Getting to Strategic Alignment - NSM · PDF filedigital camera to compete with cell phone...
-
Upload
nguyenthuan -
Category
Documents
-
view
214 -
download
0
Transcript of Getting to Strategic Alignment - NSM · PDF filedigital camera to compete with cell phone...
Getting to Strategic
Alignment
Dr. Christopher A. Walker
Oslo, Norway
18 March 2014
Question
What do businesses have in common
with chess players, military leaders,
diplomats, and football coaches?
Answer
Their success depends on being
strategic!
What do we mean by
“Strategic”?
• The term “strategic” relates to a general &
longer term plan to achieve a goal
• The word Strategy is derived from the Greek
phrase that means “Art of the General”
• Strategy is the “roadmap” for success that
bridges the gap:
• From where we are
• To where we want to go
How is strategy a roadmap
to goal attainment?
• Strategy comprises all the actions
undertaken to achieve an organization’s
goals. Including:
1. Setting direction for the organization
2. Allocating resources
3. Providing clarity, thereby reducing ambiguity
4. Making decisions
5. Integrating and aligning all the organizational
activities
So, strategy is about…
• Creating alternatives to choose from
that will aid in goal achievement
– It is a journey that adapts to the context
– It requires alignment and re-alignment of
effort when the external and internal
environments change
About those
alternatives… • There are only so many strategic initiatives
an organization can undertake. Why?
– Organizations have finite resources
• Time
• People
• Financial
• Individual & organizational capabilities
– Given the limits, trying to do too much is
a recipe for failure
So, what must organizations
do to succeed?
Reduce uncertainty about the future…
• We must have a better understanding
of the challenges in the environment
– Strategy bets on future success by:
• Leveraging organizational strengths (internal)
against the opportunities/threats (external)
But, the future is
unpredictable
Those who choose to live by the
crystal ball are doomed to die of
eating broken glass.
Leading firms that failed
to predict the future?
• Olivetti (1908, typewriter maker) created first desk
top personal computer (1964)
– Out of computers by 1995; now office equipment maker
• Motorola (1928, radio & TV equipment)
– Sold radio & TV business to Panasonic
– First cell phone (1984); cell IP sold to Google (2011)
• Polaroid (1937) premier photographic equipment
– Bankrupt in 2001. Reorganized and, in 2010, released
digital camera to compete with cell phone cameras
• Aliweb (1993) the first successful search engine
– Google or Bing them: They no longer exists
Why is the future
unpredictable?
• It has a range of potential outcomes
• It is subject to uncontrollable randomness
• It has constraints
• It requires individual decisions affected by a
number of factors and people
Such variability means the future is not
inevitable, no matter how well planned
This leaves us with
three basic realities…
1. The only certainty about the future is
that it is uncertain.
1. Past success does not guarantee
future success.
2. Uncertainty needs to be reduced
What can be done to
reduce uncertainty?
• For organizations, it is simple: Conduct
a formal strategic analysis to better
enable organizational success
• How?
– By gathering data on what is important:
• Internal environment
• External environment
Why is environmental analysis
critical to the development of
strategies?
1. The analysis is the framework for organizing the data gained from both the internal and external environments
1. It provides a current perspective
1. It helps organizations understand the challenges they face NOW and what they need to meet them
1. It provides the means to draw conclusions about the organization’s situation and its implications for creating strategy
What do we mean by a
formal strategic analysis?
• SWOT Analysis – Strengths, Weaknesses,
Opportunities, Threats (Internal & External
Environments)
• Five Forces – Industry, competition, suppliers,
buyers, and substitutes
• P.E.S.T. – Political, Economic, Sociological,
Technological
• Value Chain – Internal processes
• Kepner-Tregoe Analysis – Competitive forces
• BCG Matrix – Learning curve
A common favorite of
business executives?
• SWOT Analysis (Strengths, Weaknesses,
Opportunities, Threats) Looks at the three
questions essential to strategy development:
1. What are the internal organizational capabilities
the organization possesses?
2. What are the challenges of the external
environment?
3. How might the alignment between the internal
capabilities and the external challenges suggest
plans for actions (strategies) to capitalize on the
opportunities?
SWOT analysis
SWOT Analysis
Internal Analysis
Strengths Weaknesses
External Analysis
Opportunities Threats
A principle value of
SWOT?
• It’s simple
– It is not about creating complex lists of
alternatives that must be researched
extensively
– It is about the identification of relevant
issues that enable conclusions to be
drawn that aid the development of
strategies to achieve organizational goals
What is the aim of
SWOT analysis?
1. To identify and organize important
internal and external factors
2. To provide a clearer understanding of what
is necessary for success
3. To analyze issues that have led to past
failure
4. To provide clarity of the operating context
5. To help decision makers make better
choices
What SWOT looks for:
Strengths • Internal characteristics of an organization
or team that are positive attributes which
improve the potential for success
– Examples of strengths:
• Organizational reputation
• Employee educational levels
• Specialized skills
• Organizational culture
What SWOT looks for:
Weaknesses • Internal characteristics that create a
disadvantage by reducing the organization’s
ability to attain goals
– Examples of weaknesses:
• Management decision-making
• Lack of necessary employee skills
• High employee turnover
• Aging, out-of-date technology
What SWOT looks for:
Opportunities
• Attractive external factors that an
organization has the ability to take
advantage of through effective strategies
– Examples of opportunities:
• New geographic markets
• Rising demand
• New technologies
What SWOT looks for:
Threats
• Uncontrollable external elements in the
environment that arise and jeopardize
the viability of an organization
– Examples of threats:
• Slow economic growth
• Governmental upheaval
• Terrorism
The benefits of SWOT
analysis? 1. Better understanding of the competitive
environment/situation
2. Anticipate different futures
3. Offer evidence for need to change or adapt
4. Identify organizational capabilities
5. Help set goals & objectives
6. Help develop strategies and tactics
7. Enable alignment of strengths with opportunities
and help offset threats
What are the limitations
of SWOT Analysis?
1. Subjectivity is used in the analysis
1. Things get missed and left out
1. It is confined to a point-in-time
perspective
What problems might the
limitations create?
1. Strengths may be overestimated
1. Weaknesses may be discounted
1. Opportunities not understood
1. Threats may be unimaginable
2. One area may be over-emphasized
vs. another
Nonetheless, the benefits of
formal SWOT analysis are BIG
• Strengths identified can be the foundation for strategy
• Weaknesses that impair the pursuit of opportunities can be fixed
• Opportunities best suited to the organizational strengths can be exploited by strategies
• Threats can be recognized and addressed to minimize, but not eliminate risks
Using SWOT is
strategic when…
• It improves the potential for success by
creating better understanding of the
environment
• It ensures all organizational efforts are
consistent with one another
• It helps guide the development of
functional strategies
What do we mean by
Functional Strategy?
• The goal oriented plans and actions of an
organizational function (e.g., department,
team) that helps:
– Maximize resource productivity
– Enable the achievement of goals
Are all functional
strategies the same? • They vary because they are based on
specific responsibilities (e.g., HR, Finance, Security)
• Consequently, they are limited by the
capabilities within each function
• They are non-transferable
– The same function in a different organization
cannot employ the same strategy and expect to
be successful because the context is different
What is the purpose of
Functional Strategy?
• To align the skills and resource
strengths of the smaller function
to the larger one
• To enable success by taking
advantage of opportunities and
offsetting the threats
How do we create
functional strategies?
• Simple answer:
– Carefully & thoughtfully
•There is no exact template
– Because of different organizational goals
and areas in which they compete
•But, there is a self-reinforcing cycle
that is universal across all organizations
• Let’s take a look…
Strategy as a self-reinforcing
cycle
Identifying the context (point in
time)
Evaluating the organizational
environment (SWOT)
Setting goals/objectives
Choosing a strategy/strategies
Performance Analysis (is it working?)
Why is creating functional
strategy hard work?
• Specific decisions must be made that determine:
– What work processes and activities need to be done in the functional area to support the strategy
– How to make sure these processes and activities have the necessary resources
– What the appropriate timelines are for completion
– How to best coordinate with other functions to ensure effective implementation
What questions should a function
ask about their newly created
strategy?
1. Is it aligned – does it support the larger organization’s strategies?
2. Is it flexible – can it accommodate changes in either the internal or external environments?
3. Is it adaptive – can it be adjusted when we see what is working and what is not?
What happens next?
• The chosen strategy needs to be
implemented
– Only upon executing the strategy can it
be determined if it is effective
– If not, is there an alignment problem?
• Work being performed
• Resources
• Timelines
• Coordination
What happens when there are
problems with alignment?
• It impairs performance because:
– Coordination is impossible
– There is a failure to exploit the organizational resources and capabilities
– Goals are difficult to achieve
How to avoid a lack
of alignment?
• There must be effective leadership at
the functional and larger
organizational levels
• Why does this matter so much?
1. Communication engages others
2. Good judgment
3. Handle ambiguity & uncertainty well
4. Establish relationships & involve others
5. Balance risk and manage adversity
6. Properly allocate resources
7. Leverage the skills of others
8. Collaborate well
9. Solve problems
10. Execute strategy to deliver results
Research on leadership in
“best” companies
Is our functional strategy
helping deliver results?
• Performance Effectiveness must be compared to “THE” standard measure for success – Our Goals: – Example: Did the safety awareness program (the
strategy) decrease employee disability claims (the goal)?
• If yes, by how much? • If not, why not?
– If actual performance does not measure up to expectations:
• Is a change needed in the functional strategy? • Is there a need for increased focus on execution?
One final question: What
makes a winning strategy?
• A winning strategy should pass three tests:
1. The Fitness Test
• Does it fit with the external and internal
aspects of our current context?
2. The Competitive Edge Test
• Does it help us achieve a competitive edge?
3. The Performance Test
• Does it improve our organizational
performance?
The benefits of effective
functional strategies are BIG!!
1. Reduced costs (financial and human)
2. Reduced complexity
3. Enhanced operations (improved coordination)
4. Improved response to problems
5. Enhanced adaptation to potential challenges
6. Increased organizational knowledge
7. Reduced RISK
8. Enhanced potential for goal achievement
A final thought
“Tomorrow will arrive and it is always
different. This changes the context we
find ourselves in. So, the strategies that
enabled you to “take the hill” will not
be the same as the strategies necessary
to hold it.”
Peter Drucker
Thank You!
Questions?