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Strategy in strategic hrm part 1
The document provides an overview of Part 1 of a session on strategy in strategic human resource management. Part 1 aims to provide an understanding of organizational strategy, including the role of strategy, different types of strategy, value propositions, and organizational lifecycles. It discusses key strategy concepts and tools such as Porter's five forces analysis and the generic business strategies of cost leadership, differentiation, and focus. Examples are provided of companies like Walmart, Krispy Kreme, and Kodak to illustrate different strategic approaches. The document emphasizes aligning HR practices with business strategy to achieve organizational goals.
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Strategy in strategic hrm part 1
- 1. STRATEGY IN STRATEGICHRM: PART 1 Anilesh Seth Ideator, Co Founder & CEO, KROW www.krow.in Ex-CEO/MD: LGSI, Qatalys & Supervalu India www.slideshare.net/anilesh http://In.linkedin.com/in/anileshseth anileshseth@hotmail.com
- 2. Part 1: Sessions1 & 2 • Objective of these sessions is to enable an understanding of strategy and associated terms and tools to serve as a foundation to segue into Strategic HRM • Content of Part 1: Overview of organizational strategy – role of strategy, understanding of types of strategy through case studies and examples, value proposition and organization life-cycle
- 3. • July 27,2012 News ….”Samsung completely destroyed Apple in smartphone shipments Last Quarter” • Samsung passed Nokia to become the top manufacturer for handsets overall • Samsung “shipped” over 50 million smartphones in the second quarter • Apple “sold” 26 million
- 4. • July 27,2012 News ….”Samsung completely destroyed Apple in smartphone shipments Last Quarter” • Samsung passed Nokia to become the top manufacturer for handsets overall • Samsung “shipped” over 50 million smartphones in the second quarter • Apple “sold” 26 million Assignment: Do desk research on both companies and identify what each company is doing to ensure the no 1 slot. Are these sustainable? Pick a position on who will succeed. Output: Powerpoint – Max 4 slides. ????
- 5. So what isStrategy?
- 6. So what isStrategy? “Strategy is the direction and scope of an organization over the long-term; which achieves advantage for the organization through its configuration of resources within a challenging environment, to meet the needs of markets and to fulfill stakeholder expectations”
- 7. What the gurussay…. • Michael Eugene Porter (1996) Competitive strategy is about being different. It means deliberately choosing a different set of activities to deliver a unique mix of value
- 8. Porter’s five forcesanalysis • This is a framework used for evaluating a company’s competitive position http://www.maxi-pedia.com/Five+Forces+model+by+Michael+Porter
- 9. What the gurussay…. • Kenichi Ohmae The 3Cs Model Reference: http://www.lacpa.org.lb/Includes/Images/Docs/TC/TC278.pdf
- 10. What the gurussay…. • Gary Hamel and CK Prahlad “To achieve success the company should connect its ends to its means through Strategic Intent”. This has 3 attributes: – Sense of direction – Sense of discovery – Sense of destiny
- 11. The military viewpoint •Deals with the planning and conduct of campaigns, the movement and disposition of forces and the deception of the enemy • “In peace, prepare for war, in war, prepare for peace. The art of war is of vital importance to the state (512 BC)”
- 12. Some common threads • The future…. • Customers…. • Competition…. • Competitive advantage…. • Entry barriers…. • Innovation…. • Marshaling resources…. A great starting point is asking the questions: - Where are we now? - Where do we want to go? - How do we get there? “If one does not know to which port one is sailing, no wind is favorable.” Lucius Annaeus Seneca…Roman Philosopher (born 5 BC)
- 13. Porter’s generic businessstrategies
- 14. Cost leadership example:Wal-Mart • Wal Mart was founded in 1962 by Sam Walton • Rigorously pursued its core philosophy of cost-leadership • Sam realized that retailing was a volume driven business and success would be achieved by offering customers better value for their money • Started by establishing discount stores in smaller towns • 1970s – it went national. Opened its first distribution center • 1980s – opened up the first SAM’s club. 276 stores • 1990s – EDLP went international. 1997 crossed 100 billion USD • 2000s – offering customers a seamless shopping experience – online, in store or on a mobile device. 2010 – Bharti Walmart in India • 2012 – 50 years of helping people save money so they can live better. Employs 2.2 million associates worldwide, 200 million customers each week in 10,000 stores in 27 countries • As of Jan 2012 it had revenues of 447 billion after Exxon and Royal Dutch Shell
- 15. How did Wal-Martachieve this?
- 16. How did Wal-Martachieve this? • Warehousing and distribution System: strategically located distribution centers, cut overheads, reduce costs • Inventory: As low as possible by tightly controlling supplier on-time delivery • EDLP • Overseas outsourcing: Online and direct access to low cost foreign suppliers • Supplier control: Encourages suppliers to keep reducing costs, update computer systems, redesign packaging, examine financial accounts and ask them to cut margins etc
- 17. Product and servicedifferentiation • Product differentiation – Features Example: – Manufacturing process Cervelo – aerodynamic race bikes “Speed, Engineered” – Performance BMW – the ultimate driving machine – Design • Service differentiation Example: – Speed of delivery Enterprise rent a car – Availability “We’ll pick you up” – Loyalty programs – After sales service and training – Warranty Combination: Dominos pizza: New product intros with 30 minute guarantee
- 18. Differentiation example: KrispyKreme • Specialty retailer of premium-quality doughnuts • Started in 1937 – went IPO in 2000 • First international store in Canada in 2001 • Now in Sydney, London, Mexico, Puerto Rico, Turkey • Plans to open up 80 stores in Southern India and Western India in next 5 years • Revenue about 13.5 billion USD
- 19. Krispy Kreme –some elements of their strategy • “It isn’t about what’s inside the doughnut but what's inside a customer’s head” • Opinions are: – The Michelangelo of doughnut makers – It is an art – Heavenly inspired • Loyalists are wait in line for hours on the opening day of a new unit – they camp out 24 hrs in advance! • Created a cultural icon and built customer pride – Exhibit at the Smithsonian National Museum of American History – The Doughnut Theatre – watch them being made – Doughnut of the month – Website: Friend of Krispy Kreme – make customers feel they are part of the company – Collectibles (shirts, boxers, shorts, mugs, hats etc.)
- 20. Types of businesslevel strategy Cost Efficient supply chain leadership Caters to a niche, Porter’s 4 Customer service, Example Kopi Luwak Example Breeze Resorts Differentiation focus generic Differentiation quality, convenience, strategies Low-cost focus Lowest provider for a niche market Example: Redbox for DVD rentals Foundational elements: - Customer intimacy – this involves a high level of investment in understanding customers - Product innovation
- 21. Strategy vs Tactics •A strategy is a market Example: Hyundai Motor Corporation’s based move that expenditures on R & D and plant expansion involves a significant to become one of the world’s largest car-makers commitment of by 2010 and sell one million units annually in the organizational US resources and is difficult to implement and reverse • A tactic is a market Example: Hyundai Motor Corporation’s based move that is US pricing strategy taken to fine-tune a strategy
- 22.
- 23. What is this“Vision thing”? • Vision – Long term, encouraging, aspiration for the future – Must be in line with corporate values
- 24. What is this“Vision thing”? • Vision – Long term, encouraging, aspiration for the future – Must be in line with corporate values Boeing (1950): Become the dominant player in commercial aircraft and bring the world into the jet age Boeing (2016): People working together as a global enterprise for aerospace leadership Microsoft (1980): A personal computer in every home running Microsoft software Microsoft (Steve Balmer): Enabling people and businesses to realize their full potential Reading: Marketing Myopia: http://hbr.org/2004/07/marketing-myopia/ar/1 Assignment: Research the vision statements of at least one successful start up and one established Indian corporate. Find out if this has changed over the years
- 25. Organization life-cycle Likely to mirror industry maturity Can apply SWOT/Porter’s 5 forces at each stage – it will be different Ref: http://www.product-arts.com/articlelink/1246-company-evolution-a-the-organizational-life-cycle
- 26. The KODAK casestudy • In Jan 2012, the 131 year old film pioneer filed for bankruptcy • Since 2004, they reported only one year of full profit • Kodak appears to have fallen to undercutting of prices by companies like Fujifilm and then the onset of digital technologies. Kodak actually halted investment in film in 2003 • Kodak’s turnaround strategy has the following components: – Creation of a digital business – Exiting traditional operations – closing 13 plants and 130 labs – Workforce reduction by 47,000 since 2003 – Reducing cost-structure – Monetizing non-core IP assets (digital patents – selling and suing!) Question: Was Kodak in business to create cameras and film or was Kodak in business to help people capture and preserve memories?
- 27. Value Proposition • Abusiness or marketing statement that summarizes why a consumer should buy a product or use a service. It: – explains how your product solves customers problems or improves their situation – delivers specific benefits (quantified value) – tells the customer why they should buy from you and not from the competition (unique differentiation) – should be simple and concise Check out this video: http://www.youtube.com/watch?v=VZ5rgVgn5qk
- 28. More about valuepropositions • Example of what it should *not* be: Revenue-focused marketing automation & sales effectiveness solutions unleash collaboration with customers and internal departments throughout the revenue cycle • Caution not to mix them up with slogans like: “L’Oréal. Because you’re worth it”
- 29. Example of agood value proposition
- 30. Example of agood value proposition
- 31. Connecting some dots…. What is “Strategic” HRM? Discussion: Who “manages” employees – HR or Managers?
- 32. What is strategicHRM? • Strategic HRM is the practice of aligning business strategy with that of HR practices to achieve the strategic goals of the organization • This meshes with the values of a company and can manifest itself in ways such as innovation leadership or outstanding customer service • This demands a proactive and hands on approach by the management as well as the HR department • The HR department’s role here is more of “facilitation”
- 33. Essential elements ofstrategic HRM • Internally transforming HR staff and structure • Enhancing administrative efficiency • Integrating HR into the At the core is ensuring that strategic planning a company’s Human Resources process are a source of key Competitive • Linking HR practices to advantage business strategy and to one another • Developing a partnership with line management
- 34. Example: Use oftools as an enabler of change management • The ADKAR model Awareness ..of the need for change Desire ..to support and participate in the change Knowledge ..of how to change Ability ..to implement required skills and behaviours Reinforcement ..to sustain the change Source: ADKAR, A model for change in business, government and our community - Jeffrey M. Hiatt
- 35. Case: The needto downsize…… 5 4 3 Barrier Point 2 1
- 36. The Strategic ManagementProcess Strategic Analysis Strategy Development Strategy Implementation
- 37. Reference books • Competitive Strategy: Techniques for Analyzing Industries and Competitors – Michael Porter • Competitive Advantage: Creating and Sustaining Superior Performance – Michael Porter • Cases in Competitive Strategy – Michael Porter • Strategy Maps – Kaplan & Norton • What Matters Now – Gary Hamel • Strategic Flexibility – Gary Hamel, C K Prahlad, Howard Thomas, Don O’Neal • Competing for the Future – Gary Hamel, C K Prahlad • Strategic Management – Hitt, Ireland, Hoskisson
- 38.
Editor's Notes
- #4 Aspects to consider:Timing of new product introduction?No of models?Features/ease of use?Screen size, weight?Distribution channels?Supply chain, manufacturing costs?Geographic pull?Innovation?Does it makes sense to use a tool like SWOT Analysis?
- #5 Aspects to consider:Timing of new product introduction?No of models?Features/ease of use?Screen size, weight?Distribution channels?Supply chain, manufacturing costs?Geographic pull?Innovation?Does it makes sense to use a tool like SWOT Analysis?
- #7 Remember, resources includes people – and hence the importance of “Strategic HRM”
- #8 Note the emphasis on being different, unique
- #10 The emphasis is on “Sustained” competitive advantageCustomers are both present and potential – and are segmentedCorporation needs to evaluate both the long and the short term strategies to beat competition. Examples:Selectivity and sequencingMake or buyCost-effectiveness/cost leadership
- #11 Sense of direction: A particular point of view about the long-term market or competitive position that the firm hopes to build. It’s a view of the futureSense of discovery: A strategic intent is differentiated. It implies a competitively unique point of view about the future. It holds out to the employees the promise of exploring new competitive territorySense of destiny: Strategic intent has an emotional edge to it; it is a goal that employees “want” to achieve
- #21 Focused cost leadership is the first of two focus strategies. A focused cost leadership strategy requires competing based on price to target a narrow market A firm that follows this strategy does not necessarily charge the lowest prices in the industry. Instead, it charges low prices relative to other firms that compete within the target market. Redbox, for example, uses vending machines placed outside grocery stores and other retail outlets to rent DVDs of movies for $1. There are ways to view movies even cheaper, such as through the flat-fee streaming video subscriptions offered by Netflix. But among firms that rent actual DVDs, Redbox offers unparalleled levels of low price and high convenience.Focused differentiation is the second of two focus strategies. A focused differentiation strategy requires offering unique features that fulfill the demands of a narrow market . As with a focused low-cost strategy, narrow markets are defined in different ways in different settings. Some firms using a focused differentiation strategy concentrate their efforts on a particular sales channel, such as selling over the Internet only. Others target particular demographic groups. One example is Breezes Resorts, a company that caters to couples without children. The firm operates seven tropical resorts where vacationers are guaranteed that they will not be annoyed by loud and disruptive children.As noted in a 2010 article in the New York Times, Kopi Luwak beansare found in the droppings of the civet, a nocturnal, furry, long-tailed catlike animal that prowls Southeast Asia’s coffee-growing lands for the tastiest, ripest coffee cherries. The civet eventually excretes the hard, indigestible innards of the fruit—essentially, incipient coffee beans—though only after they have been fermented in the animal’s stomach acids and enzymes to produce a brew described as smooth, chocolaty and devoid of any bitter aftertaste.Reference: http://catalog.flatworldknowledge.com/bookhub/3085?e=ketchen_1.0-ch05_s04#ketchen_1.0-ch05_s05
- #24 Note how the vision statement has changed over the years. Why do you think this is so?The vision statement does not change in the short term.
- #25 Note how the vision statement has changed over the years. Why do you think this is so?The vision statement does not change in the short term.
- #26 The organizational lifecycle is analogous to the product life cycle which follows a similar trajectory
- #27 What was their vision? Did they need to change it? Did they need to redefine their business? Were the leaders not looking at the innovations/technological changes? Was this a classic case of “Marketing Myopia”
- #35 One of the biggest needs of organizations is to have an effective way to tackle change. Examples of changes could be many – such as a need to reskill employees, downsizing, shifting a plant or at an individual level, say, transferring an individual to another location, or even something like introducing flexible work arrangements. The ADKAR model is a proven tool that organizations use to manage this change. Keep in mind that it is the responsibility of the management to manage the change – not the HR department. The HR departments are facilitators in this process
- #36 An example that will resonate with many, given its contemporary nature, is one of downsizing. This causes a lot of fear and uncertainty within an organization. Productivity dips as individuals shift into survival mode. The ADKAR model provides a good framework to evaluate where an organization stands. This allows for configuring strategies to deal with the specific areas that emerge as the ones requiring attention.