This document summarizes IBM's transformation from struggling hardware seller to successful solutions provider through dynamic capabilities. It discusses how IBM sensed changes in the market and seized opportunities by reconfiguring assets under CEOs Lou Gerstner and Sam Palmisano. Processes like deep dives and strategic forums involving 25,000 executives helped identify new areas like life sciences while exploiting mature markets like mainframes. The document contrasts theories of strategy and competitive advantage with dynamic capabilities, which help firms develop new competencies to succeed in both new and existing businesses amid complex, fast-changing competition.
Citibank was founded in 1812 and is currently the largest bank in the US and one of the largest in the world. It is headquartered in New York City and has a presence in over 120 countries. Citibank has over 200 million customer accounts and provides various financial services including banking, credit cards, investment management, and wealth management. It aims to offer excellent customer service globally through strategic focus on productivity, efficient use of capital, technology, and client relationships.
The document discusses Hewlett Packard's (HP) Computer Systems Organization's (CSO) sales approach to large enterprise customers. HP commissioned a consulting firm to audit its sales process and make recommendations. The audit found that HP sales reps spent most of their time on downstream repurchase opportunities rather than higher-margin midstream and upstream projects. It recommended that HP adopt a portfolio approach, entering accounts at multiple levels simultaneously. It also suggested focusing sales efforts on the most strategic large accounts. The new approach would prioritize opportunities and provide specialized support to sales reps to improve conversion rates and reduce wasted time.
Management Strategy: The Core Competence of the Corporation.
Based on Harvard Business Review with same title article written by C.K. Prahalad and Gary Hamel
This presentation was prepared by executive MBA students at the University of Texas at Dallas. The purpose of the presentation as delivered in an academic setting is to shine light on Tesla, Inc.'s strategic position in the market relative to their corporate governance challenges with a set of specific recommendations.
The document discusses plans to rebrand the QWIKY's coffee shop chain in India through a new "Mobile coffee" concept. Some key points:
1) QWIKY's aims to target the growing "On-The-Go" consumer market in India by launching a fleet of mobile coffee vans that will serve coffee at locations like toll plazas and petrol pumps.
2) The new brand positioning will be as the "#1 On-The-Go coffee provider" catering specifically to busy professionals always on the move.
3) An initial budget of around 15 lakhs rupees is proposed to cover expenses like legal costs, vehicle customization, marketing promotions for the launch.
This document summarizes the transformation of State Bank of India (SBI) from a state-owned bank to a modernized banking leader. It discusses how SBI was nationalized in 1969 and grew to over 60,000 branches by the 1990s. However, financial reforms in the early 1990s led to losses for the first time. SBI underwent restructuring in the 1970s and 1980s and established subsidiaries. In the 2000s, Chairman O.P. Bhatt led the 'Parivartan' initiative to make SBI customer-oriented, technology-focused, and improve employee attitude through communication. This helped SBI improve its market position, customer satisfaction, and win numerous awards.
Loreal in China: Strategies for the Yue Sai BrandAnkit Sen
L'Oreal acquired the Chinese skincare brand Yue Sai but has faced challenges in effectively positioning and marketing the brand. Some key issues include an uncertain business model, reduced brand visibility, and lack of motivation among L'Oreal employees in China. To address these, the document recommends that L'Oreal associate its name more closely with Yue Sai to increase brand awareness and customer acceptance. It also suggests strengthening promotions utilizing Chinese social media and traditional Chinese medicine values, while exploring new product categories and markets.
Porter's five forces analysis is used to understand the attractiveness of the smartphone industry. The threat of new entrants is low due to high capital requirements and barriers like patents. The threat of substitute products like basic phones, social media, and individual devices is moderate. The bargaining power of customers is high because of many choices and low switching costs. The bargaining power of suppliers is moderate as there are many hardware and software options. The intensity of rivalry among existing competitors like Apple and Samsung is high as they differentiate on features, applications, and prices.
Citibank was founded in 1812 and is currently the largest bank in the US and one of the largest in the world. It is headquartered in New York City and has a presence in over 120 countries. Citibank has over 200 million customer accounts and provides various financial services including banking, credit cards, investment management, and wealth management. It aims to offer excellent customer service globally through strategic focus on productivity, efficient use of capital, technology, and client relationships.
The document discusses Hewlett Packard's (HP) Computer Systems Organization's (CSO) sales approach to large enterprise customers. HP commissioned a consulting firm to audit its sales process and make recommendations. The audit found that HP sales reps spent most of their time on downstream repurchase opportunities rather than higher-margin midstream and upstream projects. It recommended that HP adopt a portfolio approach, entering accounts at multiple levels simultaneously. It also suggested focusing sales efforts on the most strategic large accounts. The new approach would prioritize opportunities and provide specialized support to sales reps to improve conversion rates and reduce wasted time.
Management Strategy: The Core Competence of the Corporation.
Based on Harvard Business Review with same title article written by C.K. Prahalad and Gary Hamel
This presentation was prepared by executive MBA students at the University of Texas at Dallas. The purpose of the presentation as delivered in an academic setting is to shine light on Tesla, Inc.'s strategic position in the market relative to their corporate governance challenges with a set of specific recommendations.
The document discusses plans to rebrand the QWIKY's coffee shop chain in India through a new "Mobile coffee" concept. Some key points:
1) QWIKY's aims to target the growing "On-The-Go" consumer market in India by launching a fleet of mobile coffee vans that will serve coffee at locations like toll plazas and petrol pumps.
2) The new brand positioning will be as the "#1 On-The-Go coffee provider" catering specifically to busy professionals always on the move.
3) An initial budget of around 15 lakhs rupees is proposed to cover expenses like legal costs, vehicle customization, marketing promotions for the launch.
This document summarizes the transformation of State Bank of India (SBI) from a state-owned bank to a modernized banking leader. It discusses how SBI was nationalized in 1969 and grew to over 60,000 branches by the 1990s. However, financial reforms in the early 1990s led to losses for the first time. SBI underwent restructuring in the 1970s and 1980s and established subsidiaries. In the 2000s, Chairman O.P. Bhatt led the 'Parivartan' initiative to make SBI customer-oriented, technology-focused, and improve employee attitude through communication. This helped SBI improve its market position, customer satisfaction, and win numerous awards.
Loreal in China: Strategies for the Yue Sai BrandAnkit Sen
L'Oreal acquired the Chinese skincare brand Yue Sai but has faced challenges in effectively positioning and marketing the brand. Some key issues include an uncertain business model, reduced brand visibility, and lack of motivation among L'Oreal employees in China. To address these, the document recommends that L'Oreal associate its name more closely with Yue Sai to increase brand awareness and customer acceptance. It also suggests strengthening promotions utilizing Chinese social media and traditional Chinese medicine values, while exploring new product categories and markets.
Porter's five forces analysis is used to understand the attractiveness of the smartphone industry. The threat of new entrants is low due to high capital requirements and barriers like patents. The threat of substitute products like basic phones, social media, and individual devices is moderate. The bargaining power of customers is high because of many choices and low switching costs. The bargaining power of suppliers is moderate as there are many hardware and software options. The intensity of rivalry among existing competitors like Apple and Samsung is high as they differentiate on features, applications, and prices.
The document discusses GE's practice of promoting top leaders from within the company. It traces the career histories of several GE CEOs including Charles Coffin, Ralph Cordiner, Reginald Jones, and Jack Welch. It also provides a timeline of Jeff Immelt's career at GE from 1982 when he joined the company to 2001 when he became CEO. The document examines how GE has evolved its management policies and strategic focus over time to remain a leading global competitor.
IBM has shifted from a hardware-focused business model to one focused on services, software and solutions. It generates over 60% of its revenue from services like consulting and infrastructure management. IBM's value proposition is providing integrated solutions to large businesses through partnerships, research, and hybrid cloud services. The company has invested heavily in growth areas like cloud, analytics and AI to transition as hardware becomes less important.
This document contains an agenda for evaluating Maersk Line's success with social media marketing and recommendations for next steps. It summarizes that Maersk succeeded due to seeing social media strategically, authentic customer interaction, and being first to adopt multiple platforms. Key drivers included visual content, consistent voice, crisis response, management buy-in, platform segmentation, and low costs. The document evaluates Maersk's content strategy focusing on differentiating content and using employees as creators. It analyzes Maersk's execution across platforms like Facebook, Twitter, LinkedIn and YouTube. Competitors may initially be ambivalent but will likely seek to match Maersk's success. Future challenges include redefining real-time marketing, greater
MAD HATS currently faces obstacles to growth including market saturation, lack of marketing strategy, and disconnected IT systems. The document recommends (1) introducing seasonal hats tied to causes, (2) utilizing IT systems like ERP and SOA for operations and analysis, and (3) restructuring leadership and adding positions like CIO. These strategic, technological, and human capital initiatives would work together to help MAD HATS overcome barriers through frequent product releases, expanded demographics, and optimized operations. The recommendations are estimated to cost $750,000 initially but would make the company profitable over $15 million within 5 years according to risk analysis.
This document contains information about Class 1 Group 8 and their project on Samsung Electronics. It includes Samsung's mission, vision, objectives and strategies. It also provides an analysis of Samsung's products, competitors, strengths, weaknesses, opportunities, threats and various strategic models like SWOT, CPM, EFE and IFE matrices. The document aims to understand and evaluate Samsung's business strategies.
Samsung is a South Korean multinational electronics company founded in 1938. It has annual revenue over $305 billion and employs 489,000 people globally. Samsung operates in 80 countries through 15 regional headquarters and has diverse business areas including consumer electronics, IT, mobile communications, and semiconductor manufacturing. It has a strong focus on innovation through its $9 billion annual R&D budget and 34 R&D centers worldwide. Samsung holds the top market share position for LCD screens and mobile phones. It faces challenges from short product lifecycles and aggressive Chinese competitors, but maintains its leading position through localized marketing, premium pricing, and vertical integration across manufacturing and supply chain.
Mind Tree is an international IT consulting and services company headquartered in India and New Jersey. It operates through two units and was founded in 1999. Mind Tree has over 15 offices globally and focuses on product engineering and IT services. The company emphasizes a culture-led approach and places significant importance on its values, with culture comprising 40% of employee appraisals. Mind Tree utilizes various knowledge management practices like communities of practice, a knowledge portal called Konnect, and a holistic approach involving people, organizations and their interfaces to effectively manage knowledge.
Uber is expanding globally and considering entering the Chinese market. The document provides background on Uber's founding in 2009 as a mobile app for ridesharing. It has grown rapidly to operate in over 68 countries and 300 cities worldwide. Uber faces challenges expanding into new markets from opposition by taxi unions and regulators, as well as some safety and ethical concerns regarding surge pricing. The company aims to disrupt the taxi industry with its business model of using independent contractor drivers without owning vehicles itself.
1. The document presents cost and production data for two models, Model 101 and Model 102, including direct labor costs, variable overhead costs, selling prices, contribution margins, and fixed overhead costs.
2. An optimization model is formulated to maximize total profit by determining the optimal production quantities of each model, subject to various capacity constraints.
3. Sensitivity analysis shows that 500 additional units of engine assembly capacity can be added before it impacts the optimal production decision, and profit would increase by $2000 for every additional 100 units of capacity.
The document discusses the Ansoff Matrix, which is a tool that helps businesses decide growth strategies related to new or existing products and markets. It outlines four growth strategies:
1) Consolidation focuses on protecting existing market share with current products.
2) Market penetration aims to increase sales of existing products to existing markets through tactics like competitive pricing.
3) Market development seeks to sell existing products to new markets, such as new geographic areas.
4) Product development introduces new products to existing markets and requires developing new competencies.
This document discusses Apple's use of blue ocean strategy to drive innovation and business success. It provides an overview of blue ocean strategy concepts like creating uncontested market space, focusing on non-customers, and using value innovation to eliminate, reduce, raise and create new elements. The document then analyzes Apple's strategic moves like simplifying interfaces, adding applications and improving design to attract new customers beyond the existing market. Finally, it discusses frameworks and principles for formulating and executing blue ocean strategies while minimizing risks.
Rendanheyi is Haier's unique decentralized organizational structure comprised of over 200 entrepreneurial micro-enterprise teams. This structure allows Haier to sense customer needs, rapidly develop and seize new opportunities. Haier has transformed its organization multiple times under the visionary leadership of Zhang Ruimin to continually build dynamic capabilities and remain agile and innovative. Some American companies with organizational structures similar to Rendanheyi that also focus on developing dynamic capabilities include Alphabet, 3M, W.L. Gore, and Berkeley Research Group.
The document discusses platform business models and digital ecosystems. It defines a platform business model as one that builds value for multiple sides in a market by consolidating customers and simplifying processes. Examples of digital platform businesses include desktop operating systems, game consoles, and payment systems. The document outlines that platform businesses are built on network effects, and their openness is critical. It also discusses how platform models can generate profits through first and third party usage and build digital ecosystems through virtuous cycles of competition and collaboration.
O.P. Bhatt assumed the chairmanship of State Bank of India (SBI) in 2006. At that time, SBI's market share had declined significantly and employees lacked goals and commitment. Bhatt implemented several strategies to communicate and drive change at SBI. He held conclaves to set a 14-point agenda, met with unions to discuss mutual support, and listened to managers' feedback. Bhatt restructured roles, improved IT infrastructure, retained skilled employees, and regularly met with managers. These changes helped regain market share and reputation. Bhatt's vision was for SBI to be among the top global banks and serve all Indians while developing employees.
The document discusses Dell's direct sales model and competitive strategy. It summarizes Dell's history and growth founded on direct sales to customers. It analyzes Dell's competitors who struggled to copy the direct model. The document also reviews Dell's market share, competitive strengths, and provides recommendations to expand products, markets, and diversify through acquisitions for long-term growth.
The new new competition - How digital platforms change competitive strategyPlatform Revolution
The document discusses how platform competition differs from traditional competition. Platform competition occurs at three levels: between platforms, platforms and their partners, and partners within a platform's ecosystem. Platforms win by owning their ecosystem, monitoring it for valuable resources, leveraging user data, acquiring companies built on their platform, monitoring adjacent areas, and having superior technological design. Some markets become "winner-take-all" where network effects drive users to a single dominant platform. Understanding platform competition is important for both platforms and participants in their ecosystems.
International Business Machine (IBM) has experienced many ups and downs over its long history since 1910. [1] Key factors in IBM's recent success include its well-known brand name, global distribution capabilities, and ability to change its organization when technology changes. [2] IBM's plans to solve some of the world's most challenging problems may succeed because it hires scientists, engineers, and consultants, invests $50 billion in R&D with 30% for long-term research. [3] IBM's biggest competitors today are technology and consulting firms related to hardware and software like HP and Accenture. However, risks to IBM's current strategy include low success rates, R&D becoming obsolete, inability to
Samsung is a South Korean multinational electronics company founded in 1938. It has grown to be a global leader in electronics, with over 285 offices in 67 countries. Samsung has a vision of inspiring the world and creating the future through new technologies, innovative products, and creative solutions. It aims to achieve $400 billion in revenue and become a top five global brand by 2020. Samsung has been successful due to its focus on innovation, quality products, and strong leadership.
The document provides a SWOT analysis and strategic overview of 3M Company using several frameworks. It analyzes 3M's industry attractiveness, business strengths, and brand portfolio using a GE 9Cube matrix. It then examines 3M's strategy, structure, shared values, staff skills, style, and systems using McKinsey's 7S framework. The document outlines 3M's innovation process and positions its business sectors in a BCG matrix. Finally, it applies Porter's five forces model to 3M's industry environment to analyze threats and bargaining powers.
Scorpio (Brand Identity) – IIM-A Case Study Solution Harinder Pelia
1) The Scorpio from Mahindra was originally positioned as a "car-plus" that offered more space, power and comfort than regular cars.
2) Key brand elements for Scorpio included the name, logo and tagline "Nothing Else Will Do" which conveyed thrill and adventure. Early TV ads featured international settings and characters.
3) Over time, Scorpio began losing its adventurous image as more SUVs entered the market. Mahindra revitalized the brand by focusing on its off-road capabilities in new ads and adding a more powerful engine.
4) Looking ahead, Mahindra will need to update Scorpio's design and target institutional
This is a presentation given in the MBS MSc Innovation Management course taught by Prof. Silvia for group assignment to introduce and discuss the paper Dynamic Capabilities and Strategic Management by Teece D., Pisano G., and Shuen A. in 1997.
The document discusses the concepts of dynamic capabilities and the resource-based view of the firm. It explains that dynamic capabilities allow firms to adapt their resource configurations to changing market conditions in order to gain and maintain competitive advantages. Specifically, dynamic capabilities help firms rearrange and develop their resources to create new value through activities like product development, strategic decision-making, and alliance-building. The document also discusses how dynamic capabilities differ based on the level of dynamism in a market and how firms can develop and improve their dynamic capabilities over time through processes like repeated practice, codification of procedures, and learning from failures.
The document discusses GE's practice of promoting top leaders from within the company. It traces the career histories of several GE CEOs including Charles Coffin, Ralph Cordiner, Reginald Jones, and Jack Welch. It also provides a timeline of Jeff Immelt's career at GE from 1982 when he joined the company to 2001 when he became CEO. The document examines how GE has evolved its management policies and strategic focus over time to remain a leading global competitor.
IBM has shifted from a hardware-focused business model to one focused on services, software and solutions. It generates over 60% of its revenue from services like consulting and infrastructure management. IBM's value proposition is providing integrated solutions to large businesses through partnerships, research, and hybrid cloud services. The company has invested heavily in growth areas like cloud, analytics and AI to transition as hardware becomes less important.
This document contains an agenda for evaluating Maersk Line's success with social media marketing and recommendations for next steps. It summarizes that Maersk succeeded due to seeing social media strategically, authentic customer interaction, and being first to adopt multiple platforms. Key drivers included visual content, consistent voice, crisis response, management buy-in, platform segmentation, and low costs. The document evaluates Maersk's content strategy focusing on differentiating content and using employees as creators. It analyzes Maersk's execution across platforms like Facebook, Twitter, LinkedIn and YouTube. Competitors may initially be ambivalent but will likely seek to match Maersk's success. Future challenges include redefining real-time marketing, greater
MAD HATS currently faces obstacles to growth including market saturation, lack of marketing strategy, and disconnected IT systems. The document recommends (1) introducing seasonal hats tied to causes, (2) utilizing IT systems like ERP and SOA for operations and analysis, and (3) restructuring leadership and adding positions like CIO. These strategic, technological, and human capital initiatives would work together to help MAD HATS overcome barriers through frequent product releases, expanded demographics, and optimized operations. The recommendations are estimated to cost $750,000 initially but would make the company profitable over $15 million within 5 years according to risk analysis.
This document contains information about Class 1 Group 8 and their project on Samsung Electronics. It includes Samsung's mission, vision, objectives and strategies. It also provides an analysis of Samsung's products, competitors, strengths, weaknesses, opportunities, threats and various strategic models like SWOT, CPM, EFE and IFE matrices. The document aims to understand and evaluate Samsung's business strategies.
Samsung is a South Korean multinational electronics company founded in 1938. It has annual revenue over $305 billion and employs 489,000 people globally. Samsung operates in 80 countries through 15 regional headquarters and has diverse business areas including consumer electronics, IT, mobile communications, and semiconductor manufacturing. It has a strong focus on innovation through its $9 billion annual R&D budget and 34 R&D centers worldwide. Samsung holds the top market share position for LCD screens and mobile phones. It faces challenges from short product lifecycles and aggressive Chinese competitors, but maintains its leading position through localized marketing, premium pricing, and vertical integration across manufacturing and supply chain.
Mind Tree is an international IT consulting and services company headquartered in India and New Jersey. It operates through two units and was founded in 1999. Mind Tree has over 15 offices globally and focuses on product engineering and IT services. The company emphasizes a culture-led approach and places significant importance on its values, with culture comprising 40% of employee appraisals. Mind Tree utilizes various knowledge management practices like communities of practice, a knowledge portal called Konnect, and a holistic approach involving people, organizations and their interfaces to effectively manage knowledge.
Uber is expanding globally and considering entering the Chinese market. The document provides background on Uber's founding in 2009 as a mobile app for ridesharing. It has grown rapidly to operate in over 68 countries and 300 cities worldwide. Uber faces challenges expanding into new markets from opposition by taxi unions and regulators, as well as some safety and ethical concerns regarding surge pricing. The company aims to disrupt the taxi industry with its business model of using independent contractor drivers without owning vehicles itself.
1. The document presents cost and production data for two models, Model 101 and Model 102, including direct labor costs, variable overhead costs, selling prices, contribution margins, and fixed overhead costs.
2. An optimization model is formulated to maximize total profit by determining the optimal production quantities of each model, subject to various capacity constraints.
3. Sensitivity analysis shows that 500 additional units of engine assembly capacity can be added before it impacts the optimal production decision, and profit would increase by $2000 for every additional 100 units of capacity.
The document discusses the Ansoff Matrix, which is a tool that helps businesses decide growth strategies related to new or existing products and markets. It outlines four growth strategies:
1) Consolidation focuses on protecting existing market share with current products.
2) Market penetration aims to increase sales of existing products to existing markets through tactics like competitive pricing.
3) Market development seeks to sell existing products to new markets, such as new geographic areas.
4) Product development introduces new products to existing markets and requires developing new competencies.
This document discusses Apple's use of blue ocean strategy to drive innovation and business success. It provides an overview of blue ocean strategy concepts like creating uncontested market space, focusing on non-customers, and using value innovation to eliminate, reduce, raise and create new elements. The document then analyzes Apple's strategic moves like simplifying interfaces, adding applications and improving design to attract new customers beyond the existing market. Finally, it discusses frameworks and principles for formulating and executing blue ocean strategies while minimizing risks.
Rendanheyi is Haier's unique decentralized organizational structure comprised of over 200 entrepreneurial micro-enterprise teams. This structure allows Haier to sense customer needs, rapidly develop and seize new opportunities. Haier has transformed its organization multiple times under the visionary leadership of Zhang Ruimin to continually build dynamic capabilities and remain agile and innovative. Some American companies with organizational structures similar to Rendanheyi that also focus on developing dynamic capabilities include Alphabet, 3M, W.L. Gore, and Berkeley Research Group.
The document discusses platform business models and digital ecosystems. It defines a platform business model as one that builds value for multiple sides in a market by consolidating customers and simplifying processes. Examples of digital platform businesses include desktop operating systems, game consoles, and payment systems. The document outlines that platform businesses are built on network effects, and their openness is critical. It also discusses how platform models can generate profits through first and third party usage and build digital ecosystems through virtuous cycles of competition and collaboration.
O.P. Bhatt assumed the chairmanship of State Bank of India (SBI) in 2006. At that time, SBI's market share had declined significantly and employees lacked goals and commitment. Bhatt implemented several strategies to communicate and drive change at SBI. He held conclaves to set a 14-point agenda, met with unions to discuss mutual support, and listened to managers' feedback. Bhatt restructured roles, improved IT infrastructure, retained skilled employees, and regularly met with managers. These changes helped regain market share and reputation. Bhatt's vision was for SBI to be among the top global banks and serve all Indians while developing employees.
The document discusses Dell's direct sales model and competitive strategy. It summarizes Dell's history and growth founded on direct sales to customers. It analyzes Dell's competitors who struggled to copy the direct model. The document also reviews Dell's market share, competitive strengths, and provides recommendations to expand products, markets, and diversify through acquisitions for long-term growth.
The new new competition - How digital platforms change competitive strategyPlatform Revolution
The document discusses how platform competition differs from traditional competition. Platform competition occurs at three levels: between platforms, platforms and their partners, and partners within a platform's ecosystem. Platforms win by owning their ecosystem, monitoring it for valuable resources, leveraging user data, acquiring companies built on their platform, monitoring adjacent areas, and having superior technological design. Some markets become "winner-take-all" where network effects drive users to a single dominant platform. Understanding platform competition is important for both platforms and participants in their ecosystems.
International Business Machine (IBM) has experienced many ups and downs over its long history since 1910. [1] Key factors in IBM's recent success include its well-known brand name, global distribution capabilities, and ability to change its organization when technology changes. [2] IBM's plans to solve some of the world's most challenging problems may succeed because it hires scientists, engineers, and consultants, invests $50 billion in R&D with 30% for long-term research. [3] IBM's biggest competitors today are technology and consulting firms related to hardware and software like HP and Accenture. However, risks to IBM's current strategy include low success rates, R&D becoming obsolete, inability to
Samsung is a South Korean multinational electronics company founded in 1938. It has grown to be a global leader in electronics, with over 285 offices in 67 countries. Samsung has a vision of inspiring the world and creating the future through new technologies, innovative products, and creative solutions. It aims to achieve $400 billion in revenue and become a top five global brand by 2020. Samsung has been successful due to its focus on innovation, quality products, and strong leadership.
The document provides a SWOT analysis and strategic overview of 3M Company using several frameworks. It analyzes 3M's industry attractiveness, business strengths, and brand portfolio using a GE 9Cube matrix. It then examines 3M's strategy, structure, shared values, staff skills, style, and systems using McKinsey's 7S framework. The document outlines 3M's innovation process and positions its business sectors in a BCG matrix. Finally, it applies Porter's five forces model to 3M's industry environment to analyze threats and bargaining powers.
Scorpio (Brand Identity) – IIM-A Case Study Solution Harinder Pelia
1) The Scorpio from Mahindra was originally positioned as a "car-plus" that offered more space, power and comfort than regular cars.
2) Key brand elements for Scorpio included the name, logo and tagline "Nothing Else Will Do" which conveyed thrill and adventure. Early TV ads featured international settings and characters.
3) Over time, Scorpio began losing its adventurous image as more SUVs entered the market. Mahindra revitalized the brand by focusing on its off-road capabilities in new ads and adding a more powerful engine.
4) Looking ahead, Mahindra will need to update Scorpio's design and target institutional
This is a presentation given in the MBS MSc Innovation Management course taught by Prof. Silvia for group assignment to introduce and discuss the paper Dynamic Capabilities and Strategic Management by Teece D., Pisano G., and Shuen A. in 1997.
The document discusses the concepts of dynamic capabilities and the resource-based view of the firm. It explains that dynamic capabilities allow firms to adapt their resource configurations to changing market conditions in order to gain and maintain competitive advantages. Specifically, dynamic capabilities help firms rearrange and develop their resources to create new value through activities like product development, strategic decision-making, and alliance-building. The document also discusses how dynamic capabilities differ based on the level of dynamism in a market and how firms can develop and improve their dynamic capabilities over time through processes like repeated practice, codification of procedures, and learning from failures.
This paper examines the microfoundations that underlie the development of dynamic capabilities for discontinuous innovation in entrepreneurial firms. It analyzes data from two Norwegian petroleum companies to identify four types of microfoundations - product, position, process, and paradigm - that are essential for commercializing innovations. The findings reveal specific aspects of each microfoundation. The study contributes to understanding how dynamic capabilities emerge by exploring their antecedents at the firm level, and relates microfoundations and dynamic capabilities to the context of innovation in new ventures.
Dynamic capabilities allow organizations to sense opportunities, seize opportunities, and transform themselves. They consist of microfoundations like routines, methodologies, and individual acts. Microfoundations include routines for sensing opportunities, as well as non-routine acts by leaders. Effective microfoundations balance routines with non-routine innovation. Research studies both the nature of individual microfoundations and their complex interactions.
Operationalization of Dynamic CapabilitiesRené Rohrbeck
This document proposes a framework for operationalizing dynamic capabilities. It identifies 5 dimensions and 21 elements of organizational future orientation abilities. These abilities are grouped into levels of maturity. The framework also outlines barriers that can prevent companies from adapting to changes, and the activities and capabilities needed to overcome these barriers. These include scanning the environment, defining responsibilities, integrating foresight with decision-making, and promoting a culture open to new ideas. Future research is proposed to longitudinally study how companies respond to external changes over time.
Ibm and innovation overview 20150326 v15 shortISSIP
IBM's University Programs work to accelerate regional development through partnerships with universities worldwide. The document discusses IBM's innovation capabilities and how they are dynamic. It provides examples of how IBM senses opportunities, seizes them, and manages threats and transformation.
This document summarizes a working paper about deliberate learning and the evolution of dynamic capabilities. It defines dynamic capabilities as patterns of collective activity that systematically generate and modify operating routines to improve effectiveness. It presents a framework showing how learning mechanisms shape operating routines directly and also indirectly through dynamic capabilities. It discusses three learning mechanisms - experience accumulation, knowledge articulation, and knowledge codification - and how their effectiveness depends on features of the organizational task, like frequency and ambiguity. It aims to understand how capabilities develop and change over time through these different learning processes.
1) IBM faced significant problems in the late 1980s and early 1990s as it failed to adapt to changes in the computing industry. Its outdated business model focused on mainframe computers rather than more practical applications for PCs.
2) In 1993, Louis Gerstner was hired as CEO to turn IBM around. He diagnosed extensive issues requiring radical transformation.
3) Gerstner implemented change using John Kotter's 8-step model, creating urgency, building a team to guide transformation, establishing a new vision, removing obstacles, planning short-term wins, sustaining change through cultural shifts. This successful change management restored IBM's competitiveness.
Recent strategic management literature has suggested the age of sustainable competitive advantage has ended, that we instead live in the age of temporary advantage. However, dynamic capabilities, routines that adapt resources, are considered to be a source of sustainable competitive advantage. This paper addresses a gap in the literature by proposing a theory of individual level dynamic capability development. This paper also proposes dynamic capabilities which are organized by the four dimensions of the learning orientation construct are positively associated sustainable competitive advantage.
The document discusses three generic strategies for businesses: differentiation strategy, focus strategy, and Ansoff's Matrix. The differentiation strategy involves making a product or service unique to add value for customers through continuous innovation, quality, services, design or customer terms. The focus strategy targets a specific market segment through specialization and niche marketing. Ansoff's Matrix analyzes product and market expansion strategies.
This document discusses strategic management and strategic alternatives. It defines key terms like strategic business unit (SBU) and strategy. It describes the evolution of strategic planning and discusses portfolio restructuring, strategic options like growth, divestment, and investment. It also covers strategies for declining, mature and emerging markets, as well as competitive strategy, core competencies, competitive advantages, diversification, and knowledge management.
This document discusses strategic analysis and choice in business. It provides an overview of various analytical frameworks and tools used to generate, evaluate, and select strategies, including the TOWS matrix, SPACE matrix, BCG matrix, and Grand Strategy matrix. These tools help analyze a company's internal strengths and weaknesses as well as external opportunities and threats to develop alternative strategies and guide strategic decision making.
The process of strategic choice involves focusing on strategic alternatives through gap analysis, analyzing alternatives based on objective and subjective factors, evaluating alternatives against selection criteria, and making a final choice. Subjective factors considered in strategic choice include perceptions of critical success factors, commitment to past actions, decision styles and risk attitudes, and internal politics. Organizations develop contingency strategies in advance to deal with uncertainties and create strategic plans to implement chosen strategies.
This document discusses strategic choices and approaches that firms can take. It discusses the need for firms to have consistent strategies aligned with their situation to achieve goals. Several strategy options and approaches are described, including Porter's three generic strategies of cost leadership, differentiation, and focus. Ansoff's product/market matrix and the four strategic approaches it outlines are also summarized. Additional approaches from Glueck and Kotler are briefly described involving stability, expansion, retrenchment strategies and competitive positions respectively. Key criteria for evaluating strategies and common strategic alternatives are also provided.
This document discusses strategic management and strategic choice. It outlines several approaches to strategic choice, including Porter's strategies of cost leadership, differentiation, and focus. It also discusses Ansoff's product/market matrix and strategies based on existing and new products and markets. Other approaches mentioned include Glueck's stability, expansion, and retrenchment strategies, as well as Kotler's strategies based on market leader, challenger, follower, and niche positions. The document provides details on common strategies within each approach and factors to consider when selecting strategies.
The document summarizes a chapter on corporate-level strategy from a strategic management textbook. It discusses seven key topics: (1) the definition of corporate-level strategy and different levels of diversification, (2) the three primary reasons firms diversify, (3) how related diversification can create value, (4) how unrelated diversification can also create value, (5) incentives and resources that encourage value-neutral diversification, (6) management motives that can encourage overdiversification and reduce value, and (7) a summary model of the relationship between diversification and firm performance.
This document discusses creating a college support team to help students achieve their goals. It recommends that freshmen orient themselves to campus, set goals, take assessment tests, register for classes, and utilize tutoring and office hours. It also stresses identifying one's values and natural skills through aptitude tests. Students should establish goals and identify people outside of faculty and staff who can help, such as parents, friends, tutors, and alumni. As sophomores, students should register, utilize support programs, help others succeed, encourage freshmen, and become leaders by passing on their support system. Creating a network helps students change the culture for the better.
The Brown Act outlines rules for transparency and public participation in meetings of legislative bodies in California. It defines which groups are subject to the act and discusses requirements around regular, special, emergency, and adjourned meetings including agendas, notices, and open discussion. Exceptions are provided for certain personnel and litigation matters. Violations of the act can result in civil or criminal penalties.
This document summarizes an article about IBM's transformation from the early 1990s when it was failing, to the 2000s when it became a leader in software and services. When Lou Gerstner took over as CEO in 1993, services were 27% of revenue and software didn't exist as a business unit. By 2001, services and software were $35 billion and $13 billion businesses, making up 58% of total revenue. The document discusses IBM's use of dynamic capabilities, which allowed it to sense changes, seize opportunities by reallocating resources, and develop new competencies to adapt to changing markets and technologies over 20 years. It describes IBM's strategy processes that involve 25,000 executives to identify opportunities across industries and ge
Monique GilliamWednesday27 Nov at 2102Manage discussion entry.docxroushhsiu
Monique Gilliam
Wednesday27 Nov at 21:02
Manage discussion entry
Week 2 Discussion Forum
Discuss the elements of strategic management and explain why it is crucial to an organization's survival. Excluding the examples from the textbook, give an example of a company that failed as a result of poor strategic management. Explain the difference between a strategy and a business model. Please discuss this in 200-250 words.
Strategic management is a strategy that provides direction for a company. Strategic management is a plan that includes situation analysis, strategy formulation, strategy implementation, and strategy evaluation. Situation analysis is how managers learn and understand what the company is capable of, along with the customers and the business environment. Strategy formulation is the process that is used to achieve the goals of the company. Strategy implementation puts the plan in motion, and strategy evaluation tests the effectiveness of an idea.
For a business to survive, the management team must be willing to grow the company to obtain new opportunities; without growth, a business will not be able to maintain longevity with a large amount of competition. The extension allows a business the ability to obtain assets, funds, and investments that will enable a push toward performance and profits.
Sears is a company that I believe that failed because of poor strategic management. Sears has been a household name for many years until new competition such as Walmart and Amazon, to name a few came on the scene. I don't believe Sears had a plan, strategy, or a goal of how-to compete because of their household name in the past. A business should always be assessing its strategy for success; if not, the industry could be left behind. Sears, in my hometown, never had any significant updates to the store or the merchandise to keep up with the competition. It seems to me that their strategy was just lower prices on already low-quality merchandise, excluding exercise equipment, appliances, and outdoor equipment.
All businesses, large and small, should have a strategy and a business model. A strategy is a plan of action that explains what the company will and will not do, how they plan to compete with the competition, and how they will execute the plan. The business model is how the company plans to make a profit; also, the business model identifies what the products and services are and who their target market is and any expenses. These two plans will aid in keeping a business moving in the right direction.
James Miller
Thursday28 Nov at 6:30
Manage discussion entry
Strategic Planning
BUS402 Week 2
Discussion 1
Discuss the elements of strategic management and explain why it is crucial to an organization’s survival.
The process of strategic management is made up of four elements: situation analysis, strategy formulation, strategy implementation, and strategy evaluation. Situational analysis is the stepping off point of strategic mana ...
Issue | McKinsey Quarterly 2013 Number 4
@McKQuarterly
Strategy to beat the odds
Examines how to make wise strategic choices, mobilize the C-suite to take advantage of big data, use social technologies to engage employees and transform organizations, and build vibrant communities with help from companies.
2013 q4 McKinsey quarterly - Strategy to beat the oddsAhmed Al Bilal
This document summarizes principles for companies to effectively implement social technologies internally and realize their full potential benefits. It recommends that companies: 1) Make social technologies central to work processes rather than extras; 2) Provide organizational support like training to foster adoption; 3) Experiment with social tools in a learning-focused way rather than top-down directives; 4) Track impact over time and evolve metrics as understanding improves. Case studies from MITRE, TD Bank, and Maersk Line illustrate applying these principles.
Discussion Post 4 Student Replies Strategic Management.docxbkbk37
The document discusses strategic management and strategy. It defines strategic management as examining how actions of executives, firms, and industries influence success. Strategy can be viewed as a plan, ploy, position, pattern, or perspective. A strategic plan outlines steps a firm will take, while a ploy involves creative moves to outwit competitors. The document uses examples like Apple, pizza restaurants, the Mississippi River, and the American Revolution to illustrate different views of strategy.
Discussion Post 4 Student Replies Strategic Management.docxbkbk37
The document discusses strategic management and strategy through analyzing five different perspectives on strategy: plan, ploy, pattern, position, and perspective. It provides examples of each, such as strategic plans involving business models, strategic ploys like Hannibal crossing the Alps with elephants, and analyzing strategy as the consistent patterns of firms like Apple. The document also discusses how strategy involves a firm's position relative to competitors and how executives can have different strategic perspectives on the same events.
Discussion Post 4 Student Replies Strategic Management.docxwrite31
The document discusses strategic management and strategy. It defines strategic management as examining how actions of executives, firms, and industries influence success. Strategy can be viewed as a plan, ploy, position, pattern, or perspective. A strategic plan outlines steps a firm will take, while a ploy involves creative moves to outwit competitors. The document uses examples like Apple, pizza restaurants, the Mississippi River, and the American Revolution to illustrate different views of strategy.
Saylor URL: http://www.saylor.org/books Saylor.org
4
Chapter 1
Mastering Strategy: Art and Science
L E A R N I N G O B J E C T I V E S
After reading this chapter, you should be able to understand and articulate answers to the following
questions:
1. What are strategic management and strategy?
2. Why does strategic management matter?
3. What elements determine firm performance?
Strategic Management: A Core Concern for Apple
The Opening of the Apple Store
Image courtesy of Neil Bird, http://www.flickr.com/photos/nechbi/2058929337.
March 2, 2011, was a huge day for Apple. The firm released its much-anticipated iPad2, a thinner and
faster version of market-leading Apple’s iPad tablet device. Apple also announced that a leading publisher,
Random House, had made all seventeen thousand of its books available through Apple’s iBookstore.
Apple had enjoyed tremendous success for quite some time. Approximately fifteen million iPads were sold
in 2010, and the price of Apple’s stock had more than tripled from early 2009 to early 2011.
http://creativecommons.org/licenses/by-nc-sa/3.0/
http://www.saylor.org/books
http://www.flickr.com/photos/nechbi/2058929337
Saylor URL: http://www.saylor.org/books Saylor.org
5
But future success was far from guaranteed. The firm’s visionary founder Steve Jobs was battling serious
health problems. Apple’s performance had suffered when an earlier health crisis had forced Jobs to step
away from the company. This raised serious questions. Would Jobs have to step away again? If so, how
might Apple maintain its excellent performance without its leader?
Meanwhile, the iPad2 faced daunting competition. Samsung, LG, Research in Motion, Dell, and other
manufacturers were trying to create tablets that were cheaper, faster, and more versatile than the iPad2.
These firms were eager to steal market share by selling their tablets to current and potential Apple
customers. Could Apple maintain leadership of the tablet market, or would one or more of its rivals
dominate the market in the years ahead? Even worse, might a company create a new type of device that
would make Apple’s tablets obsolete?
http://creativecommons.org/licenses/by-nc-sa/3.0/
http://www.saylor.org/books
Saylor URL: http://www.saylor.org/books Saylor.org
6
1.1 Defining Strategic Management and Strategy
L E A R N I N G O B J E C T I V E S
1. Learn what strategic management is.
2. Understand the key question addressed by strategic management.
3. Understand why it is valuable to consider different definitions of strategy.
4. Learn what is meant by each of the 5 Ps of strategy.
What Is Strategic Management?
Issues such as those currently faced by Apple are the focus of strategic management because they help
answer the key question examined by strategic management—“Why do some firms outperform other
firms?” More specifically, strategic management examines how actions and .
Saylor URL: http://www.saylor.org/books Saylor.org
4
Chapter 1
Mastering Strategy: Art and Science
L E A R N I N G O B J E C T I V E S
After reading this chapter, you should be able to understand and articulate answers to the following
questions:
1. What are strategic management and strategy?
2. Why does strategic management matter?
3. What elements determine firm performance?
Strategic Management: A Core Concern for Apple
The Opening of the Apple Store
Image courtesy of Neil Bird, http://www.flickr.com/photos/nechbi/2058929337.
March 2, 2011, was a huge day for Apple. The firm released its much-anticipated iPad2, a thinner and
faster version of market-leading Apple’s iPad tablet device. Apple also announced that a leading publisher,
Random House, had made all seventeen thousand of its books available through Apple’s iBookstore.
Apple had enjoyed tremendous success for quite some time. Approximately fifteen million iPads were sold
in 2010, and the price of Apple’s stock had more than tripled from early 2009 to early 2011.
http://creativecommons.org/licenses/by-nc-sa/3.0/
http://www.saylor.org/books
http://www.flickr.com/photos/nechbi/2058929337
Saylor URL: http://www.saylor.org/books Saylor.org
5
But future success was far from guaranteed. The firm’s visionary founder Steve Jobs was battling serious
health problems. Apple’s performance had suffered when an earlier health crisis had forced Jobs to step
away from the company. This raised serious questions. Would Jobs have to step away again? If so, how
might Apple maintain its excellent performance without its leader?
Meanwhile, the iPad2 faced daunting competition. Samsung, LG, Research in Motion, Dell, and other
manufacturers were trying to create tablets that were cheaper, faster, and more versatile than the iPad2.
These firms were eager to steal market share by selling their tablets to current and potential Apple
customers. Could Apple maintain leadership of the tablet market, or would one or more of its rivals
dominate the market in the years ahead? Even worse, might a company create a new type of device that
would make Apple’s tablets obsolete?
http://creativecommons.org/licenses/by-nc-sa/3.0/
http://www.saylor.org/books
Saylor URL: http://www.saylor.org/books Saylor.org
6
1.1 Defining Strategic Management and Strategy
L E A R N I N G O B J E C T I V E S
1. Learn what strategic management is.
2. Understand the key question addressed by strategic management.
3. Understand why it is valuable to consider different definitions of strategy.
4. Learn what is meant by each of the 5 Ps of strategy.
What Is Strategic Management?
Issues such as those currently faced by Apple are the focus of strategic management because they help
answer the key question examined by strategic management—“Why do some firms outperform other
firms?” More specifically, strategic management examines how actions and .
Dear students get fully solved assignments
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Answering two critical questions will fortify your company’s
strategy—and your ability to implement it. For more from Ken Favaro, visit: http://www.strategy-business.com/Ken-Favaro
1. The document discusses strategic management concepts and compares the strategies and performance of retailers Sears and Walmart over time.
2. Sears pursued a "one size fits all" strategy while Walmart focused on low prices and expanded into rural areas, perfecting an efficient low-cost model.
3. While Sears struggled financially, Walmart grew rapidly and successfully by implementing strategies centered around low costs, expanding into new markets, and tailoring store formats.
This document summarizes an article from strategy+business that discusses the rise of "supercompetitors" - companies that have fundamentally reshaped their industries through their distinctive capabilities. It provides examples of well-known supercompetitors like Amazon, Apple, Starbucks, IKEA, and others. The document asserts that these companies' success is based on having a few highly scalable and mutually reinforcing core capabilities, rather than on size, assets, or short-term profits. It argues that as traditional sources of competitive advantage diminish, the ability to build and leverage distinctive capabilities will determine which companies can gain long-term influence in their industries.
This document summarizes an article from strategy+business that discusses the rise of "supercompetitors" - companies that have fundamentally reshaped their industries through their distinctive capabilities. It provides examples of well-known supercompetitors like Amazon, Apple, Starbucks, IKEA, and others. The document asserts that these companies' success is based on having a few highly scalable and mutually reinforcing core capabilities, rather than on size, assets, or short-term profits. It argues that as traditional sources of competitive advantage diminish, the ability to build and leverage distinctive capabilities will determine which companies can gain long-term influence in their industries.
“Supercompetitors” are a new kind of market leader, gaining competitive advantage through the things they do better than anyone else—even amid the fierce competition and turbulence of many industries today. Learn more about how they do it: http://strat.bz/yhGHUWN
2012 q2 McKinsey quarterly - Put your money where your strategy isAhmed Al Bilal
The document discusses corporate strategy and capital allocation. It summarizes several articles in the McKinsey Quarterly, including ones on overcoming strategic inertia by reallocating resources, using social media strategically, and leveraging social technologies internally. It also previews pieces on better listening skills for executives and harnessing the potential of social media. The introduction notes that many companies fail to change their capital allocation to business units from year to year, despite changing environments, showing stagnant strategies.
Module CLC AssignmentCollaborative Learning Community C.docxgilpinleeanna
Module CLC Assignment
Collaborative Learning Community: Constructivist Teaching: Then and Now
Group Name
Grand Canyon University: EED 364
Date
(INTRO)
REFLECTION
Within your collaborative group, locate three separate science lesson plans from different grade levels that are aligned to the same discipline and core idea across the NGSS. In a 500-750-word discussion: deconstruct the lesson plans and describe the components within the lesson plans that reflect how the students are actually engaging in science practices. Use the ASPA subheadings below to evaluate the lessons.
Asking questions (for science) and defining problems (for engineering)
Developing and using models
Planning and carrying out investigations
Analyzing and interpreting data
Using mathematics and computational thinking
Constructing explanations (for science) and designing solutions (for engineering)
Engaging in arguments from evidence
Obtaining, evaluating, and communicating information.
Conclusion
Reference
Why Best Buy has always had the best
strategy
Two new roads in search of continuous renewal
I
n the few decades since corporate strategy really took off as a serious academic
discipline, several luminaries such as Michael Porter have made their mark by
developing a theory, refining it and testing it, and in turn having a huge impact on how
the subject is studied by business students and practitioners alike. Other academics have
tried to challenge the theories, pick arguments or just plain put down these seminal theorists.
Others tinker with the formulae to try and make their own impact. However some try to
genuinely expand on the original and attempt to take it into new directions and dimensions
that, crucially, take account of the rapid changes in business practices.
An example of early corporate strategy theory is a matrix devised by Gary Hamel and CK
Prahalad that shows the importance of core competencies to an organization, and can be
used to develop strategies to take advantage of those core competencies. This is done by
plotting existing and new competencies alongside existing and new markets, which reflects
the competencies needed to consolidate position and compete in the new areas. But are
these the only choices open to firms where competencies are concerned?
Accident or design?
In the 1980s and 1990s there was a CEO of a UK pest control business nicknamed ‘‘Mr 20
percent’’ on account of his promises to grow the company by this much each year. He pulled
the trick off for several years, but not unsurprisingly he eventually became unstuck – but how
much of his and the company’s success down to cunning strategy, or luck? Similarly, did
Steve Jobs know how successful the iPod would be when he signed off Jonathan Ive’s iconic
design in 2001? And therefore, were future designs and functions based around it to gain
continuous growth? The answer is of course a mixture of the two, however some strategists
think that firms can at least ...
long term business benefits of integrated dataStrategic thinking .pdfanandinternational01
long term business benefits of integrated data:
Strategic thinking is a powerful leadership tool that gives organizations the foresight and insight
needed to succeed in the long term, especially when applied throughout the organization.
The Power of Strategic Thinking
There is power in strategic thinking and it is available to everyone. When organizations begin to
think strategically, they gain:
* Insight, or problem solving skills, that help them intuitively make sense of chaos in their
environment.
* The ability to see emerging conditions that could potentially provide long-term competitive
advantage.
* The skill of visualizing, interpreting and scanning the environment for information about the
organization’s present and future.
* The ability to identify new market opportunities and create real solutions that advance
business.
* The ability to understand the importance of relationship building and its interconnectedness
with business goals.
Insight and Foresight
In their article, Managing strategic planning paradigms in China, Liu and Roos (2006) explain
what happened in 2005 when the Chinese government became the third largest trading nation in
the world. Foreign investors who wanted to trade in the Chinese market had to give up partial
ownership of their companies. They also had to give up the right to offer insight or foresight
about the future of their companies. Many companies agreed to do this because they realized that
they did not know their new environment and needed to depend on others to build the necessary
relationships to achieve success in China. Now that these investors are familiar with the Chinese
markets and culture, they are causing what Andrew Grove calls “a strategic inflection point” or a
fundamentally big change in their business environment. Having regained their freedom, it will
be those companies who exercise their strategic thinking muscles that will succeed in the long
run.
Everyone can be a Strategic Thinker
Many organizations do not involve all levels of employees in strategic thinking. They believe
that regular employees are not capable of strategic thinking and that only executives can
visualize, interpret and scan the environment for information about the organization’s present
and future. How wrong they are!
Another reason why organizations don’t employ strategic thinking is that company hiring
processes are often flawed. People are hired because of who they know and the agenda they are
bringing to the table. This means that valuable strategic thinking skills such as insight and
foresight are overlooked and replaced with nepotism and government control.
Finding New Opportunities
What does your organization stand to gain from teaching everyone to become a strategic thinker?
Another example of insight came from the mind of William Coleman. Coleman, a 58 year old
billionaire and former co-founder of BEA Systems, has created a new company called Cassatt
(Lyons, 2006). He came up with the simple concept of the .
82 Harvard Business Review April 2008 hbr.orgCAN.docxsleeperharwell
82 Harvard Business Review | April 2008 | hbr.org
CAN YOU SUMMARIZE YOUR COMPANY’S STRATEGY in 35 words or
less? If so, would your colleagues put it the same way?
It is our experience that very few executives can honestly an-
swer these simple questions in the affi rmative. And the compa-
nies that those executives work for are often the most successful
in their industry. One is Edward Jones, a St. Louis–based bro-
kerage fi rm with which one of us has been involved for more
than 10 years. The fourth-largest brokerage in the United States,
Jones has quadrupled its market share during the past two de-
cades, has consistently outperformed its rivals in terms of ROI
through bull and bear markets, and has been a fi xture on Fortune’s
list of the top companies to work for. It’s a safe bet that just
by David J. Collis and Michael G. Rukstad
G
e
tt
y
Im
ag
e
s
an
d
I
P
N
st
o
ck
Can You Say
What
Your
Strategy Is?
1084 Collis.indd 821084 Collis.indd 82 3/4/08 10:14:03 PM3/4/08 10:14:03 PM
It’s a dirty little secret:
Most executives
cannot articulate the
objective, scope, and
advantage of their
business in a simple
statement. If they
can’t, neither can
anyone else.
1084 Collis.indd 831084 Collis.indd 83 3/4/08 10:14:09 PM3/4/08 10:14:09 PM
84 Harvard Business Review | April 2008 | hbr.org
about every one of its 37,000 employees could express the
company’s succinct strategy statement: Jones aims to “grow
to 17,000 fi nancial advisers by 2012 [from about 10,000 to-
day] by offering trusted and convenient face-to-face fi nan-
cial advice to conservative individual investors who delegate
their fi nancial decisions, through a national network of one-
fi nancial-adviser offi ces.”
Conversely, companies that don’t have a simple and clear
statement of strategy are likely to fall into the sorry category
of those that have failed to execute their strategy or, worse,
those that never even had one. In an astonishing number of
organizations, executives, frontline employees, and all those
in between are frustrated because no clear strategy exists for
the company or its lines of business. The kinds of complaints
that abound in such fi rms include:
“I try for months to get an initiative off the ground, and
then it is shut down because ‘it doesn’t fi t the strategy.’
Why didn’t anyone tell me that at the beginning?”
“I don’t know whether I should be pursuing this market
opportunity. I get mixed signals from the powers that be.”
“Why are we bidding on this customer’s business again?
We lost it last year, and I thought we agreed then not to
waste our time chasing the contract!”
“Should I cut the price for this customer? I don’t know if
we would be better off winning the deal at a lower price
or just losing the business.”
Leaders of fi rms are mystifi ed when what they thought
was a beautifully crafted strategy is never implemented.
They assume tha.
82 Harvard Business Review April 2008 hbr.orgCAN.docxfredharris32
82 Harvard Business Review | April 2008 | hbr.org
CAN YOU SUMMARIZE YOUR COMPANY’S STRATEGY in 35 words or
less? If so, would your colleagues put it the same way?
It is our experience that very few executives can honestly an-
swer these simple questions in the affi rmative. And the compa-
nies that those executives work for are often the most successful
in their industry. One is Edward Jones, a St. Louis–based bro-
kerage fi rm with which one of us has been involved for more
than 10 years. The fourth-largest brokerage in the United States,
Jones has quadrupled its market share during the past two de-
cades, has consistently outperformed its rivals in terms of ROI
through bull and bear markets, and has been a fi xture on Fortune’s
list of the top companies to work for. It’s a safe bet that just
by David J. Collis and Michael G. Rukstad
G
e
tt
y
Im
ag
e
s
an
d
I
P
N
st
o
ck
Can You Say
What
Your
Strategy Is?
1084 Collis.indd 821084 Collis.indd 82 3/4/08 10:14:03 PM3/4/08 10:14:03 PM
It’s a dirty little secret:
Most executives
cannot articulate the
objective, scope, and
advantage of their
business in a simple
statement. If they
can’t, neither can
anyone else.
1084 Collis.indd 831084 Collis.indd 83 3/4/08 10:14:09 PM3/4/08 10:14:09 PM
84 Harvard Business Review | April 2008 | hbr.org
about every one of its 37,000 employees could express the
company’s succinct strategy statement: Jones aims to “grow
to 17,000 fi nancial advisers by 2012 [from about 10,000 to-
day] by offering trusted and convenient face-to-face fi nan-
cial advice to conservative individual investors who delegate
their fi nancial decisions, through a national network of one-
fi nancial-adviser offi ces.”
Conversely, companies that don’t have a simple and clear
statement of strategy are likely to fall into the sorry category
of those that have failed to execute their strategy or, worse,
those that never even had one. In an astonishing number of
organizations, executives, frontline employees, and all those
in between are frustrated because no clear strategy exists for
the company or its lines of business. The kinds of complaints
that abound in such fi rms include:
“I try for months to get an initiative off the ground, and
then it is shut down because ‘it doesn’t fi t the strategy.’
Why didn’t anyone tell me that at the beginning?”
“I don’t know whether I should be pursuing this market
opportunity. I get mixed signals from the powers that be.”
“Why are we bidding on this customer’s business again?
We lost it last year, and I thought we agreed then not to
waste our time chasing the contract!”
“Should I cut the price for this customer? I don’t know if
we would be better off winning the deal at a lower price
or just losing the business.”
Leaders of fi rms are mystifi ed when what they thought
was a beautifully crafted strategy is never implemented.
They assume tha.
How to Implement a Real Estate CRM SoftwareSalesTown
To implement a CRM for real estate, set clear goals, choose a CRM with key real estate features, and customize it to your needs. Migrate your data, train your team, and use automation to save time. Monitor performance, ensure data security, and use the CRM to enhance marketing. Regularly check its effectiveness to improve your business.
Anny Serafina Love - Letter of Recommendation by Kellen Harkins, MS.AnnySerafinaLove
This letter, written by Kellen Harkins, Course Director at Full Sail University, commends Anny Love's exemplary performance in the Video Sharing Platforms class. It highlights her dedication, willingness to challenge herself, and exceptional skills in production, editing, and marketing across various video platforms like YouTube, TikTok, and Instagram.
IMPACT Silver is a pure silver zinc producer with over $260 million in revenue since 2008 and a large 100% owned 210km Mexico land package - 2024 catalysts includes new 14% grade zinc Plomosas mine and 20,000m of fully funded exploration drilling.
At Techbox Square, in Singapore, we're not just creative web designers and developers, we're the driving force behind your brand identity. Contact us today.
How to Implement a Strategy: Transform Your Strategy with BSC Designer's Comp...Aleksey Savkin
The Strategy Implementation System offers a structured approach to translating stakeholder needs into actionable strategies using high-level and low-level scorecards. It involves stakeholder analysis, strategy decomposition, adoption of strategic frameworks like Balanced Scorecard or OKR, and alignment of goals, initiatives, and KPIs.
Key Components:
- Stakeholder Analysis
- Strategy Decomposition
- Adoption of Business Frameworks
- Goal Setting
- Initiatives and Action Plans
- KPIs and Performance Metrics
- Learning and Adaptation
- Alignment and Cascading of Scorecards
Benefits:
- Systematic strategy formulation and execution.
- Framework flexibility and automation.
- Enhanced alignment and strategic focus across the organization.
The APCO Geopolitical Radar - Q3 2024 The Global Operating Environment for Bu...APCO
The Radar reflects input from APCO’s teams located around the world. It distils a host of interconnected events and trends into insights to inform operational and strategic decisions. Issues covered in this edition include:
HOW TO START UP A COMPANY A STEP-BY-STEP GUIDE.pdf46adnanshahzad
How to Start Up a Company: A Step-by-Step Guide Starting a company is an exciting adventure that combines creativity, strategy, and hard work. It can seem overwhelming at first, but with the right guidance, anyone can transform a great idea into a successful business. Let's dive into how to start up a company, from the initial spark of an idea to securing funding and launching your startup.
Introduction
Have you ever dreamed of turning your innovative idea into a thriving business? Starting a company involves numerous steps and decisions, but don't worry—we're here to help. Whether you're exploring how to start a startup company or wondering how to start up a small business, this guide will walk you through the process, step by step.
At Techbox Square, in Singapore, we're not just creative web designers and developers, we're the driving force behind your brand identity. Contact us today.
Understanding User Needs and Satisfying ThemAggregage
https://www.productmanagementtoday.com/frs/26903918/understanding-user-needs-and-satisfying-them
We know we want to create products which our customers find to be valuable. Whether we label it as customer-centric or product-led depends on how long we've been doing product management. There are three challenges we face when doing this. The obvious challenge is figuring out what our users need; the non-obvious challenges are in creating a shared understanding of those needs and in sensing if what we're doing is meeting those needs.
In this webinar, we won't focus on the research methods for discovering user-needs. We will focus on synthesis of the needs we discover, communication and alignment tools, and how we operationalize addressing those needs.
Industry expert Scott Sehlhorst will:
• Introduce a taxonomy for user goals with real world examples
• Present the Onion Diagram, a tool for contextualizing task-level goals
• Illustrate how customer journey maps capture activity-level and task-level goals
• Demonstrate the best approach to selection and prioritization of user-goals to address
• Highlight the crucial benchmarks, observable changes, in ensuring fulfillment of customer needs
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Part 2 Deep Dive: Navigating the 2024 Slowdownjeffkluth1
Introduction
The global retail industry has weathered numerous storms, with the financial crisis of 2008 serving as a poignant reminder of the sector's resilience and adaptability. However, as we navigate the complex landscape of 2024, retailers face a unique set of challenges that demand innovative strategies and a fundamental shift in mindset. This white paper contrasts the impact of the 2008 recession on the retail sector with the current headwinds retailers are grappling with, while offering a comprehensive roadmap for success in this new paradigm.
1. 1
Dynamic Capabilities at IBM: Driving Strategy into Action
(White Paper Draft)
J. Bruce Harreld
Senior Vice President
IBM
Charles A. O’Reilly III
Graduate School of Business
Stanford University
Michael L. Tushman
Harvard Business School
Harvard University
August 10, 2006
Copying or posting is an infringement of copyright.
2. 2
Abstract
In the past 15 years, the IBM Company has undergone a remarkable transformation from
a struggling seller of hardware to a successful broad range solutions provider. Underlying
this change is a story of foresighted strategy and disciplined execution—of connecting
knowing to doing. In strategic terms, the IBM transformation illustrates the ideas behind
dynamic capabilities, showing how the company has been able to sense changes in the
marketplace and to seize these opportunities by reconfiguring existing assets and
competencies. We review the literature on dynamic capabilities and, using IBM as a case
example, show how their strategy process permits them to both explore new markets and
technologies (e.g., life sciences, pervasive computing) as well as to exploit mature
products and markets (e.g., mainframe computers, middleware).
3. 3
Dynamic Capabilities at IBM: Strategy in Action
In the early 1990s, many Wall Street analysts had written off IBM as a company; its
stock price was the lowest it had been since 1983. By 1992, more than 60,000 jobs had
been lost and, in spite of John Akers’ (the CEO until 1993) efforts at transformation, the
company was failing. When Lou Gerstner took over in 1993, the services unit was 27
percent of revenues and the software unit didn’t even exist. In 2001, services and
software were $35 billion and $13 billion businesses respectively and combined
represented 58 percent of total revenues. IBM’s market cap had increased from $30
billion in 1993 to $173 billion. The share price over that period increased 7X. Since then,
with Sam Palmisano as CEO, IBM has continued this remarkable transformation so that
today, IBM has revenues of $91 billion, more than 70% from software and services.
During the past decade, the company has transformed itself from primarily a provider of
computer hardware to a broad-based supplier of information technology services and
solutions. From an employer with more than 400,000 employees in 1986, IBM went to a
company of slightly more than 200,000 in 1994 and today has grown to 330,000. They
have gone from a laggard in the personal computer business in 1980 to a 40 percent
market share in 1985 to exiting from the business in 2005. From a company that provided
little in the way of consulting services in 1990, IBM has become the largest services
company with more than 190,000 employees in their Global Technical Services and
Global Business Services units. During a 20 year period, IBM has gone from success to
failure to success; from a technology company to a broad-based solutions provider to,
perhaps, an exemplar of the new world of open systems and on-demand capabilities.
Unlike other great technical companies such as Xerox, Philips and Polaroid that failed to
4. 4
capture the benefits of their innovation, IBM has been able to leverage their intellectual
capital into businesses as diverse as life sciences, automotive and banking—and make
healthy profits along the way.
How did this happen? While the broad story of IBM’s rise, fall, and transformation has
been well-documented elsewhere1
, there is a part of this story that is essential and not
widely appreciated—a story about strategy and execution and how the IBM strategy
process links the two. It is an illustration of how a current buzzword in strategy,
“dynamic capabilities,” is made real and used to help the company succeed in mature
businesses, like mainframe computers, as well as move into new ones, like digital media.
It is a lesson in how theory and practice combine to develop new insights that are useful
for business and generate new thinking about strategy.2
To illustrate how dynamic capabilities help IBM succeed, we first review briefly the
current thinking about strategy—and why dynamic capabilities are an improvement on
older strategy frameworks. We then describe how the company’s brush with failure led to
the evolution of the IBM Business Leadership Model and how a set of related strategic
processes, including deep dives, Emerging Business Opportunities, the Strategic
Leadership Forum, and the Corporate Investment Fund, are managed by IBM’s Strategy
Group and involve 25,000 executives to help identify and capture opportunities across
1
Louis V. Gerstner, Who Says Elephants Can’t Dance? Harper Business, 2002; Paul Carroll, Big Blues:
The Unmaking of IBM. Reed Business, 1993; Doug Garr, IBM Redux: Gerstner and the Business
Turnaround of the Decade, Harper Collins, 1999.
2
M. Tushman, C. O’Reilly, A. Fenelosa, A. Kleinbaum and D. McGrath, “Toward relevance and rigor:
Executive education as a lever shaping research and practice” Academy of Management Learning and
Education, 2006.
5. 5
140 geographies with constantly changing competitors and technologies. This process,
while hardly perfect, has, in the words of former CEO Gerstner, “helped the elephant to
dance.”
Strategy: Why it is so important—and often fails
We suspect that every regular reader of the business press has, in one way or another,
been steeped in the logic of strategy and competitive advantage. We have all been
exposed to the notions of the five forces, core competencies, SWOT, “coopetition,” and a
myriad of other frameworks for how leaders can help their firms prosper. For the few
who missed class that day, the essence of strategy is contained in a single question: “The
fundamental question in the field of strategic management is how firms achieve and
sustain competitive advantage.”3
This basic question has preoccupied managers and academics for the last century. The
extent of this preoccupation is underscored by the results of a search of the academic
literature using “strategy” as a keyword: More than four million citations were listed.4
Amazon lists more than 49,000 books with strategy in the title and a broad Google search
shows 800 million hits. Two obvious conclusions can be drawn from this interest: first,
strategy is clearly important; and second, given the disparate approaches, there does not
seem to be a consensus about “how” strategy works—in spite of the fact that there is
good consensus on the definition of the term itself.
3
Teece, D., Pisano, G. & Shuen, A. 1997. “Dynamic capabilities and strategic management.” Strategic
Management Journal, 18: 509-533. P. 1
4
Using the Google Scholar search function, a total of 4,170,000 cites were returned. A search on
“competitive advantage” returned 707,000 hits.
6. 6
In spite of variations in the definition, “strategy” is widely used to refer to the plans and
actions that firms take to achieve their objectives. It is simultaneously a process by which
plans for allocating resources are developed and the actions required to achieve their
goals are identified. It reflects management’s understanding of the firm’s assets and
position as well as the external forces it faces. At the most basic level, strategy is about
making quality decisions and executing well on those decisions. Unfortunately, what
seems so simple in theory is anything but in practice.
One of the things that makes this seemingly simple conceptual process so difficult is the
uncertainty and complexity of competition and change, particularly in fast moving
markets. To compete successfully managers need to be able to scan their environments,
identify relevant opportunities and threats, design responses that will satisfy customers in
ways that competitors can’t easily imitate and, finally, to ensure that these plans are
implemented, even as the firm competes across a variety of geographies and markets and
in mature businesses as well as emerging ones. Yet, capturing and distilling relevant
information isn’t a natural capability for most senior management teams. As David
Teece, who is both an academic strategist and a CEO, notes, “The skills that result in the
identification or development of an opportunity are not the same as those required to
profit from or ‘exploit’ the opportunity.”5
5
Teece, D. 2006. “Explicating dynamic capabilities: The nature and microfoundations of (long run)
enterprise performance.” Working Paper, P. 23
7. 7
Strategy is about understanding market and technology evolution and transformation as
well as the ability to execute against the plans. Interestingly, the striking evidence is that
some companies never see the threats or, more frequently, are unable to change quickly
enough to avoid them. For many years, the senior management at Sears refused to believe
that Wal-Mart was a competitor or a threat. Famously, in 1977 Ken Olsen, the founder
and CEO of DEC said “There is no reason for any individual to have a computer in his
home.” The irony here is that in 1998 a struggling DEC was sold to Compaq, a maker of
computers for people’s homes—which in turn was acquired by HP. Of course everything
looks clearer in hindsight, but the unfortunate fact is that we often can’t know ex ante
where to place bets. Strategy is partly a process of hypothesis testing in which firms
place bets and explore new technologies and markets and develop new competencies,
even as the firm continues to exploit existing competencies in mature businesses.
From “Five Forces” to “Dynamic Capabilities”: The Evolution of Strategic Thinking.
Theories of strategy abound and form the basis for the four million citations mentioned
earlier. Academics have developed four main paradigms for thinking about strategy.
First, there is the well-known competitive forces framework of Michael Porter in which
competitive advantage comes from actions taken by a firm to create defensible positions
against competitors—for example, by erecting strong barriers to entry.6
In this framing,
the strategic problem faced by managers is one of industry structure, entry deterrence,
and positioning. In a second framework, the resource-based view of strategy, competitive
advantage comes from difficult-to-imitate firm-specific assets that can be used to capture
rents—for instance through strong intellectual property, economies of scale, or a
6
Porter, M. 1980. Competitive Strategy. Free Press
8. 8
dominant brand.7
In this view, profits flow from having lower costs or higher quality
(e.g., through efficient supply chains or operational excellence), innovative products, or
customer insight that allows firms to understand and meet customer needs in the way
competitors cannot. A third distinct theoretical approach to strategy emphasizes a
strategic conflict approach which uses the tools of game theory to suggest how firms can
outsmart their rivals.8
The thrust of this approach emphasizes taking strategic moves,
such as irreversible investments in capacity, to influence the behavior of rivals. Intel, for
example, has been bold in exiting businesses such as semiconductor memory, demanding
to be a sole-source provider and refusing to license their designs, and announcing
capacity expansions to signal their commitment to would-be competitors.9
Similarly,
when Nokia chose to divest itself of all businesses other than telecom, it was signaling to
its competitors its commitment to a single industry.
Most recently, strategy research has begun to emphasize a fourth approach, dynamic
capabilities, which builds on the notion of core competencies but focuses on the role of
management in building and adapting these competencies to address rapidly changing
environments.10
This development was stimulated by the recognition that many
successful or dominant firms fail to sustain their performance as markets and
technologies shift (think DEC, RCA, Pan Am or Sears). In spite of having the resources,
7
Penrose, E. 1959. The Theory of the Growth of the Firm. Basil Blackwell; Rumelt, R. 1974. Strategy,
Structure and Economic Performance, Harvard University Press; Teece, D. 1984. Economic Analysis and
strategic management. California Management Review, 26: 87-110.
8
Brandenburger, A. & Nalebuff, B. 1996. Coopetition, Doubleday; Kreps, D. & Wilson, R. 1982.
Reputation and imperfect information. Journal of Economic Theory, 27: 253-279; Shapiro, C. 1989. The
theory of business strategy. Rand Journal of Economics, 20: 125-137.
9
Burgelman, R. 2002. Strategy Is Destiny: How Strategy-Making Shapes a Company’s Future. Free Press.
10
Teece, D. 2006, op cit.; Eisenhardt, K. & Martin, J. 2000. Dynamic capabilities: What are they? Strategic
Management Journal, 21: 1105-1121.
9. 9
these companies failed to adapt to changed circumstances. With dynamic capabilities,
sustained competitive advantage comes from the firm’s ability to leverage and
reconfigure its competencies and assets in ways that are valuable to the customer but
difficult for competitors to imitate. Dynamic capabilities help a firm sense opportunities
and then to seize them by successfully reallocating resources, often by adjusting existing
competencies or developing new ones. One example will illustrate this. In the early
1990s, Johnson Controls was primarily a maker of seats for U.S. automakers. Their
distinctive competencies were in manufacturing and their relationships with car
companies. Recognizing that this was an increasingly competitive market and one in
which they would be unlikely to dominate, they invested in design and partnering skills
that enabled them to move into higher margin businesses like design, engineering, and
electronics integration. They adapted and extended their competencies in the
manufacturing of seats and relationships with auto companies to transform the company.
Between 1995 and 2002 their shareholder return improved 400%.
Core competencies are generally defined as discrete business-level processes
fundamental to running the business which give it an advantage over competitors.11
For
instance, Southwest Airline’s advantage comes not from their planes, route structure, or
employees but from the combination of factors such as fast turnaround, high productivity,
and low costs. These result from a set of activities or core competencies that competitors
find difficult to replicate. Dell’s supply chain or Wal-Mart’s logistical prowess are other
examples. Competencies are necessary but not sufficient for sustained competitive
11
Leonard-Barton, D. 1995. Wellsprings of Knowledge. HBS Press; Stalk, G., Evans, P. & Shulman, L.
1992. Competing on capabilities: The new rules of corporate strategy. Harvard Business Review; Teece, D.
et al., 1997, op cit.
10. 10
advantage in changing markets. Recognizing that existing competencies may become less
valuable as competitors replicate them or markets shift, dynamic capabilities emphasize
the organization’s ability to sustain profitability by reconfiguring assets and competencies
to address changing market circumstances. It is this ability to adapt and extend existing
competencies that differentiates dynamic capabilities from competencies.
This ability places a premium on senior management’s ability to accomplish two critical
tasks. First, they must be able to accurately sense changes in their competitive
environment, including potential shifts in technology, competition, customers, and
regulation. Second, they must be able to act on these opportunities and threats; to be able
to seize them by reconfiguring both tangible and intangible assets to meet new
challenges.12
These two fundamental capabilities are at the core of a firm’s ability to
grow and survive over time and represent the essence of dynamic capabilities. “Winners
in the global marketplace have been firms that can demonstrate timely responsiveness
and rapid flexible product innovation, coupled with the management capability to
effectively coordinate and re-deploy internal and external competencies.”13
In IBM’s
language this requires that leaders possess both strategic insight and strategic execution.
One without the other is insufficient for long term success since the marketplace is ever
changing. If a firm has resources and competencies but lacks these dynamic capabilities,
it may make a competitive return in the short-term but is unlikely to sustain this in the
face of change.
12
Teece, D. 2006, op cit.
13
Teece, D. et al. 1997, op cit, P. 515.
11. 11
Each of these approaches to strategy attempts to solve the puzzle of how a firm can out-
compete its rivals by either developing useful firm-specific skills or positioning itself in
ways that customers value and are willing to pay for and that rivals cannot easily imitate.
While earlier approaches to strategy were largely static (e.g., develop a positional
advantage and protect it), dynamic capabilities call attention to the need for organizations
to change over time and compete in both emerging and mature businesses.14
While
conceptually reasonable, this is often difficult enough that successful firms fail. Lou
Gerstner acknowledged this, noting that “In most cases a company has a set of
competitive advantages in its base business. It may be hard—very hard—to redirect or
reenergize the existing enterprise.”15
How can leaders of organizations do this and avoid
being the subject of some business journalist’s account of a formerly great firm’s failure?
From Theory to Practice: Why Strategic Thinking Sometimes Fails.
Although theories of strategy can be elegant in their formulation, they are often less
helpful in practice. What passes for strategy in many organizations too often consists of
three-ring binders, power point slides, and annual meetings as carefully scripted as a
Kabuki drama—and, just as in the Japanese version, those who fail to play their roles
often suffer an organizational fate much like the villains in the play. Worse, many
strategists, especially academics who develop the theory, typically don’t want to get their
hands dirty with the myriad of details necessary for successful execution. As a result, in
many organizations a barrier exists between strategists and operational executives. The
failure of the conventional strategic planning group to devise executable plans has often
14
Tushman, M. & O’Reilly, C. 1996. The ambidextrous organization: Managing evolutionary and
revolutionary change. California Management Review, 38: 1-23.
15
Gerstner, 2002, op cit, P. 220.
12. 12
resulted in some firms giving up on strategic planning departments.16
Therefore, timely
strategic insights often go unrecognized by those line executives responsible for
execution.
Compounding this problem, many organizational strategic planning and review processes
take place annually—not an immutable time frame that technology, customer needs, or
competition adheres to. Firms that do annual planning in fast changing markets and
technologies are always behind. Worse, many operating managers in competitive markets
have little time for the reflection and analysis that good strategy requires. The IBM saga
over the past decade vividly illustrates these dangers—and offers a possible solution.
Success, Failure, and Success: Fixing Strategy at IBM
Through the mid-1980s IBM enjoyed 40 percent of the computer industry’s sales and 70
percent of its profit. In 1990 IBM sales were five times their nearest rival, but growth had
slowed to less than six percent. Analysts at the time described the company’s position as
a “dangerous mix of arrogance and complacency.”17
Even John Akers, the CEO, claimed
that “Everyone is too comfortable at a time when the business is in crisis.”18
By 1991
their stock price had reached the lowest point since 1983. From 1986 to 1993 IBM had
taken $28 billion in charges and cut 125,000 people from their payroll—after avoiding
layoffs for more than 70 years.
16
Rumelt, R., Schendel, D. & Teece, D. 1994, Fundamental Issues in Strategy, HBS Press
17
Business Week, June 17, 1991.
18
Business Week, op cit.
13. 13
On January 26, 1993, in the face of a looming disaster, CEO John Akers resigned. The
following day many of his direct reports also announced their departures and, after a
seven month search, Lou Gerstner was appointed as CEO—the first outsider to run IBM
in its history. Reflecting the company’s condition, a Business Week reporter described
Gerstner’s appointment as “the toughest job in Corporate America today.”19
After several months on the job, Gerstner’s diagnosis of the company’s problems was
clear: Costs were out of line, they had lost touch with customers, the firm was too
decentralized, and they had stayed with their old strategy too long. He summarized this
by saying, “We don’t move fast enough in this company. This is an industry in which
success goes to the swift more than the smart. We’ve got to become more nimble,
entrepreneurial, focused, cost driven…we’ve been too bureaucratic and preoccupied with
our own view of the world…The world is cynical about IBM’s promises. What I’m
trying to do is deliver results not promises, results not vision, results not concepts.”20
His
message to senior executives was equally blunt: “You should decide if you want to be
here. If you don’t, leave.”
Based on his understanding of customers’ needs, Gerstner recognized that the market was
shifting. The application of technology, not its invention, would become the growth
engine for IBM. This was a completely different approach than the old IBM business
model. These insights led to a transformation that subsequently led IBM to exit the
network hardware business, application software, storage, and personal computers and to
19
Business Week, October 4, 1993.
20
Financial Times, March 28, 1994.
14. 14
enter the services businesses and develop a freestanding software business. It also led to a
realistic evaluation of the firm’s core capabilities resulting in the decision to exit
consumer businesses which required skills very different from IBM’s enterprise focus.
However, Gerstner knew that having the strategic insight and accomplishing it were two
very different challenges. “I’m not saying that actually sticking to a strategic vision is as
easy as articulating it.”21
In analyzing why IBM had found itself failing, he noted that “What happened to this
company was not an act of God, some mysterious biblical plague sent down from on
high. It’s simple. People took our business away.”22
More startling, after reviewing
IBM’s strategies, he concluded that “The company didn’t lack for smart, talented people.
Its problems weren’t fundamentally technical in nature. It had file drawers full of winning
strategies. Yet the company was frozen in place…The fundamental issue in my view is
execution. Strategy is execution.”
To begin the transformation he emphasized focus, speed, customers, teamwork, and
getting the pain behind them. He did this by developing a few global core processes,
centralizing the company to leverage its strengths as a provider of solutions to customers,
fixing the core businesses, redesigning the metrics and reward systems, and relentlessly
driving the culture toward a focus on the marketplace. He began every meeting, including
budget and technology meetings, by asking participants what they had heard from
customers. He assigned customer responsibility to senior executives who acted as
21
Gerstner, 2002, op cit, P. 164.
22
New York Times, June 26, 1994.
15. 15
ombudsmen for the customer relationship. This forced senior managers to listen to
customers’ problems and complaints and created a sense of urgency about the
marketplace. Incentives were changed so that business unit heads were no longer
rewarded solely on the performance of their business but on how well they operated as a
team.
Since 2002, Gerstner’s successor as CEO, Sam Palmisano, has continued the
transformation of the company into an “on-demand business” using advanced computer
and software technologies to quicken the flow of knowledge within companies and help
executives respond instantly to changes This entails offering open architecture, integrated
processes, and self-managing systems—selling computing services, not computers23
. This
has required a transformation of the company around customer needs. For instance, in a
partnership with the U.S. Postal Service, IBM has developed software to optimize mail
handling and shipping while with Boeing they have partnered to create technologies for
network-centric warfare products. They have also partnered with the Mayo Clinic to do
breakthrough work on gene profiling and with Bang & Olufsen to develop an electronic
pill dispenser. Within IBM, this has required that the company re-integrate itself to bring
together experts to solve customer problems—not simply to sell products or services.
The most important element of this transformation, however, was the radical shift in
IBM’s approach to strategic insight and strategic execution and embodied in how the
company approaches strategy.
23
IBM, The New Agenda: IBM and the On-Demand Era.
16. 16
How IBM Does Strategy
Up until 1999, the strategy process at IBM looked pretty much like the process at any
large, complex organization. Developments in technology were monitored, there were
occasional projects to drill down into specific issues, and, most centrally, there was the
annual strategic review process in which business unit heads prepared and presented their
plans to the senior management group. This strategy document purported to describe
what was happening in the unit’s marketplace (e.g., competitor moves, technology
changes) and what the financial implications were for the business. These separate
documents would be rolled together for IBM in what was called “the Spring Plan.”
In 1999 things changed. In preparation for one of these review meetings, Gerstner read
one of the business unit’s strategic plans. Irritated by what he saw, he called Harreld, the
SVP of Strategy, into his office, threw the strategy paper across his desk, and asked, “Are
you supposed to be in charge of strategy around here? This thing isn’t worth the paper it’s
printed on.” Knowing Gerstner, he responded “With all due respect, this isn’t the way we
really do strategy. Surely you don’t think this document was actually written by the
business unit leader?” Gerstner stopped, reflected for a moment, and acknowledged that
in his time as a group executive, he didn’t write those documents either. They were
farmed out to a staff expert and did not reflect the reality of the competitive landscape.
For example, during the 1990s, there were more than 400 strategic planners within IBM
whose primary role was to poke holes in the thinking of general managers. The actual
planning process was a staff exercise undertaken to satisfy senior management, not an
17. 17
accurate reflection of what the business needed to do to be competitive and certainly not
a blueprint for action.
After a discussion of the weaknesses of the current strategic review process at IBM and
the realities of their markets, Gerstner told Harreld to go away and think about
engineering a dramatic step-change in how strategy could be made more relevant at
IBM—a process that would reflect the realities and complexities of their businesses and
involve the responsible general managers in a real process of sensing the environment
and seizing opportunities. What emerged came to be labeled the “IBM Business
Leadership Model” (see Figure 1) and encompassed a process of strategic insight
(strategic intent, marketplace insight, innovation focus, and business design) designed to
systematically identify opportunities and strategic execution (alignment of people,
structure, culture, and process) designed to seize opportunities by ensuring that every
strategic initiative also had an associated plan for execution. In this way, the IBM
Business Leadership Model reflects the two fundamental dynamic capabilities of sensing
and seizing opportunities.
From this perspective, strategy doesn’t matter unless it changes what the company does
in the marketplace. Otherwise it’s “chartware”. Strategy is not about how to beat the
competition but understanding the client’s needs and removing the barriers needed to
help them—beating the competition is secondary. It is the connection of knowing with
great accuracy what the opportunities are with the ability to do the things necessary to
accomplish these.
18. 18
Insert Figure 1 about here
In a company of the size, complexity and geographic reach of IBM it is unrealistic to
think about strategy as an annual, top-down process. To be successful, IBM believes that
the process must help line managers to be engaged and competent in the strategy- making
process. A central part of this process is to keep strategy making at the business unit
level with the people who best understand the local marketplace—but also have a process
where general managers are willing to blow the whistle and ask for help when they need
it. Under the old system, the strategy process created an us versus them mindset where
candor was not rewarded. Furthermore, in the strategic reviews, criticisms about other’s
deficiencies exacerbated the tendency for leaders to be conservative in their strategies.
Under the new system, the essence of strategy is “disciplined, fact-based conversations.”
This approach now involves more than 25,000 general managers at IBM in both the
formulation and execution of strategy.
The IBM Business Leadership Model24
As shown in Figure 1, the IBM Business Leadership Model emphasizes the role of the
general manager and the interdependence between strategy and execution. Strategy is
stimulated by leaders’ dissatisfaction, the perception of a gap between current and desired
performance. In the IBM model, this be either a performance gap (a shortfall between
expected and actual results), or an opportunity gap (a discrepancy between current
business results and those achievable with a new business design). General managers
24
IBM internal document, 2004.
19. 19
define their gaps in terms of a clear business owner, financial metrics that quantify the
gap, and a specific time frame for addressing it (Figure 2 provides several examples).
Closing the gap requires both strategic insight to assess the opportunities and threats and
strategic execution to build the capabilities to deliver market results.
Insert Figure 2 about here
Strategic Insight. As shown in the left-hand side of Figure 1, strategy formulation
emphasizes four interrelated disciplines:
• Strategic Intent sets the overall direction and goal for the organization. This
statement sets priorities for the achievement of strategic advantage. For example,
Palmisano’s 2002 declaration that IBM would become an “on-demand company”
led to the development by the software organization of services oriented
architecture (SOA) to make software more adaptable and the consulting
organization to emphasize component business modeling to help clients more
easily use IBM services.
• Market Insight involves a focus on understanding customer needs, competitor
moves, technology developments, and market economics. This is a fact-gathering
analytical effort the goal of which is to specify in detail what is happening in the
market, how profits are shifting, and the implications for the IBM business.
• Innovation Focus challenges general managers to actively experiment and
challenge their thinking in the design and implementation of strategy, including
taking ideas from a wide range of sources and creating pilots and experiments to
shape industry change. Creativity is encouraged not simply with new products
and services but also operational and business model innovations.
• Business Design is based on the three elements above and specifies how the
business will go to market. Business design involves answering five key
questions:
o Customer Selection. What customer segments do we choose to serve—
and what will we not serve?
o Value Proposition. What will we offer our customers and how will we be
differentiated from our competitors? Why should any customer prefer our
offering to anyone else’s?
o Value Capture. Given the answers to the first two, how will IBM make
money?
o Scope of Activities. What will we do internally and what activities will we
rely on our value net partners?
20. 20
o Sustainability. How will we defend the profitability of our offerings
against competitor responses?
Strategic Execution. The right hand side of Figure 1 illustrates the elements required by
general managers for the execution of their strategic plan. The strategy-making process
culminates in a clearly-communicated business design and the allocation of required
resources. Implementation begins with an honest appraisal of current organizational
alignment and capabilities—identifying misalignments and specifying the steps needed to
correct these. Based on the business design, execution focuses on aligning four key
organizational elements to ensure that the business can deliver on the strategic intent:
• Critical Tasks and Processes. These are the key activities or success factors
necessary to deliver on the value proposition and scope of activities specified in
the business design. They are the concrete tasks and interdependencies needed to
add value from the customer’s perspective.
• Formal Organization. These are the explicit structures, metrics, and rewards
required to direct, control, and motivate individuals and groups to perform the
unit’s critical tasks. The question asked is “does the current formal organization
facilitate the accomplishment of the required critical tasks and
interdependencies?”
• People and Skills. Does the unit have the requisite human resource characteristics,
capabilities, and competencies needed to execute the critical tasks? Are people
motivated and engaged?
• Culture. Does the existing culture (expectations about how people need to
behave) support the accomplishment of the critical tasks? Given the new business
design, are there new behaviors that will be required to deliver on the value
proposition?
Business unit performance is a function of having the right strategy and the alignment or
congruence among these four organizational elements.25
The successful execution of
strategy critically depends on this alignment. What is sometimes overlooked, however, is
that whenever a strategy is changed, it is almost always the case that the existing
organizational alignment will also need to be changed. The IBM Business Leadership
25
Tushman, M. & O’Reilly, C. 2002. Winning Through Innovation. HBS Press
21. 21
Model forces line managers to be explicit in diagnosing the current versus the needed
organizational alignment, and to ensure that these changes are made by the top
management team as a part of their new strategy. Existing organizational architectures
reflect old strategies. Unless management actively realigns their business to reflect the
new strategy, execution will suffer.
IBM’s Dynamic Capabilities
After stabilizing the company in the mid-1990s, Gerstner described IBM’s bet on the
future this way: “Our bet was this: Over the next decade, customers would increasingly
value companies that could provide solutions—solutions that integrated technology from
various suppliers and, more importantly, integrated technology into the processes of the
enterprise.”26
The core competence required to execute this strategy was the ability to
integrate—open middleware (the software that permits applications to be used across a
variety of platforms) and services were key to this. Commenting on whether IBM, a
traditional hardware company, could make this transition, Gerstner said, “Services is
entirely different. In services, you don’t make a product and sell it. You sell a
capability…this is the kind of capability you cannot acquire.”27
Competencies are embedded in organizational processes or routines around coordination,
learning and transformation. For IBM, this meant it would need to take its existing
competencies in technology and quality and add to them the capability to learn better how
to serve the customer, integrate the organization around the customer’s needs, and to
transform themselves from a great product company to one that solved customer’s
26
Gerstner, 2002, op cit, P. 123.
27
Op cit., P. 133
22. 22
problems. In the old IBM, Gerstner observed that “All of [our] capabilities were of a
business model that had fallen wildly out of step with marketplace realities.”28
To change
meant walking away from the IBM history and the collapse of gross profit margins as
they moved into services, but he was also optimistic, “History shows that the truly great
and successful companies go through constant and sometimes difficult renewal of the
base business.”29
Palmisano’s “On Demand Business” campaign is taking the next step by transforming
IBM from a set of conventional silos (e.g., hardware, software, and services) to an
integrated structure oriented around providing solutions to customer needs. To make this
new approach work, the entire role of the corporate strategy group at IBM needed to
change. If all the group did was to manage an annual strategy process, they would be
largely irrelevant to line managers—just another staff function wasting valuable
resources. To be successful, the strategy group needed to help business leaders gain
strategic insight and to help act on these insights. General mangers needed to be involved
in the entire process.
This new approach also required transformation of the strategy department. Beforehand,
IBM’s strategy department was exclusively populated with strategic planning
professionals who had strong skills in formulating strategic insight. However, since few
of these professionals had run a business, their strategic executional capabilities were
limited. Today, two thirds of the strategy organization is composed of successful general
28
Op cit, P. 176
29
Op cit, P. 220.
23. 23
managers who join the team for an 18 – 30 month period. These executives bring
invaluable operational skills to the strategy team. Their presence has transformed the
department’s formerly academic planning culture to one which is much more action-
oriented. In return, these general managers develop improved strategy skills thus better
preparing them for their next line management assignment.
To ensure that the strategy process provides the insight necessary to sense opportunities
and the execution required to seize them, a set of complementary mechanisms have
evolved. The specific mechanisms that underlie the two fundamental dynamic
capabilities of sensing and seizing opportunities are outlined in Figure 3. In this figure,
the above the line activities include those actions designed to both sense new
opportunities and threats and to seize them by reallocating resources and reconfiguring
the organization. In Jim March’s terms, these are activities that promote “exploration”
and learning.30
“Exploitation” is equally as important and accomplished through the
existing organization—sometimes referred to within the company as a “disciplined
machine.” What is notable about the IBM approach to strategy is less in what they do and
more in how they do it. Each of the elements shown in Figure 3 is replicable by
competitors. What is more difficult to copy is the integrated way in which these activities
are implemented. Figure 4 illustrates how the above the line activities map onto the
dynamic capabilities of sensing and seizing opportunities.
Insert Figures 3 and 4 about here
30
James G. March. (1991). Exploration and exploitation in organizational learning. Organizational
Science, 2: 71-87.
24. 24
Sensing New Opportunities -- Strategic Insight
• The Technology Team meets monthly and assesses the market readiness and
potential of emerging technologies. This team draws on the deep expertise of IBM
Fellows and Distinguished Engineers. Decisions can result in accelerated funding
for a project or in its demise.
• The Strategy Team also meets monthly to examine the market results of existing
unit strategies as well as to explore new growth areas. Decisions can result in
new market entry, adjustments to existing business plans, or complete exit from a
business. This team is composed of a cross section of general managers, strategy
executives, and other key functional leaders.
• The Integration & Values Team is a group of 300 key leaders, selected annually
by the CEO and senior executives who are considered responsible for integrating
IBM through company-wide initiatives. These initiatives, known as Winning
Plays, are corporate-wide strategic efforts (e.g., issues that require cross-
organization interdependence). Each initiative has assigned leaders and, often,
uses the “deep dive” process. Results are reported quarterly to the entire I&VT
and, in abridged form, to the entire company.
• A Deep Dive is a structured process, typically requested by a general manager
confronting a performance or opportunity gap and staffed jointly by the operating
unit and the strategy group. This is an intensive, focused process where a topic
(e.g., a new technology or change in competition) is scrutinized in great detail.
This process is highly analytical and fact-based. It typically results in a strategic
decision to either pursue a market or technology, to change strategy, or to exit a
market. Intentionally these efforts are not run to a preset time line; the work
continues until all questions are answered, the decisions are clear, and the
necessary adjustments to the organizational model are clearly delineated.
Each of these processes helps ensure continuous scrutiny of the competitive environment
and involves line managers in this effort. The deep dives, for example, are routinely
called out by business managers facing problems. The technology team offers a way to
link technological advances with business needs. The strategy team ensures dynamic
adjustments to strategy and execution are made in a timely manner. The winning plays
provide a way of communicating and focusing the organization on company-wide
25. 25
initiatives. The primary capability in sensing opportunities is the ability to make high
quality unbiased investment decisions under conditions of high uncertainty. These four
mechanisms provide a multifaceted way of continually monitoring and assessing
changes, a clear decision process for making timely decisions, and the ability to allocate
resources in support of these decisions.
Seizing New Opportunities -- Strategic Execution
In addition to these mechanisms that help identify opportunities, the IBM strategic
process also has a set of mechanisms to help seize these by reallocating resources and,
when needed, reconfiguring the organization. The key here is the ability to recombine
and reconfigure assets and structures as markets and technologies change. In addition to
the I&VT and Winning Plays described above, which also have elements that help seize
opportunities, three powerful mechanisms help ensure what Teece refers to as “asset
orchestration.”31
• Emerging Business Opportunities (EBOs) are an integrated set of processes,
incentives and structures designed explicitly to enable IBM to address new
business opportunities. The EBO process begins with the recognition that mature,
well-established businesses need to operate differently from new, exploratory
ones. To succeed, emerging businesses have different key success factors and
require a different style of leadership and different alignments of people, formal
organizations and culture. IBM recognized that the current management system
rewarded short-term execution aimed at current markets. Trying to operate new
business within a mature one can be exceedingly difficult, with the result that the
new business is often killed. Further, the company lacked the disciplines for
selecting, experimenting, funding, and terminating new businesses. This led to
the development of a process to identify new growth opportunities and to
establish separate new organizations with their own leadership, alignment, and
funding—all with senior management oversight to ensure that the new businesses
got the resources needed to explore the opportunity. Under the new system, these
aren’t product upgrades or just technical opportunities; they’re business
31
Teece, 2006, op cit., P. 46
26. 26
opportunities—ones we believe we can commercialize and turn into revenue-
producing businesses.
The EBO process begins when growth opportunities are identified that require significant
cross-organization integration to be successful. Each EBO is typically characterized by a
new value proposition—which may cannibalize existing offerings, involves multiple
groups within the company, is in a high growth domain but with offerings that may not
be well-defined, and requires evangelism to develop successfully. From 1999 - 2005, 18
opportunities were identified, including autonomic computing, blade servers, digital
media, and network processing. Some of these succeeded and were subsequently folded
into existing businesses, others failed, and new ones have been added. Life Sciences for
example was predicated on the potential opportunities offered by the needs for new
hardware, software, and services demanded by pharmaceutical firms involved in
proteomics and the promise of personalized medicine. A number of earlier efforts within
the company to address these emerging markets had failed. However, since its founding
as an EBO in 1999, its leader, Carol Kovac, has grown this business to more than $2B in
revenues and begun new businesses to address emerging opportunities and evolved other
startup businesses to a mature category.
• The Strategic Leadership Forums (SLFs) are 3 ½ day team-based workshops
built around specific performance or opportunity gaps that bring extended teams
together for intensive work on problems or opportunities. These workshops begin
with work on refining the gap statement, challenging the strategy, a deep root
cause analysis of the specific underlying causes of the performance or
opportunity gap, and the development of an action plan. Teams are selected to
include all those responsible for the issue to be addressed. During the SLF groups
are supported by members of the strategy group and facilitation is provided by
members of IBM’s Global Executive and Organizational Capability group. This
process helps line managers to have a structured, candid conversation with a
common language—and to explicitly link strategic insight to execution in a
disciplined way.
27. 27
For example, over a 3 ½ year period, there were 23 Strategic Leadership Forums that
hosted 113 teams and more than 1700 executives, including a significant majority of the
Integration & Values Team. These forums were used to address significant strategic
initiatives such as accelerating the development of Emerging Business Opportunities like
Life Sciences, Pervasive Computing, and Technology Services, addressing performance
gaps within mature businesses, linking IBM Fellows and Distinguished Engineers to the
on-demand effort, and even resolving significant organizational conflicts across lines of
business. A typical SLF would begin when either senior executives called out a strategic
initiative or a general manager surfaced the need for a focused intervention. Once
identified, the strategy group would help identify team leaders, build a fact base, and
convene the SLF. At the SLF, there would be disciplined conversations about the
strategy, a root cause analysis of the gap, the development of an implementation plan,
and senior management follow-up to ensure execution. Given the importance of the
topics addressed in these events, the SLFs were not typical corporate off-sites but
intensely focused, often emotional debates about the future of the business. As Palmisano
said in his introduction to one SLF, “I want you to argue and fight but leave in
agreement…the strategy is ‘IBM first.’”
The SLF is not simply education but a mechanism to solve major strategic problems.
Based on the success of this effort, the strategy group now supports “mini-SLFs”
throughout the company. This process, driven by the IBM Business Leadership Model,
provides a powerful common methodology and language which is used throughout IBM
and facilitates a common systematic approach to strategic initiatives.
28. 28
• The Corporate Investment Fund was developed as a way of providing funding
for new initiatives identified by the I&VT or EBOs. This $500M fund was taken
from existing units and specifically designed to provide the resources to start new
initiatives. Funding decisions were made once a quarter. However, as Gerstner
noted, “We worked very hard at the process of starving the losers and investing
in the big bets…The new ventures had to be protected from the normal budgetary
cycle because if things get tight, more often than not, profit-center managers
would be tempted to starve the future oriented projects.”32
The Corporate Investment Fund is not the conventional internal venture fund found in
many companies. Rather, it is designed with the recognition that the annual budgeting
process may not be sufficiently responsive to fund new initiatives as they emerge during
the year—especially those that cut across business units and may not be attractive enough
for any specific business to fund by itself. Funds can be used to support Winning Play
initiatives or other projects that aren’t included in the annual budgeting process. For
example, after committing to the on-demand transformation, the fund was used to support
services oriented architecture in the software group and the development of enabling
technology in the consulting organization. Funds have also been allocated to permit the
accelerated development of executive talent in China and India.
Taken together, these processes emphasize strategic insight and execution and general
management leadership responsibility. While many organizations have several of these
elements as a part of their strategy process, what is different about the IBM approach is
that they have an integrated set of mechanisms to both sense and seize opportunities. This
allows the firm to consider trends in markets and technology, identify issues that are
relevant to customers, examine them in detail, and to reconfigure assets to address these.
32
Gerstner, 2002, op cit., P. 227
29. 29
Once these decisions are made, this allows the new initiatives to be embedded into the
disciplined machine that characterizes IBM’s more mature businesses.
The Strategy Group at IBM
Strategy, and the role of the strategy group at IBM, has a very different profile than
conventional approaches. In the IBM context, strategy is an ongoing, disciplined
conversation between general managers and senior executives about the future of the
corporation—not an annual process or the work of a group of internal consultants. As
mentioned earlier, the strategy team itself is comprised largely of line managers who
spend an 18-30 month stint deepening their strategic skills. These individuals are
assigned by IBM’s senior executives without the strategy unit’s input. This not only
broadens the perspective of the strategy group but is a valuable developmental tool for
ensuring that the future senior managers of the company have deep strategic skills.
One of the enablers of IBM’s strategy process is that the career strategists within the
strategy department have no designs on any other jobs within the company; they have no
personal or political agenda, so their role is to facilitate difficult or critical conversations
with a focus on the facts and not some larger but hidden agenda. Further, if the input
from the strategy group is to be effective, this team needs to be in place through several
investment cycles in order to ensure consistency of strategic choice over time. Without
this continuity, the aggregate effects of investments are unlikely to give the strategy a
chance to succeed.
30. 30
The IBM Business Leadership Model explicitly makes three important points. First,
leadership by general managers requires both strategic insight and execution. Second, this
is anchored on either a performance or opportunity gap as manifest in hard performance
outcomes such as market share gain, margins, growth, or profit. The metrics used to
assess the success of strategy implementation are always grounded in business
outcomes—and where the business is gaining or losing traction. In the end, it is about
only two things: customer satisfaction and shareholder return..
Third, this process highlights the importance of alignment or complementarities among
the components. For example, strategic execution occurs not from attention to people or
incentives or culture but from the alignment of all of these with the critical tasks
necessary to execute the chosen strategy. Effective strategy is not simply the articulation
of a strategic intent but the linking of this to innovation, solid marketplace insight, and an
appropriate business design. The overarching challenge is to ensure general management
involvement and ownership in this process—and not to let it become a staff function. As
useful as the IBM Leadership Model is in framing the strategic challenge, the risk is that
it becomes “chartware”—and lower level managers become cynical about it.
Dynamic Capabilities: Driving Strategy Into Action
Harreld is the first to acknowledge that the IBM approach to strategy is imperfect.
Amidst all the praise he received for transforming IBM, Gerstner was suitably modest
and noted that when he left in 2002, IBM was in the same businesses that it had been
when he arrived (e.g., hardware, software, and even services). The real change required
31. 31
was for the company to reconfigure itself to be able to compete in a different way. It
meant walking away from its history and long-standing business model. This required
seeing the marketplace differently—but Gerstner claimed that IBM already had the right
strategies. More importantly, it required a cultural transformation that allowed the
company to reconfigure itself and to reallocate resources so that they could execute these
strategies. As Gerstner noted at his last annual shareholder meeting, “In the new IBM
we’ve always believed that our ability to execute is as important as the strength of our
strategies.”33
This is the essence of dynamic capabilities--the ability of a firm to sense
new opportunities and to seize them.
What the transformation of IBM illustrates is that while organizations are often
characterized by strong inertial forces that limit change, it is by no means impossible.
Teece argues this in saying that “Genetic engineering is possible with organizations; but
it is not easy…The key to sustained profitable growth is the ability to recombine and
reconfigure assets and organizational structures as markets and technologies change.”34
To accomplish such change, however, requires that senior managers be able to not only
sense the changes needed by their firms but also to be able to seize these by allocating
resources and reconfiguring the organization to address these. This involves seeing things
realistically, being willing to cannibalize existing businesses when necessary for survival,
and being ambidextrous or able to manage both mature and emerging businesses.35
33
Lou Gerstner, Annual Meeting, Savannah, Georgia
34
Teece, 2006, op cit, P. 21
35
O’Reilly, C. and Tushman, M. 2004, The ambidextrous Organization. Harvard Business Review, April,
PP. 74-83
32. 32
In this regard, a key leadership element is the importance of fit or complementarity
among strategy, structure, culture, and process. As Michael Porter observed “Strategic fit
among activities is fundamental not only to competitive advantage but also to the
sustainability of competitive advantage. It is harder for a rival to match an array of
interlocked activities than it is merely to imitate a particular sales approach, match a
process technology, or replicate a set of product features.”36
In this sense, dynamic
capabilities comprised of complementary processes—like the ability to reallocate and
reconfigure assets—form the basis of a difficult to imitate competitive advantage. The
fact that such “soft” capabilities cannot be easily purchased but must be developed over
time only enhances their value.
At IBM these dynamic capabilities have been developed over time as an integral part of
how the company does strategy. It is the combination and complementarities among
those processes that promote strategic insight (e.g., deep dives, winning plays, ownership
by general managers in the strategy making process) and those that link this insight to
execution (e.g., EBOs, the Strategic leadership Forum, the Corporate Investment Fund)
that permits the firm to compete simultaneously in emerging and mature markets. This
approach permits the company to make small, frequent investments and to learn from
these. To use a buzzword, it encourages organizational learning—not solely by making
smart decisions from the top down but through an evolutionary process of variation-
selection-retention.
Conclusion
36
Porter, M. 1996, What is strategy? Harvard Business Review, November-December, P. 73
33. 33
Helping organizations develop dynamic capabilities is, we believe, the fundamental and
enduring task of executive leadership. As Alfred Chandler has shown, organizations,
especially successful ones, can stagnate over time.37
Pursuing the same strategy and
sticking with the same core competencies may make a firm successful in the short-term
but is likely to be fatal in the long-term. Senior leaders are responsible for ensuring that
this does not happen. Unfortunately, the evidence is that too often firms get trapped by
their own success. The only way out of this trap is for senior leaders to help their firms
develop the dynamic capabilities that promote sustained competitive advantage.
In the past decade, IBM has undergone a remarkable transformation. While there are
many reasons for this success, at least part of it has been in their ability to both sense and
seize opportunities and to reconfigure the company’s structure and competencies to
address these. In strategic terms, these dynamic capabilities have been made real through
an ongoing process of disciplined, fact-based conversations, a common language and
problem solving methodology as manifest in the IBM Business Leadership Model, and a
clear commitment by leaders to compete in mature as well as emerging markets. This
language and process is employed throughout the company—from the senior executive
levels to first level managers. It is an integrated way to focus on both the formulation of
strategy and its implementation.
Unlike other piecemeal approaches to strategy, the IBM process is one driven by line
management based on the realities of the marketplace as seen in performance and
opportunity gaps, not a staff exercise or slide deck. This has moved the strategy-making
37
Chandler, A. 1990. Scale and Scope. Belknap Press.
34. 34
process from an annual ritual to a continual process, from an emphasis on planning to one
on action, from a staff function to one that line managers own, and from a concern with
strategy only to a focus on both strategy and execution. It has changed the role of the
strategy group from that of a critic to a partner in fixing problems—and one that is
aligned with general managers in identifying future problems and opportunities for the
company.
Dynamic capabilities are not abstract academic concepts but a concrete set of
mechanisms that help managers address the fundamental question of strategy—to
develop a truly sustainable competitive advantage. Interestingly, we are beginning to
realize that sustainability is fleeting unless it is aligned with capabilities to continually
sense how the marketplace is changing and seize these changes through dynamic
organizational realignment.
35. 35
Figure 1
The IBM Business Leadership Model
Formal
Organization
People &
Skills
Climate &
Culture
Brand Elements
Critical Tasks
Strategy Execution
Market
Results
Performance
Opportunity
GAP
Business
Design
Marketplace
Insight
Innovation
Focus
Strategic
Intent
Closing the gap requires both strategy to assess the opportunities
and design the business to address them—and execution to assess
and build the organizational capabilities to deliver market results.
Strategic Insight Strategic Execution
36. 36
Figure 2
Performance and Opportunity Gaps
Performance Gap: Our revenue growth over the past 10 years has lagged the market
(4% vs. 8%). Our goal is to break out of this pattern of low growth and achieve 10%
profitable revenue growth in the next 24 months. Achieving this result will result in an
estimated $5 billion in top line growth.
Business Owner: VP of Line of Business
Performance Gap: The business has grown dramatically over the past 5 years. During
this period the quality of our products has declined. Our attempts at introducing six
sigma have failed and we have lost 5 points in market share in the past 12 months. Each
point lost represents roughly $500 million in revenue. Our intent is to regain this market
share over the next 24 months.
Business Owner: VP Quality
Performance Gap: The goal of our 2003 merger was to dramatically reduce costs (esti-
mated savings of $1 billion) and improve product development times (reduce times from
12 months to 6). In spite of a reorganization we have failed to achieve our time, quality or
cost targets. We need to achieve our time-to-market of 6 months within the next year.
Business Owner: VP Product Development
Opportunity Gap: Current revenue growth per customer in our existing markets is
is growing only slowly (5% per annum) and customer expectations are increasing. If
we are able to move up the stack and provide solutions rather than point products, we
should be able to increase revenues and profits by 20% over the next 3 years.
Business Owner: Division GM
Opportunity Gap: Our R&D group has developed a new technology platform which
represents a potential disruptive technology in our industry. At present, we anticipate a
first-mover opportunity of about 12-18 months if we can introduce this technology within
the next 6 months. Our current product development cycle takes 18-24 months. To
succeed, we must shorten this cycle to 6 months.
Business Owner: VP Technology and Manufacturing
37. 37
Figure 3
The Strategy Process at IBM
Technology
Team
Strategy
Team
Corporate
Investment
Fund
Strategic
Leadership
Forums
I&VT /
Winning Plays
Deep Dives
IBM Business Leadership Model
The IBM Company: “A Disciplined Machine”
• Metrics
• Structure
• Leader Behavior
Exploit existing capabilities and processes:
Explore into new spaces:
Emerging
Business
Opportunities
38. 38
Figure 4
Dynamic Capabilities at IBM
Strategic Elements Sensing Seizing
Technology Team X
Strategy Team X
Integration & Values Team /
Winning Plays
X X
Deep Dives X
Emerging Business Opportunities
(EBOs)
X
Strategic Leadership Forums
(SLFs)
X
Corporate Investment Fund X