Overview of Corporate Strategy and Objective Development <br />Presented by MW Technology<br />3/25/2010<br />1<br />Property of MW Technology<br />Michael Weaver, President<br />Michael.firstname.lastname@example.org<br />
Strategy & O.G.S.M.T. The simplest management tool to stop shrinking profits by eliminating non value added work <br />3/25/2010<br />2<br />Property of MW Technology<br />
AGENDA<br />Discussion of Corporate Strategy<br />Strategic Direction Styles<br />Business Strategy Hierarchy<br />Why Strategies Fail<br />Business Culture & Why it is Important<br />O.G.S.M.T. Management Process<br />Objective<br />Goal<br />Strategy<br />Measurement<br />Tactics<br />3/25/2010<br />THE PUZZLE OF <br />MANAGING A <br />SUCCESSFUL<br />ORGANIZATIONAL<br />Property of MW Technology<br />3<br />
A company can only expect to achieve a leadership position or superior financial results when it has purposefully laid out its strategic direction.<br />Every outstanding corporate success is based on a direction that differentiates the firm’s approach from that of others. <br />3/25/2010<br />CORPORATE STRATEGIC DIRECTION<br />Property of MW Technology<br />4<br />
Specifically, strategic direction helps in:<br />Identifying what “FITS” and what MARKET NEEDS the company is well suited to deliver.<br />Analyzing potential synergies internally and externally with partners.<br />Undertaking risks that cannot be justified on a project basis (e.g., willingness to pay for what appears, on a purely financial basis, to be a premium for delivery of a product or acquisition, a STRATEGIC NEED).<br />Providing the ability to act fast .<br />Presence of strategic direction not only helps in adequately and quickly scanning opportunities in the environment but capitalizing on them without waiting.<br />Focusing on the “CRITICAL FEW” high return opportunities while providing adequate support to the existing core or “Hero” products is key to success.<br />3/25/2010<br />CORPORATE STRATEGIC DIRECTION<br />Property of MW Technology<br />5<br />
CORPORATE STRATEGIC DIRECTION<br />Corporate strategic direction is defined in different ways. <br />In some corporations, it is a corporate creed, or code of conduct, that defines perspectives from the viewpoint of different stakeholders. (This is actually the company value statements)<br />At others; policy statements provide guidelines for implementing strategy. (Mission Statements)<br />In others; direction is outlined in terms of objective statements. (In my opinion this is the Best Process.)<br />However it is expressed, corporate directions are broad statements that represent the company’s position on its mission and serve as input in setting objectives and strategy at lower levels in the organization. <br />3/25/2010<br />Property of MW Technology<br />6<br />
BUSINESS STRATEGY HIERACHY<br /><ul><li>In most organizations there are several levels of management.
Strategic Management is the highest in the sense that it is the broadest - applying to all parts of the organization - while also incorporating the longest time horizon. It gives direction for corporate values, culture, goals, and missions. Under this broad corporate strategy there are typically business-level competitive strategies and functional unit strategies.
Corporate Strategy refers to the overarching strategy of the diversified organization. Such a strategy answers such questions as "which businesses should we be in?" and “How does being in these businesses create synergy and/or add to the competitive advantage of the organization as a whole?“
Business Strategy refers to the aggregated strategies of single business firm or a Strategic Business Unit (SBU) in a diversified corporation. According to Michael Porter, a firm must formulate a business strategy that incorporates either cost leadership, differentiation or focus in order to achieve a sustainable competitive advantage and long-term success in its chosen areas or industries.</li></ul>3/25/2010<br />Property of MW Technology<br />7<br />
BUSINESS STRATEGY HIERACHY<br /><ul><li>Functional Strategies include marketing, new product development, human resource, financial, legal, supply-chain, and information technology management strategies. The emphasis is on short and medium term plans and is limited to the domain of each department’s functional responsibility.
In the 1990s many companies felt that a functional structure was not an efficient way to organize so they re-aligned according to processes or SBUs. A Strategic Business Unit is a semi-autonomous unit that is responsible for its own budgeting, new product decisions, hiring, and price setting. An SBU is treated as an internal profit centre by corporate headquarters.
A Technology Strategy is focused on technology as a means of achieving the overall organizational objectives. This is used in many Innovation Based startup companies.
Since the turn of the millennium, some firms have reverted to a simpler strategic structure driven by advances in information technology. It is felt that knowledge management systems should be used to share information and create common goals. Strategic Business Units are sometimes thought to hamper this process but if properly integrated it can be extremely helpful in sharing market intelligence and cross functional synergies.</li></ul>3/25/2010<br />Property of MW Technology<br />8<br />
WHY STRATEGIES FAIL<br /><ul><li>Failure to understand the CUSTOMER
**Poor communications ** ALWAYS #1 issue - insufficient information sharing among stakeholders </li></ul>Property of MW Technology<br />9<br />
ORGANIZATIONAL CULTURE<br />Decision makers have often fallen prey to one of the most basic rules of business: <br />Strategy alone does not produce business results; it's the execution of that strategy that matters. <br />Effective execution springs from the capability and the desire of all employees to perform in certain ways. <br />If the culture of an organization does not support the vision and value proposition, successfully realizing the strategy is an almost impossible task.<br />Culture is a critical determinant of success. It can help accelerate the achievement of high performance; it can also impede progress toward that goal. <br />Attention to culture and successful efforts to shape culture in support of strategy will separate the winners from the losers.<br />3/25/2010<br />Property of MW Technology<br />10<br />
CULTURE – WHAT IS IT?<br />A fairly standard definition is an organization's shared set of assumptions, beliefs, values, understandings and meanings that guide the perceptions, judgments and behaviors of its people. <br />One way to understand the importance is to compare it to the “Operating System" of a computer. <br />When the operating system is working, you don't think about it. If you do stop to think about it, you realize the PC can't do anything that is not supported by the operating system. <br />It determines your performance, restricts some actions and enables others. <br />It is the same with corporate culture. The Culture guides and shapes the behavior of people from the newest employee to the most experienced. <br />Creating a corporate culture that supports the positive behaviors, mindsets, perspectives, attitudes and beliefs of its workforce can drive Significant Financial Returns and a High Performance Team.<br />It becomes so internalized by employees that it is taken for granted. People don't focus on what the culture is: UNTIL, the Leaders want to do something in an “INNOVATIVE” manner that may be foreign to the accepted norms of the organization. Without effective communication the change will meet significant resistance.<br />3/25/2010<br />Property of MW Technology<br />11<br />
FOR ANY COMPANY TO BE SUCCESSFUL EVERY ASSOCIATE MUST UNDERSTAND THE IMPACT OF THEIR PERSONAL CONTRIBUTIONO.G.S.M.T. IS THE MOST EFFECTIVE PROCESS OF COMMUNICATION, PLANNING AND DELIVERY OF THE COMPANY OBJECTIVES<br /><ul><li> OBJECTIVES
TACTICS</li></ul>3/25/2010<br />Property of MW Technology<br />13<br />
OBJECTIVES <br /><ul><li>Definition: Something that one's efforts or actions are intended to attain or accomplish; a purpose; a goal; a target: i.e.the objective of a marketing campaign; the objective of a fund-raising drive.
Word Test: Must present challenge at all levels of the organization. Be a guide for the business destiny.
Contains a verb that expresses behavior that can be readily seen. (performance aspect)
Describes the situation under which the action takes place. (condition aspect)
Describes how well you are expected to perform. (standards aspect)
Describes the kind of support that the organization must provide. (commitment aspect)
Typical Words: to organize, to conduct, to write, to analyze, to prepare, to evaluate, to design, to implement, to collect, to write, to experiment, to collaborate, to sell, to take market share, etc.</li></ul>3/25/2010<br />Property of MW Technology<br />16<br />
GOALS<br /><ul><li>Most business professionals understand that achieving a long-term goal requires a series of logical, achievable, sequential steps.
Organizations cannot rely on chance or luck but many do.
The steps that lead from where a business is today to where it wants to be in the future - ITS OBJECTIVES – are often missing, especially in small & medium companies.
Even when the Objectives and Goals have been developed very often they are not clearly defined or measurable.</li></ul>3/25/2010<br />Property of MW Technology<br />17<br />
Common action verbs used to write GOALS and fuzzy verbs that should not be used because they do not express a directly observable action.<br />3/25/2010<br />Bad Words<br />Good Words<br />Describe the situation under which the action verb takes place. This is called the Condition Aspect of the goal. It means to think about the circumstances under which you will pursue the goal. Will you do it within a certain period of time? — Are there timelines? -- Will you do it independently or with assistance? — Are others involved? -- Will you do it regularly, weekly, or monthly? — What is the frequency?” <br />Describe how well you are expected to perform. This is called the Standards Aspect of the goal. Up to this point you have collaboratively established with your manager what you are going to do and under what conditions. Now it is time to state how well you will be able to do it. This means to use words that describe an acceptable performance level—that is, use words that get at the quality of the performance you must work toward or exceed.<br />Property of MW Technology<br />18<br />
STRATEGIES – LOWER LEVELS<br /><ul><li>Definition: The science of combining, planning and directing large organizational structures & operations.
A plan, method, or series of maneuvers for obtaining a specific goal or result.
The overarching, long-term plan of operations that will achieve the financial objectives of the company.
Tactics is concerned with the conduct of an engagement while strategy is concerned with how different engagements are linked.
In military words, how a battle is fought is a matter of tactics: the terms that it is fought on and whether it should be fought at all is a matter of strategy.
Sun Tzu’s (Chinese Warlord) five elements in strategic detail: </li></ul>1. The Mission<br />2. The Climate<br />3. The Ground<br />4. The Leadership<br />5. The Methods<br />3/25/2010<br />It is my personal view that business should be approached as a War against the competition and a study of combat strategies and tactics can be extremely useful in developing effective plans.<br />Property of MW Technology<br />19<br />
STRATEGIES – LOWER LEVELS<br /><ul><li>Word Test: The nature of an organization is often expressed in terms of its Mission which indicates the purpose of the organization, for example:
To design, develop, manufacture and market specific product lines for sale on the basis of certain features to meet the identified needs of specified customer groups via certain distribution channels in particular geographic areas.
A statement along these lines indicates what the organization is about and is infinitely clearer than saying, "we're in electronics" or "we are in business to make money.“
Some people confuse mission statements with value statements - the former should be very hard-nosed while the latter can deal with 'softer' issues surrounding the group or business.
Typical Words/Descriptions: What the business is/does, the primary products/services, key processes & technologies, main customer groups, primary markets/segments, and principal channels & outlets
Common action verbs used to write STRATEGIES and fuzzy verbs that should not be used because they do not express definitive .<br />3/25/2010<br />Good Words<br />Bad Words<br />Property of MW Technology<br />21<br />
DIFFERENT STYLES OF BUSINESS STRATEGY<br /><ul><li>Sequential Strategies - A strategy that consists of a series of sub-strategies that must all be successfully carried out in the right order.
Alliance Strategies - The use of alliances and partnerships to build strength and stabilize situations.
Position Defense - The erection of fortifications.
Mobile defense - Constantly changing positions.
Encirclement strategy - Envelop the opponents position.
Cumulative strategies - A collection of seemingly random operations that, when complete, obtain your objective.
Counter-offensive - When you are under attack, launch a counter-offensive at the attacker’s weak point.
Strategic withdrawal - Retreat and regroup so you can live to fight another day.
Leapfrog strategy - Avoid confrontation by bypassing enemy or competitive forces.
(The best possible strategy if you have a highly innovative new product development team)</li></ul>3/25/2010<br />Property of MW Technology<br />22<br />
DIFFERENT STYLES OF MARKETING STRATEGY<br /><ul><li>Offensive marketing warfare strategies - are used to secure competitive advantages; market leaders, runner-ups or struggling competitors are usually attacked
Defensive marketing warfare strategies - are used to defend competitive advantages; lessen risk of being attacked, decrease effects of attacks, strengthen position. (usually fails in the long term)
Flanking marketing warfare strategies - Operate in areas of little importance to the competitor.
Guerrilla marketing warfare strategies - Attack, retreat, hide, then do it again, and again, until the competitor moves on to other markets.
Deterrence Strategies - Deterrence is a battle won in the minds of the enemy. You convince the competitor that it would be prudent to keep out of your markets.
Pre-emptive strike - Attack before you are attacked.
Frontal Attack - A direct head-on confrontation.
Flanking Attack - Attack the competitor’s flank. </li></ul>3/25/2010<br />Property of MW Technology<br />23<br />
MEASUREMENT<br /><ul><li>Definition: The act or process of measuring. The process of obtaining the magnitude of a quantity, such as length or mass, relative to a unit of measurement, such as a foot or a pound or a currency. The term can also be used to refer to a specific result obtained from the measurement process.
Word Test: A measurement answers the general question, "how many?", as in how many miles, or millimeters, or dollars or % of market share. As measurement is basically about counting, measurement is conducted in numbers and is quantitative. The measurement used in business are results compared to an established goal that signifies success.</li></ul>3/25/2010<br />Property of MW Technology<br />24<br />
MEASUREMENT<br /><ul><li>Typical Words in Business:
Expressed in an increase or decrease in % value measured or a currency.</li></ul>3/25/2010<br />Property of MW Technology<br />25<br />
TACTICS<br />Definition: Any mode of action for gaining advantage or success. The science that deals with securing objectives set by strategy, especially the technique of deploying resources in effective maneuvers against a competitor. A procedure or set of actions engaged in to achieve an specific end, an aim, or a goal.<br /><ul><li>The military science that deals with securing objectives set by strategy.
While the Warfare Business Philosophy is not popular in today’s politically correct environment it is one of the most effective approaches to business competition. View competition as warfare between competitors with the market place as the battle field. Some of the most meaningful business books are based in the study of combat strategy and tactics.</li></ul>3/25/2010<br />Property of MW Technology<br />26<br />
TACTICS<br /><ul><li>Word Test: Typically contain verbs that describe an action or series of steps necessary to achieve a targeted goal that will contribute to the achievement of a stated objective.
Higher Level STRATEGIES become <br />Functional Level OBJECTIVES<br />OGSMT EXAMPLE LAYOUT<br />OBJECTIVE<br />GOALS<br />STRATEGIES<br />MEASURES<br />TACTICS<br /><ul><li>Build Three Core Competencies</li></ul>(Advance the organizations skill base development (internal & external) to strengthen the Teams Core Competencies)<br />(EACH FUNCTIONAL LEVEL SHOULD HAVE 4 TO 6 OBJECTIVES) more dilutes focus, less does not challenge the organization.<br /><ul><li>Focus on developing and promoting from within
( Strategies can support more than one objective)
Create a working environment that is fun and non-threatening where the associates feel comfortable and part of the team.</li></ul>Functional Level STRATEGIES become Team Level OBJECTIVES<br />3/25/2010<br />Property of MW Technology<br />29<br />
3/25/2010<br />THE FAILURE TO COMMUNICATE CLEARLY IS THE ROOT CAUSE OF EVERY CONFLICT OR FAILURE IN BUSINESS, POLITICS, RELATIONSHIPS, AND SOCIETY. JMW <br />CONFLICT<br />COOPERATION<br />Property of MW Technology<br />30<br />
Suggested Reading List<br />The Art of War by Sun Tzu, 6th century BC Chinese Warlord<br /><ul><li>His strategies are called "first-mover advantage", Sun Tzu said: "Generally, he who occupies the field of battle first and awaits an enemy is at ease, he who comes later to the scene and rushes into the fight is weary." </li></ul>Competitive Strategy, by Michael Porter <br />On War , by von Clausewitz<br />He felt that in a situation of chaos and confusion, strategy should be based on flexible principles. Strategy comes not from formula or rules of engagement, but from adapting to what he called "friction" (minute by minute events). Emphasis is on FLEXIBILITY and good competitive intelligence.<br />Communicating the American Way: A Guide to Business Communications in the U.S, by Elisabetta Ghisini & Angelika Blendstrup Ph.D. <br />3/25/2010<br />Property of MW Technology<br />31<br />
Acknowledgements and Thanks<br />Walter Herbst for insight into OGSMT Tool.<br />Kellogg School of Management , Dept. of Mechanical Engineering,<br /> Northwestern University<br />Warrent Haug for insight into OGSMT Tool and how to implement effectively.<br />Wikipedia, the free on line encyclopedia<br />Merriam-Webster on line dictionary<br />The multitude of authors of the White Papers and Articles published on the internet that have contributed to the development of this concept.<br />3/25/2010<br />Property of MW Technology<br />32<br />
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