WHAT IS STRATEGY?

Do you have a Business Strategy?

Business Alignment Framework

Business Environment- Customers/Clients- Competition- Markets- Core Competencies- Technologies- Political Environment- Capacity to Act

Business Direction- Strategic Intent- Vision- Mission- Values

Business Strategy- Alignment- Priorities- Methodology- Resources

Operational Planning- Cascading Goals and Plans

Communication- Communication Goals and Plans

Processes- Policies- Process Flows- Technologies

Structures- Organization Units- Roles- Work Definition- Critical Success

Factors- Teams

People- Staff the Structure- Work/Role

Competencies- Retain/Develop- HR Systems- Culture/Climate

Implementation- Change 1: Select the Right Change- Change 2: Make it Happen

Measurement and Evaluation- Continuous Improvement

 

 

 

 

   

 

 

What is Strategy?

Strategy says what you are going to do to achieve the Business Direction you have defined in your vision, mission and values;

Typically each main component of the Business Direction requires a separate strategy;

Strategies are, by nature established at a general level;

At this stage in the process, you are identifying the areas where priority effort must be expended, and the nature of the processes and resources that are required.

Essence of Strategy

In essence:

No organization can afford everything it would like to do.

Resources have to be allocated.

The essence of strategic planning is to allocate resources to those areas that have the greatest future potential

Elements of Strategy

Elements of Strategy:

Strategic Planning: The process of determining the major goals of the organization and the

policies and strategies for obtaining and using

resources to achieve those goals. In this definition:

- policies are broad guides to action.

- strategies determine the best way to

use the resources.

Goal: Broad, long-term accomplishments

that an organization wishes to attain. A goal is the purpose

toward which an organization directs its endeavors, a

broad statement of intent.

Elements of Strategy

Elements of Strategy:

Objectives: Specific short-term tasks that must be completed to achieve the

organizational goals. These are specific

plans to meet broad goals. Objectives are

measurable statements of intended results describing

the desired end result and the standard

against which it will be measured

Tactic: The detailed, short-term decisions about what

is done, who is to do it, and how it is to be

done. Tactics are specific plans to achieve broad strategic plans.

Elements of Strategy

Elements of Strategy:

Contingency: The alternative course of action that may be

used if the primary plans (strategies/tactics)

do not achieve the objectives of the

organization.

Strategy: A Plan of Action

Example: Strategic Plan – goal set to make product X the preferred product in a specific market.

Tactical plan – objective to develop product X by the end of the year so that it meets 100% of the customer’s requirements.

Contingency Plan – objective set that if product X does not meet

100% of the customer’s requirements, the organization well develop

product Y by the end of the year

Is your Strategy aligned to your Value Discipline?

Identifying Value Disciplines

Value disciplines are strategy options:

OPERATIONAL EXCELLENCE

PRODUCT LEADERSHIP

CUSTOMER/CLIENT INTIMACY

Operational Excellence

Don’t emphasize product or service innovation; Don’t cultivate deep, one-to-one relationships with customers/clients; Do provide middle-of-the-market products at best price with least inconvenience; Do offer low price or hassle-free service, or both; Do deliver a combination of quality, price, ease of purchase that no ones else can

match; Do have an operating model based on four distinct features:

- supply chains and basic services have been optimized and streamlines to minimize costs and hassle (core processes)- Operations are standardized, simplified, tightly controlled, and centrally planned, leaving few decisions to the discretion of rank-and-file employees (business structures)- Management systems focus on integrated, reliable, high-speed transactions and compliance to norms- Culture abhors waste and rewards efficiency.

Product Leadership Do concentrate on offering products/services that push performance boundaries; Do offer the best product/service, period; Don’t build their positions with just one innovation; Don’t compete on price or service (though these are not ignored); Do complete on product performance; Do push products into the realm of the unknown, the untried, the highly desirable; must

be creative – commercialize ideas quickly – relentlessly pursue ways to leapfrog their own latest product/service;

Don’t plan for every possible contingency; Don’t spend much time on detailed analysis; Do react to situations as they occur; Do have a vested interest in protecting the entrepreneurial environment they created; Do complete most with themselves; Do have an operating model based on four features:

- Core processes focus on invention, product/service development, and market exploitation;- Business structures are loosely knit, ad-hoc, and ever-changing to adjust to unexplored territories;- Management systems are results-driven, that measure and reward new product/ service success, and that don’t punish experimentation;- Culture encourages individual imagination, accomplishment, out-of-the-box thinking, and a mindset driven by the desire to create the future;

Customer/Client Intimacy

Don’t focus on delivering what the market wants; Do focus on delivering what specific customers/clients want; Don’t pursue transactions; Do cultivate relationships; Do specialize in satisfying unique needs, through close customer/client relationships; Do offer the best solution, and do provide all the support needed to optimize

results/value; Do make it their business to know the people it sells to and the products/services they

need; Do tailor their products/services to specific customer/clients at reasonable prices, and

are adept at fiving the customer/client more than is expected; Do constantly upgrade offerings; Do have an operating model based on four features:

- Obsession with helping the customer/client understand exactly what’s needed and ensuring the solution gets implemented properly (core processes);

- Business structures that delegates decision-making to employees who are closest to the customer/clients;

- Management systems are geared toward creating results for carefully selected and nurtured clients;- Culture embraces specific rather than general solutions; thrives on deep and lasting

client relationships.

Which Discipline Should You Choose?

Market leaders pick one of these disciplines and then build their organization around it in the following ways:

STRATEGIC DISCIPLINE OPTIONS

Operational Excellence

Product Leadership Customer Intimacy

Core business processes that…….

Sharpen distribution systems and provide no hassle service

Nurture ideas, translate them into products and market them skillfully

Provide solutions and help customers run their businesses

Structure That…….

Has strong, central authority and a finite level of empowerment

Acts in an ad hoc, organic, loosely knit and ever-changing way

Pushes empowerment close to customer contact

Management systemsThat…….

Maintain standard operating processes

Reward individuals’ innovative capacity and new product success

Measure the cost of providing service and of maintaining customer loyalty

Culture that……. Acts predictably and believes “one size fits all”

Experiments and thinks “out-of-the-box”

Is flexible and thinks “have it your way”

Critical Success Factors

Areas of priority effort, written in general terms; Linked to strategic intent and to vision, mission and

values; Usually no more than five to seven; Prioritized based on the greatest business benefit; Fully resourced [human, financial etc.] Fully communicated Begin the cascading process to identify tactics that will

achieve each strategy; Encourage teamwork and individual

responsibility/accountability to achieve strategies; Designed and implemented in partnership with

customers/clients; Supported and sponsored by senior management

Does a coordination process exist to

integrate different strategic planning

efforts?

Strategy Options

Once you have decided on your discipline, you will need to look at your strategy options, covering the following:

Goals Philosophy Elements

Focus Competitive Performance

Management Systems Requirements

Organizational Skills Culture Core Processes

Key Business Processes Information Technology Structure

Job Design Employee Selection

Criteria Goal Setting Performance Measures Performance Appraisal

Criteriaand Input

Rewards and Compensation Training and Development

Matching Strategies to Situations

Industry Environments

Organization Positions/Situations

Situational Considerations

Market Share and Investment Options

Strategy Options

Does your strategy include tactics and

actions to direct your work?

Strategic Mindset

Here are some ways to think about your strategy, to be sure you have a winning strategy:

Change the rules of play Create a new approach to pricing Determine what the customer/client will bear to set

yourcosts

Exploit technology for integration, speed and creativity;

Keep your competitors away; Think outside the box Manage the competitor’s strategy Neutralize the competitor’s strength Be bold Build brand loyalty offer new products, services, processes, or information

for customers/clients

Strategy Life Cycle

Nothing Stays The Same:

If you think what exists today is permanent and forever true, you inevitably get your head handed to you.

Business

Plan A

Business

Plan B

Business

Plan C

Business

Plan D

Faster, increasinglyCompetitive responsesTo your BusinessEnvironment

Does your Strategy consider Financial Goals?

Does your Strategy consider Customer/Client

goals?

Aligning Measures with Goals

FINANCIAL GOALS- 8% productivity improvement- Sales increase by 6% pts. over economy- Division economic profit

CUSTOMER/CLIENT BASE- Earn customer loyalty- Decrease adjustments to +- 1% of orders- 95% order fill, on time and in full, within 2

days

Suggestions for Measures- Increase shareholder value- Reduced loss ratio- Long term revenue growth- Reduced expense ratio- Short term profit- Profit margin- ROI- Economic Profit [EVA]- Cash flow- Stable earnings- Reputation- Diversified revenue base

- Customer/client satisfaction- Improve customer/client relations- Get new customers/clients- Sell more to current customers/clients- Bigger market share- Reputation- Customer/client service ratings

Aligning Measures with Goals

OPERATIONAL AND PROCESS GOALS- Supply chain excellence- Compress time from raw material to

customer-paid- Decrease total delivery costs by 7%- Decrease inventory levels by 50%- Operation income less than 12%

LEARNING AND INNOVATION GOALS- Develop 1-2 products per division to change

basis of competition and increase sales profitability

- More than 30% sales, less than 4 year products

Suggestions for Measures- Improve development time- Reduce costs- Reduce down time- Reduce rejects; improve quality- Improve fill rate- Use technologies- Broader, more attractive produce/service line- Decrease adjustments- Compete in global markets

- Knowledge-share- Improve new product development rate- New products in new areas- Recognize leader and innovator- More growth opportunities

Consequences of Poorly Developed Strategies and Strategy Cascade

If the strategy is: Then the Consequences is:

And the result is:

Unknown Overprotection of resources

Maintain status quo

Disliked short-run financial criteria Drive out innovators

Unclear Politics prevail System is viewed cynically

Overwhelmed by short-run pressures

Targets are vague Future is not invested in

Avoided because of uncertainties

Employees are risk-averse Status quo is favored

Displaced by current activities

Employee question is the competence of leaders

Status quo is maintained

Does your strategy reflect who in your

business is responsible and accountable for

achieving the Strategy?

Does everyone in your immediate team have the same information about your business’s Business Strategy that

you do?

Your Leadership Accountability

STRATEGY AND ORGANISATIONAL EFFECTIVENESS

An effective organization is one that is designed to achieve its business goals.

Organizational Effectiveness is the job of the organizations leaders.

Organization development refers to the activities that take place to increase the organizations effectiveness.

This is the job of the leaders and the people who support them, including the managers, team leaders and employees of the organization, along with

internal or external consultant support.

Your Leadership Accountability

To fulfill this accountability in relationship to the business strategy, leaders must:

Conduct a thorough gap analysis comparing the current situation in your business to the desired vision;

Take baseline measures to define the “current situation” in terms that can be quantified;

Identify the actions that are needed to move your organization from the current situation to the desired vision so that the organization “wins: in its market place and with its customers/clients;

Prioritise those actions, focusing human energy, funding, and other resources, on the most important priorities;

Involve others in the organization in creating the plan of action;

communicate the plan at the onset, and at regular intervals as action is being taken;

Take continuous measures to determine whether the actions being taken are achieving the desired measures;

Share the results with others and involve them in problem solving;

Celebrate progress and recognize good work.

For more Information on how you can

Align Your Business for Success

CONTACT

Stella Molenaar

+27835617941

stella@in-search.co.za

Or visit our Website

www.in-search.co.za