreneurs bring resources and ideas to build opportunities and to drivechange. This is important for the differences they bring or make offer considerablevalue to customers and other stakeholders alike. In this regard they are different frommanagers who seek to manage the status quo.ii. Opportunity. Entrepreneurs seek openings to do something different or better. Theyinnovate to create new andsuperior value. Resources are ameans to an end and not an endin themselves. Thus they exposeresources to risk and stretchthem to the limit. This again isvery different fromconventional managementstyles where managers seek toconserve and or protect scarceresources.iii. Organisation-widemanagement. Entrepreneursmanage organisations, theydon’t benchmark againstfunctional objectives.That’s really something isn’t it? All achieved in tough times too! The point is thatit is the manager’s business to seek out new strategic positions, and to seek themperseveringly. They should not stay their hands from finding them; their strategicthinking should labour, whether in daylight or in moonlight, to discover viablenew business positions.Fellow managers, begin to live for invention, look for the signs that threaten strategic health,shape the moves to create new positions, make sure that you are spending and being spentthrough your work to achieve constant redefinition into fresh positions for your companies!29. Maintain MomentumA prevailing view amongst many innovative entrepreneurs is that success is fragile. Manywould claim that as a company becomes more successful, the process of maintainingmomentum becomes harder not easier.In describing a framework to develop ‘breakthrough strategies’ and centred on creativity andinnovation, it follows that a business faces serious risks from other strategic innovators.William Cook Ltd, an ailing, yet well-establishedfamily manufacturer of steel castings, rose up fromthe recession of the late ‘70s to become the marketleader in the least-value segment within its industry.On taking over the company during this time,Andrew Cook, went completely against the trendand invested in increased efficiency, quality andcapacity, at a time, remember, when output hadbeen falling and capacity was double the volume ofindustry sales.Rivals thought he was mad! Indeed, conventionalthinking would have dictated that Cook milk thebusiness and leave the industry or go into a higher-value and differentiated niche. But Cook’sinvestment completely transformed the business.Within a few years, sales had risen by 10% againstindustry losses and by the 1990s William Cook hadbecome the market leader.
  39. 39. 01280 844966 info@coaching-business.co.uk www.coaching-business.co.uk Page 39Thus strategic innovator can only stay ahead by being better and more creative. Like the harebeing chased by the hounds, it is necessary for the strategic innovator to run a constant raceagainst a pack of aspiring competitors. Thus staying ahead is a never ending battle that hasto be won many times over with will and skill.In order to maintain momentum a business may attend to three important priorities;vitality, stretch and leverage.i. Vitality. The most common cause of slippage from success is when a company losesthe sense of vitality and excitement, becoming complacent, jaded or exhausted. Insuch circumstances, the efforts at maintaining stretch and the desire to leverage arelost. Many companies come being perilously close to falling into this trap. Marks andSpencer in 2000 is a case in point.Innovate or evaporate – is an important watchword. Without innovation orcontinuous improvement, there is a serious danger that businesses take their foot ofthe pedal. What tends to happen when the goal has been reached businesses willrelax and stop trying. Further challenge is of no interest.Clearly initiatives are required to maintain vitality aimed at avoiding such dangersWhen strategic innovators achieve success, benchmarking assumes a freshimportance. These businesses, eager to understand how businesses in their sectorand other sectors, at home and overseas, benchmark them to find out how muchprogress they have made in resolving a wide range of issues. I heard of one CEO whohad learned how a smaller company had adapted its product designs to achievesignificant reductions in manufacturing costs and introduced changes in its ownprocesses.But benchmarking is not the only means of sustaining vitality. Some companiesprefer to set goals against a continuous rate of improvement within the context ofbenchmarks. The great thing about this is that builds on what benchmarking hasidentified as ‘having taken place’ among competitors and deals with ‘possible futurerates of progress’ii. Stretch. Strategic innovators look for growth as a fundamental means of leveragingthe benefits of what they have achieved, but they guard against a dash for growth in ablind belief that big is best. They invest in enhancing capabilities to provide strategicinnovations that complement and build on those already achieved as well asexploring blue sky possibilities.Different kinds of activities are required to help stretch a company.The first, an incremental approach, requires only a modest investment in resourcesyet is vital to ensuring the best practice is everywhere identified and attained.

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