How to build your strategic plan in 7 steps

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Building a plan is never easy!! When did we start to think about strategy? Why should we plan? is it difficult? Some extract from lecture I give in MBA class. Enjoy, share and send me cases, examples, ideas how we can improve strategy planning.

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How to build your strategic plan in 7 steps

  1. 1. STRATEGY & CORPORATE GOVERNANCE - © Prof. L. Bouty 2013 1 Build your strategic plan in 7 steps
  2. 2. STRATEGY & CORPORATE GOVERNANCE - © Prof. L. Bouty 2013 © dullhunk @ Flickr Rule # 1 - Think! 2
  3. 3. STRATEGY & CORPORATE GOVERNANCE - © Prof. L. Bouty 2013 Rule # 2 - Try! 3
  4. 4. STRATEGY & CORPORATE GOVERNANCE - © Prof. L. Bouty 2013 Rule # 3 - Each case is unique 4
  5. 5. STRATEGY & CORPORATE GOVERNANCE - © Prof. L. Bouty 2013 5 It’s stormy outside...
  6. 6. STRATEGY & CORPORATE GOVERNANCE - © Prof. L. Bouty 2013 6 Can I help you?
  7. 7. STRATEGY & CORPORATE GOVERNANCE - © Prof. L. Bouty 2013 7 WHAT IS STRATEGY?
  8. 8. STRATEGY & CORPORATE GOVERNANCE - © Prof. L. Bouty 2013 The Economist “Nobody really knows what strategy is.” source: © Marc Sniukas 8
  9. 9. STRATEGY & CORPORATE GOVERNANCE - © Prof. L. Bouty 2013 Costas Markides, Professor London Business School “Nobody really knows what a strategy is or how to develop a good one.” source: © Marc Sniukas 9
  10. 10. STRATEGY & CORPORATE GOVERNANCE - © Prof. L. Bouty 2013 10 Strategy has its roots in history… source: Business History Review 76 (Spring 2002): 37–74. © 2002 by The President and Fellows of Harvard College
  11. 11. STRATEGY & CORPORATE GOVERNANCE - © Prof. L. Bouty 2013 11 Strategy is a term that can be traced back to the ancient Greeks, for whom it meant a chief magistrate or a military commander in chief. source: Business History Review 76 (Spring 2002): 37–74. © 2002 by The President and Fellows of Harvard College
  12. 12. STRATEGY & CORPORATE GOVERNANCE - © Prof. L. Bouty 2013 All men can see the tactics by which I conquer, but what none can see is the strategy out of which great victory is evolved 12 SunTzu,The Art of War, 400 BC
  13. 13. STRATEGY & CORPORATE GOVERNANCE - © Prof. L. Bouty 2013 13 In USA, the building of the railroads after 1850 led to the development of mass markets for the first time. source: Business History Review 76 (Spring 2002): 37–74. © 2002 by The President and Fellows of Harvard College
  14. 14. STRATEGY & CORPORATE GOVERNANCE - © Prof. L. Bouty 2013 14 By the late nineteenth century, a new type of firm began to emerge: the vertically integrated, multidivisional (or “M-form”) corporation which needed formal approach to corporate strategy Right: Alfred Sloan (chief executive of General Motors from 1923 to 1946)
  15. 15. STRATEGY & CORPORATE GOVERNANCE - © Prof. L. Bouty 2013 15 The organizational challenges involved in World War II were a vital stimulus to strategic thinking.
  16. 16. STRATEGY & CORPORATE GOVERNANCE - © Prof. L. Bouty 2013 16 Elite business schools were founded end of 19th century promoting the idea that managers should be trained to think strategically and not just to act as functional administrators
  17. 17. STRATEGY & CORPORATE GOVERNANCE - © Prof. L. Bouty 2013 17 “Management is not just passive, adaptive behavior; it means taking action to make the desired results come to pass.” Pr. Peter Drucker
  18. 18. STRATEGY & CORPORATE GOVERNANCE - © Prof. L. Bouty 2013 Good strategies grow out of ideas that have been kicking around the company, and initiatives that have been taken by all sorts of people in the company. Prof. Henry Mintzberg 18
  19. 19. STRATEGY & CORPORATE GOVERNANCE - © Prof. L. Bouty 2013 Asking a management theorist to define strategy is rather like asking a philosopher to define truth. But strategy is basically about two things: deciding where you want your company to go, and then how you want to take it there. 19
  20. 20. STRATEGY & CORPORATE GOVERNANCE - © Prof. L. Bouty 2013 Four simple, timeless questions that every business strategy must answer: ‣Where should I choose to compete? ‣Where should my core customers be? ‣How should I differentiate myself competitively? ‣How should I discourage competitive investment? 20
  21. 21. STRATEGY & CORPORATE GOVERNANCE - © Prof. L. Bouty 2013 21 K.Ohmae, The Mind of the Strategist In business as on the battlefield, the object of strategy is to bring about the conditions most favorable to one's own side, judging precisely the right moment to attack or withdraw and always assessing the limits of compromise correctly.
  22. 22. STRATEGY & CORPORATE GOVERNANCE - © Prof. L. Bouty 2013 22 What is strategic depends where you sit! One person’s strategies are another’s tactics
  23. 23. STRATEGY & CORPORATE GOVERNANCE - © Prof. L. Bouty 2013 STRATEGY SAFARI 23 A GUIDED TOUR THROUGH THE WILDS OF STRATEGIC MANAGEMENT Prescriptive and Descriptive Schools by Henry Mintzberg
  24. 24. STRATEGY & CORPORATE GOVERNANCE - © Prof. L. Bouty 2013Picasa - Yotofuji Tanaki photos 24 THINK“Look before you leap” Design School Strategy as a process of conception, achieving the essential fit between internal strengths & weaknesses and, external opportunities & threats Prescriptive, P. Selznick, '60s
  25. 25. STRATEGY & CORPORATE GOVERNANCE - © Prof. L. Bouty 2013Picasa - Hui M photos 25 Planning School Strategy as a formal process, takes on most of the design schools assumptions Process: Formal, Decomposable, Steps, supported by checklists and formal techniques Prescriptive, Igor Ansoff, mid '70s PROGRAM“A stitch in time saves nine”
  26. 26. STRATEGY & CORPORATE GOVERNANCE - © Prof. L. Bouty 2013 26 CALCULATE“Nothing but the facts, madam” Positioning School Strategy as an analytical process, generic positions selected through formalized analyses of industry situations. Prescriptive, Michael Porter, '80s
  27. 27. STRATEGY & CORPORATE GOVERNANCE - © Prof. L. Bouty 2013Picasa - Yotofuji Tanaki photos 27 CENTRALIZE“Take us to your leader” Entrepreneurial School Strategy as a visionary process, based on intuition The leader is central Descriptive, Schumpeter,‘40s
  28. 28. STRATEGY & CORPORATE GOVERNANCE - © Prof. L. Bouty 2013Picasa - Yotofuji Tanaki photos 28 Cognitive School Strategy formation as a mental process, and analyzes how people perceive patterns and process information H.A Simon,‘50s WORRY“I’ll see it when I believe it”
  29. 29. STRATEGY & CORPORATE GOVERNANCE - © Prof. L. Bouty 2013 29 Learning School Strategy formation as an emergent process, where the management of an organization pays close attention to what works and doesn't work over time, and incorporates these 'lessons learned' into their overall plan of action. Lindblom, Hamel, Pralahad,‘70s PLAY“If first you don’t succeed, try, try again”
  30. 30. STRATEGY & CORPORATE GOVERNANCE - © Prof. L. Bouty 2013 30 Power School Strategy development is seen to be a process of negotiation between power holders within the company, and/or between the company and external stakeholders. Descriptive, Alison,‘80s HOARD“Look out for number one”
  31. 31. STRATEGY & CORPORATE GOVERNANCE - © Prof. L. Bouty 2013Picasa - Yotofuji Tanaki photos Cultural School Strategy formation as a collective process involving various groups and departments within the company; strategy as a reflection of the corporate culture of the organization. Descriptive,‘80s 31 PERPETUATE“An apple never falls far from the tree”
  32. 32. STRATEGY & CORPORATE GOVERNANCE - © Prof. L. Bouty 2013 32 Environmental School Strategy formation is seen to be a reactive process: a response to the challenges imposed by the external environment. Descriptive, Hannan & Freeman, ‘80s CAPITULATE“It all depends”
  33. 33. STRATEGY & CORPORATE GOVERNANCE - © Prof. L. Bouty 2013 Configuration School Strategy formation is seen as a process of transforming the organization from one type of decision-making structure into another. Descriptive and Prescriptive, Chandler,‘70s Picasa – Catherine S. Todd 33 LUMP“To everything there is a season...”
  34. 34. STRATEGY & CORPORATE GOVERNANCE - © Prof. L. Bouty 2013 Many definitions, Many concepts, Many schools! 34
  35. 35. STRATEGY & CORPORATE GOVERNANCE - © Prof. L. Bouty 2013 35 Intended Strategy Deliberate StrategyUnrealized Strategy Realized Strategy Strategy is a plan: they are made in advance of the actions to which they apply and they are developed consciously and purposefully Em ergentStrategy Source: Mintzberg H., The strategy concept I: Five Ps for Strategy, California Management Review 1987 Strategy is a pattern: the successful approaches merge into a pattern of action that becomes our strategy.
  36. 36. STRATEGY & CORPORATE GOVERNANCE - © Prof. L. Bouty 2013 Strategic Process Proposal 1. Start with an intended strategy (but keep your intuition) 2. Understand who you are? (Most probably you are not alone) 3. Understand where you are? (Your environment deserves attention) 4. Imagine where you can go? (Look for number one) 5. Define what you should do to go there? (Be a leader) 6. Set control points (Program your journey) 7. Monitor your journey & correct the trajectory if necessary (Learn from your mistakes) 36 Our
  37. 37. STRATEGY & CORPORATE GOVERNANCE - © Prof. L. Bouty 2013 37 WHY STRATEGY?
  38. 38. STRATEGY & CORPORATE GOVERNANCE - © Prof. L. Bouty 2013 …. at the end it is all about ShareholderValue Creation Remember… 38
  39. 39. STRATEGY & CORPORATE GOVERNANCE - © Prof. L. Bouty 2013 ShareholderValue Creation is about the fundamental equation: PROFIT=PRICE - COST 39
  40. 40. STRATEGY & CORPORATE GOVERNANCE - © Prof. L. Bouty 2013 40 Good analysis ties the details of strategy to the financial implications Source: Barwise, P., Marsh, P., & Wensley, R. (1989). Must finance and strategy clash. Harvard Business Review, (September-October), 85.
  41. 41. STRATEGY & CORPORATE GOVERNANCE - © Prof. L. Bouty 2013 41 What can make a successful plan ?Failing
  42. 42. STRATEGY & CORPORATE GOVERNANCE - © Prof. L. Bouty 2013 Did you know that companies loose up to 60%of their strategy during implementation?
  43. 43. STRATEGY & CORPORATE GOVERNANCE - © Prof. L. Bouty 2013 Companies need to wake up and fix their initiative management Most leaders are poor strategy communicators Everybody agrees that skills are crucial to performance but few are able to build an adequate development platform The Strategy Execution process often fails source:The strategy execution research report
  44. 44. STRATEGY & CORPORATE GOVERNANCE - © Prof. L. Bouty 2013 44 6 SILENT KILLERS FOR STRATEGY EXECUTION •Top-down or laissez-faire senior management style (9 of 12 cases) •Unclear strategy and conflicting priorities (9 of 12 cases) •An ineffective senior management team (12 of 12 cases) •Poor vertical communication (10 of 12 cases) •Poor coordination across functions, businesses or borders (9 of 12 cases) •Inadequate down-the-line leadership skills and development (8 of 12 cases) Source:The six silent killers of strategy implementation and learning, Michael Beer, Sloan Management Review Summer 2000
  45. 45. STRATEGY & CORPORATE GOVERNANCE - © Prof. L. Bouty 2013 45 Photo: Flickr - Some rights reserved by Ametxa Insights from the best-in-class Strategy execution is a discipline of its own Source: Jeroen De Flander
  46. 46. STRATEGY & CORPORATE GOVERNANCE - © Prof. L. Bouty 2013 49 Photo: Flickr - Some rights reserved by Dino ahmad ali Insights from the best-in-class Strategy execution is a vast area with blurred borders Source: Jeroen De Flander
  47. 47. STRATEGY & CORPORATE GOVERNANCE - © Prof. L. Bouty 2013 47 Photo: Flickr - Some rights reserved by Dino ahmad ali Insights from the best-in-class Strategy execution is on its way to maturity Source: Jeroen De Flander
  48. 48. STRATEGY & CORPORATE GOVERNANCE - © Prof. L. Bouty 2013 48 51 Photo: Flickr - Some rights reserved by Dino ahmad ali Insights from the best-in-class Strategy execution requires a great strategy Source: Jeroen De Flander
  49. 49. STRATEGY & CORPORATE GOVERNANCE - © Prof. L. Bouty 2013 49 Photo: Flickr - Some rights reserved by probe.ch Insights from the best-in-class Strategy execution requires your attention from the start Source: Jeroen De Flander
  50. 50. STRATEGY & CORPORATE GOVERNANCE - © Prof. L. Bouty 2013 53 Photo: Flickr - Some rights reserved by kamera.obskura Insights from the best-in-class Strategy execution has a strong timing sequence Source: Jeroen De Flander
  51. 51. STRATEGY & CORPORATE GOVERNANCE - © Prof. L. Bouty 2013 54 Photo: Flickr - Some rights reserved by ordinaryfool Insights from the best-in-class Strategy execution requests an integration between organizational and individual performance Source: Jeroen De Flander
  52. 52. STRATEGY & CORPORATE GOVERNANCE - © Prof. L. Bouty 2013 55 Insights from the best-in-class Strategy execution demands clear responsibilities & requires horizontal alignment Source: Jeroen De Flander
  53. 53. STRATEGY & CORPORATE GOVERNANCE - © Prof. L. Bouty 2013 56 Photo: Flickr - Some rights reserved by Dino ahmad ali Insights from the best-in-class Strategy execution asks for measurement Source: Jeroen De Flander
  54. 54. STRATEGY & CORPORATE GOVERNANCE - © Prof. L. Bouty 2013 Insights from the best-in-class Strategy execution is a resident Source: Jeroen De Flander Photo: Le Corbusier Seat
  55. 55. STRATEGY & CORPORATE GOVERNANCE - © Prof. L. Bouty 2013 Insights from the best-in-class Strategy execution needs heroes Source: Jeroen De Flander Photo:“The incredibles”, Pixar @ Disney
  56. 56. STRATEGY & CORPORATE GOVERNANCE - © Prof. L. Bouty 2013 56 Enjoy your journey!! Strategic
  57. 57. STRATEGY & CORPORATE GOVERNANCE - © Prof. L. Bouty 2013 57 Please join our discussions on Facebook and Google+
  58. 58. STRATEGY & CORPORATE GOVERNANCE - © Prof. L. Bouty 2013 58 Thank you for your time
  59. 59. STRATEGY & CORPORATE GOVERNANCE - © Prof. L. Bouty 2013 59

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