What is Strategy - Thinking like a Strategist

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Sep. 8, 2013

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What is Strategy - Thinking like a Strategist

  1. What is Strategy? Thinking like a Strategist September 2012 Bangalore, India Amit Kapoor
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  3. 2 Content • Have a dialogue on strategy • Use a case study – “Growing for Broke” • Discuss heuristics for strategic thinking
  4. 3 Start with this question… Write down first three words that come to you mind when you hear the word ‘Strategy’
  5. 4 … followed by this question… Describe in a line or two, in your own words – ‘What is Strategy?’
  6. 5 … and finally this question What is the one thing you would like to know (more) about Strategy?
  7. 6 What is Strategy? System Story Design Subtlety Scene Gimmick Learning Adapt Quick Respond Culture Action Setup Procedure Policy Tactics Process Excellence Execution Operational Quality People Approach Blueprint Method Plan Planning Strategic Competitive Industry Exploit High Ground Profit Cost Focus Program Present Core Central Competence Capabilities Focus Maneuvering
  8. 7 Strategy is a young field 1% 1% 7% 6% 6% 10% 21% 22% 20% 1922 1932 1942 1952 1962 1972 1982 1992 2002 Strategy /Strategic Citation in Harvard Business Review [Title & Abstract] (% of total articles, 10 year period, starting year)
  9. 8 Strategy definition Strategy [ˈstratəәjē ] •  the art of planning and directing overall military operations and movements in a war or battle. Often contrasted with tactics •  a plan of action or policy designed to achieve a major or overall aim: time to develop a coherent economic strategy | shifts in marketing strategy. Via Latin from Greek: •  from ‘stratēgia’ : generalship •  from ‘stratēgos’ : be a general
  10. 9 Basic tension in Strategy Advantage is Transient Corporate identity is slow to change “… although the stickiness of company’s identity is typically regarded as weakness, it’s also a great source of strength” Art Kleiner, The Right to Win “Now, here, you see, it takes all the running you can do, to keep in the same place” said the Red Queen Lewis Caroll, Alice in Wonderland
  11. 10 Strategy Map featuresstrategy&competition Source: Walter Kiechel, The Lords of Strategy; Art Kleiner, The Age of Heretics; Henry Mintzberg, Bruce Ahlstrand, and Joseph Lampel, Strategy Safari Henry Mintzberg The Rise and Fall of Strategic Planning 1994 Chris Zook Profit from the Core 2001 Gary Hamel & C.K. Prahalad Competing for the Future 1994 Michael Porter Competitive Strategy 1980 Bruce Henderson Essays 1966 W. Chan Kim & Renée Mauborgne Blue Ocean Strategy 2005 Kenneth Andrews The Concept of Corporate Strategy 1971 William Abernathy & Robert Hayes “Managing Our Way to Economic Decline” 1980 Tom Peters & Robert Waterman In Search of Excellence 1982 ADAPTATION Act quickly and creatively in response to events (organizational learning) POSITION Exploit the high ground: create and hold a distinctive position (market-back strategy) EXECUTION Align people and processes for operational excellence (the quality movement) CONCENTRATION Focus on your current core business (private equity) Michael Hammer & James Champy Reengineering the Corporation 1993 W. Edwards Deming Out of the Crisis 1986 Ram Charan & Larry Bossidy Execution 2002 MANY FEW FUTURE PRESENT markets as defined by external forces); Concentration (winners make the most of current core strengths and businesses); Execution (winners gain advantage through operational excellence); and Adaptation (winners develop an overall direction through experimentation and rapid change). From the 1960s to today, many companies have bounced from one quadrant to another. The grid itself reflects views of the best approach for developing business strategy. The X-axis represents the point of view on are those who favor top-down formulation (strategy is developed by the few, the designated expert planners and senior executives, while the rest of the enterprise is dedicated to execution). The Y-axis depicts time orientation: the degree to which strategy is seen as present- or future-oriented. At the top are those who favor moving toward a long-term destination that may be different from the company’s current position. At the bottom are those who favor letting the company’s strategic direction emerge from its current state.
  12. 11 What defines a Strategic Problem? Strategic Problem Ill-Defined and Unique Too Much or Too Little Data Limited Time and Resources Conflicting Stakeholder Views Several Critical Unknowns Cross - Functional Complexity
  13. 12 One word strategy Strategy is a “Hypothesis”
  14. 13 Kernel of a Strategy Guiding Policy the overall approach chosen to overcome the obstacles Good Diagnosis which defines the nature of the challenge Coherent Actions the set of co- ordinated actions and resource allocation
  15. 14 Thinking like a Strategist Generating the Hypotheses Making the Case o  Develop the problem definition o  Concretize the scope o  Map the issues, and deliverable o  Develop the issue tree o  Generate the hypotheses o  Develop the data matrix o  Refine hypotheses (as required) o  Collect data and conduct analysis o  Synthesize finding and conclusions o  Develop recommendations o  Develop message and storyboard o  Write and review the output Testing the Hypotheses 2 31 4Defining the Question ?
  16. The Strategic Question •  Define the fundamental question that needs to be answered •  Focus on the big picture and not the details •  Explore the gap between what the company has and what the company wants •  Understand how it fits with what else the company is trying to achieve 1. Defining the Question 15
  17. Issues and Deliverables •  What issues must you investigate to answer the fundamental question? •  What is the type of output will be produced from this investigation? •  What deliverables are expected? Will that address the company’s requirement? •  What time and resources would be required to accomplish this? 1. Defining the Question 16
  18. Develop Issue Tree Strategic Question Issue 1 Issue 2 Issue 3 Sub Issue 2.1 Sub Issue 2.2 Hypothesis 2.2.1 Hypothesis 2.2.2 Sub Issue 2.3 2. Generating the Hypotheses 17
  19. Issues vs. Hypotheses What is an Issue? •  Denotes a major piece of the problem •  Pointed to company concerns (“So what?”) •  Limited in number •  Similar in size •  Will not “fall” •  Phrased as a question •  Amenable to closure What is a Hypothesis? •  Phrased as statement to prove or disprove •  Is an 'hunch' or an educated guess •  Nested under an issue •  Provides tentative answer to issue question •  Provides context for or guides information gathering 2. Generating the Hypotheses 18
  20. Case Study: Issue Tree Strategic Question Issues What should be Paragon Tools’ growth strategy? How will the product and services ecosystem look in the machine tool ecosystem in the next 10 years? What is the best “Way-to-Play” for Paragon Tools in the machine tool ecosystem? How can Paragon Tools leverage its existing capability system developed to get the “right to win” in this ecosystem? 2. Generating the Hypotheses 19
  21. Case Study: Hypotheses Issue Sub-Issues Hypotheses How will the product and services ecosystem look in the machine tool ecosystem in the next 10 years? How will the service ecosystem emerge in the next 10 years? Which platorms? Which formats? H1: Market consolidate around 3 major platforms – for services H2: Customers will shift from buying tools to complete lifecycle packages ... .... 2. Generating the Hypotheses 20
  22. Types of Hypothesis Propositional e.g. market consolidate around three platforms – for services •  If accepted becomes finding •  Leaves "so what" •  Simple to test, more complex to interpret •  Seeks "predictive" data Diagnostic e.g. customers will shift from buying tools to complete lifecycle packages •  If accepted becomes conclusion •  Answers "so what" •  Simple to interpret if data fits, more complex to test •  Seeks "cause and effect" data 2. Generating the Hypotheses 21
  23. Develop Good Hypothesis •  Connect the Dots - General / specific exp •  Do your Homework - Lit search, web search, books / journals •  Engage with People - Planning meetings, clients, colleagues •  Stand on the Shoulder of Giants - Experts, practice guides, other assignments •  Gather Preliminary Data - Industry analysis, probing questions •  Think Hard about it! 2. Generating the Hypotheses 22
  24. •  Think on two key dimensions o  Method of enquiry: Interview/Focus Group, Research and Surveys, Observations o  Source of data: Internal, Client, Competition / Customers, Industry / Government •  Be cost conscious in selection of method of enquiry •  Assess reliability and conduct triangulation •  Organize and document rigorously Building the Data Matrix 3. Testing the Hypotheses 23
  25. Synthesizing the Facts Facts 1 Fact 2 Fact 3 Finding 1 Finding 2 Conclusion 1 Conclusion 2 Finding 3Fact 4 Fact 5 Recommendation 1 Recommendation 2 Recommendation 3 Recommendation 4 3. Testing the Hypotheses 24
  26. Developing Recommendation •  Generate alternatives, evaluate, screen and select: Complete the logic tree •  Specify and describe actions, results and benefits •  Take account of existing conditions, barriers and resources •  Cover the assignment topics and outputs •  Can be tracked back to address the root cause findings 3. Testing the Hypotheses 25
  27. Structuring the Story Argument First Action First What's wrong What's causing It Here's what you should do This is how You must change Here's what you should do This is how Change Change Add the why's 4. Making the Case 26
  28. •  Objective: Build relationship, share information, solve problem, take decision •  Audience: Who, characteristics as individual / group, receptivity, expectation, culture •  Purpose: Telling, selling, conferring, collaborating •  Story: Content, emphasis, style •  Medium: Visual (letter, report, text, video) or Oral (presentation, meeting, one-to-one) Doing the Communication 4. Making the Case 27
  29. Heuristics for Daily Problem Solving •  Structure your thinking •  Build your fact base •  Develop an initial hypothesis •  Solve the right problem •  Don't boil the ocean •  Produce an output daily •  Synthesize every day (Elevator Speech) •  Focus on the change 28
  30. Wrap Up 29 •  Strategy is a hypothesis •  Strategy consists of a good diagnosis, guiding policy and coherent action •  Use heuristic for daily practice and play Amit Kapoor September 2012