Generating Strategic Alternatives
2
The second step in the S&PA decision process develops creative, doable strategies.
Strategy Table Information Sources
1.09 • Generating Strategic Alternatives
EvaluatedAlternatives Plan
Decision Board
Project Team
FrameAlter-natives
3
Generating a range of creative, doable alternatives is a vital element of decision quality.
Creative, Doable Alternatives:
• Creative• Doable• Significantly different• Comprehensive• Compelling
Key tools:
• Creativity methods• Strategy table
Failure modes:
• Only one alternative• Missing a great alternative• Considering “not doable”
alternatives
Creative, Doable Alternatives:
• Creative• Doable• Significantly different• Comprehensive• Compelling
Key tools:
• Creativity methods• Strategy table
Failure modes:
• Only one alternative• Missing a great alternative• Considering “not doable”
alternatives
1
3 4
5
6
DecisionQuality
1.09 • Generating Strategic Alternatives
4
Combining analytic techniques with creativity methods produces compelling, doable strategies.
• Building Strategy Tables
• Summary
1.09 • Generating Strategic Alternatives
5
Decision Hierarchy
Tactics
Policies
Strategic Decisions
A strategy table helps develop specific alternatives for each strategic decision.
Strategic Decisions (one column for each)
Alternative 1
Alternative 2
Alternative 3
• • •
• • • • • • • • • • • •
Strategy Table
•Plant•Technology•Products•Quality•Marketing
Plant Technology Products Quality Marketing
There is one column in the table for each strategic decision.
1.09 • Generating Strategic Alternatives
6
We identify mutually exclusive alternatives for each strategic decision.
PlantConfigurationand Location
TechnologicalStretch
ProductRange
Quality and CostPosition
MarketingStrategy
Current
Close #1
Close #1;build domesticgreenfield
Close #1;build foreign
greenfield
State of art
Proven
Current
Full line
One basicline and
specialties
Value-added
specialtiesonly
Quality and cost leadership
Improved quality;deferredcost
reduction
Minimalquality
improvements
Sellquality and
influence market growth
Sellquality
Current
Example: Manufacturing Plant Modernization
1.09 • Generating Strategic Alternatives
7
Conduct a brainstorming session to create a wide range of ideas for strategies.
• Run out (milk) the business
• Moderate modernization
• Aggressive modernization
• Consolidation
• Sell our business (violates “take as given?”)
• Niche player only
• Buy out major customers
• Buy out major competitors
• Outsource to foreign manufacturers
• Joint venture for specialties
Strategy Themes
1.09 • Generating Strategic Alternatives
8
Using questions can help elicit a broader range of ideas.
Role-Playing “What would we do if we were…”
− Big Pharma? A small biotech?
− Resource unconstrained?
− Serving all the needs of specific physicians?
− A Managed care provider?
− Others…
Devil’s Advocate Questioning
What could your competitor do to hurt you the most?
Back-casting Go forward into the future. Assume a resolution of the problem. How could this have occurred?
1.09 • Generating Strategic Alternatives
9
Each alternative strategy comprises a consistent set of choices—one alternative under each decision.
Current
Close #1;build domesticgreenfield
Close #1;build foreign
greenfield
State of art
Proven
Current
Full line
One basicline and
specialties
Value-added
specialtiesonly
Quality and cost leadership
Improved quality;deferredcost
reduction
Minimalquality
improvements
Sellquality and
influence market growth
Sellquality
Current
PlantConfigurationand Location
TechnologicalStretch
ProductRange
Quality and CostPosition
MarketingStrategy
Aggressive Modernizatio
n
StrategyAlternatives
Close #1
1.09 • Generating Strategic Alternatives
10
Four creative and doable strategy alternatives (“strategies”) emerge in the modernization decision.
Current
Close #1;build domesticgreenfield
Close #1;build foreign
greenfield
State of art
Proven
Current
Full line
One basicline and
specialties
Value-added
specialtiesonly
Quality and cost leadership
Improved quality;deferredcost
reduction
Minimalquality
improvements
Sellquality and
influence market growth
Sellquality
Current
PlantConfigurationand Location
TechnologicalStretch
ProductRange
Quality and CostPosition
MarketingStrategy
Aggressive Modernizatio
n
ModerateModernizatio
n
Consolidation
Run Out
StrategyAlternatives
Close #1
1.09 • Generating Strategic Alternatives
11
Construct a strategy rationale that conveys why the alternative is compelling.
Description: Regain quality and cost leadership in a $2
billion/year business with growth rates estimated in
excess of 10% per year for the next decade.
Major Uncertainties: Introduction of low cost products from SE Asia
manufacturing
Quality differentiation achievable
Performance of new technology
Description: Regain quality and cost leadership in a $2
billion/year business with growth rates estimated in
excess of 10% per year for the next decade.
Major Uncertainties: Introduction of low cost products from SE Asia
manufacturing
Quality differentiation achievable
Performance of new technology
Strategy: Aggressive Modernization
Strengths
• Utilizes existing plants and
product line
• High flexibility to switch
production to match customer
needs
• Significant quality
improvement and leadership
position
Weaknesses
• Major capital required
$800 million
• Cost reduction program
requires significant
supplier and labor
concessions
Strategy Rationale
1.09 • Generating Strategic Alternatives
12
Like drilling “test wells,*” evaluating the initial alternatives identifies sources of value and risk.
Test Well #1
Test Well #2
Test Well #3
*An upstream oil and gas veteran would call these “exploration wells,” not “test wells.”
1.09 • Generating Strategic Alternatives
13
As with oil exploration, results of initial testing often point to a better “hybrid alternative.”
Test Well #3
Test Well #2
Test Well #1
Production Well
The location of the production well (chosen course of action) is not expected to be one of the test well sites (initial
alternatives).1.09 • Generating Strategic Alternatives
14
Analysis typically reveals a hybrid alternative that combines best features of initial strategies evaluated.
Strategy #1 Strategy #2 Strategy #3
EvaluationEvaluation
Hybrid Strategy
1.09 • Generating Strategic Alternatives
15
Combining analytic techniques with creativity methods produces compelling, doable strategies.
• Building Strategy Tables
• Alternative Generation− Creativity
− Need-Finding: Viewing from multiple perspectives
− Idea Generation: Creating Real Options
− Sorting
• Summary
1.09 • Generating Strategic Alternatives
16
The goal of strategy generation is a small number of high-quality strategic alternatives that:
• Respond to the real issues and challenges facing your business
• Incorporate the best creative thinking
• Cover the full range of possibilities but are significantly different
• Encompass all parts of your business
• Are doable and compelling.
1.09 • Generating Strategic Alternatives
17
The second board meeting addresses the alternatives developed by the project team.
EvaluatedAlternatives Plan
Decision Board
Project Team
Frame
Strategy Table Information Sources
Alter-natives
1.09 • Generating Strategic Alternatives
19
Appendix
1.09 • Generating Strategic Alternatives
20
“Nested” strategy tables help to expand the alternatives for each decision.
Main Strategy Table
PlantTech-
nologyProducts Quality Marketing
Product Strategy Table
Product
StrategiesBasic Line A Basic Line B
Specialty
Product I
Specialty
Product J
Specialty
Product K
Full line
One basic
line and
specialties
Value-added
specialties
only
Maintain
Phase out
Drop now
Maintain
Phase out
Drop now
Yes
No
Yes
No
Yes
No
Full line
One basic line and
specialties
Value-added specialties
only
1.09 • Generating Strategic Alternatives
21
Combining analytic techniques with creativity methods produces compelling, doable strategies.
• Building Strategy Tables
• Alternative Generation− Creativity
− Need-Finding: Viewing from multiple perspectives
− Idea Generation: Creating Real Options
− Sorting
• Summary
1.09 • Generating Strategic Alternatives
22
Alternative Generation
• Why good alternatives are important
• Exercises and Tools
Creativity
Need-Finding
Idea-Generation
Sorting
1.09 • Generating Strategic Alternatives
23
Without a robust set of options, the value of analysis is significantly compromised.
LEARN MORE in the process of developing better solutions
− Test new or unconventional ideas without big commitments (prototyping)
− Bring together the best contributions from a broad set of perspectives
CREATE VALUE by generating innovative approaches
−The highest value options are rarely the obvious ones
−Efficient use of resources; choose among many options rather than work-rework-rework again
REALIZE VALUE in setting up well for execution
−Support communication with internal and external stakeholders
−Fosters confidence, understanding and buy-in across the organization
Even great analysis of an mundane idea cannot turn it into a brilliant strategy.
1.09 • Generating Strategic Alternatives
24
In many organizations, creativity is the opposite of analysis.
Value Discipline
Value Discipline
Shareholder Value
AppliedCreativity
AppliedCreativity
“Ah ha” Factor
Customer-Focused
Finance, Market Research, C-suite
SpreadsheetAnalysis
R&D, PR, Communications
“The bean-counters only know how to say “no”.”
“Innovation is messy and hard to measure.”
In isolation, leads to…• Blue-sky concepts, not actionable• Too difficult or expensive to
implement• Short-sighted, quick-fix ideas
In isolation, leads to…• Naval-gazing, inwardly focused• Incremental or “me too” ideas• Weak value proposition, not related
to customer needs
1.09 • Generating Strategic Alternatives
25
A toolkit and language that includes both creativity and analysis is best positioned to produce high value strategy.
Refine Options and Evaluate Trade-offs
Produce Growth Opportunities
Cycle builds learnings
and buy-in
Value Discipline
Value Discipline
AppliedCreativityApplied
Creativity
Although most people (and organizations) are more comfortable on one side or the other, great strategists can use either or both as needed.
1.09 • Generating Strategic Alternatives
26
Alternative Generation
Creativity
+
Need-Finding
+
Idea Generation
+
Sorting
1.09 • Generating Strategic Alternatives
27
Creativity
Principles:
• Everyone can be creative (though some of us have forgotten how or are out of the habit)
• Many of us were at our most creative when we were children (or are in a child-like frame of mind)
• Creativity often requires that one step out of the usual routine
• Creativity is important in business• Creative leaders perform better and inspire teams• Creative team members make things happen (1+1 = 3)• Creativity is a source of organic growth that provides value to
all stakeholders• Creative lives are more fun
Note: Many of these exercises and perspective are based on Stanford University’s Joint Program in Design
1.09 • Generating Strategic Alternatives
28
Warm-up Exercise: Personal Introductions
Objective: Get to know one-another and remind each other of our creative and playful selves
Exercise:
Create a self portrait with pipe cleaners which is most reflective of you.
Tell the group your name and talk about why you chose that item
1.09 • Generating Strategic Alternatives
29
Exercise: Monk on the Mountain
• "One morning, exactly at sunrise, a Monk began to climb a tall mountain. A narrow path, no more than a foot or two wide, spiraled around the mountain to a glittering temple at the summit. The Monk ascended the mountain, deep in meditation, stopping many times along the way to rest and eat the dried fruit he carried with him. He reached the temple shortly before sunset. After several days of fasting he began his journey down the mountain, starting exactly at sunrise, back along the same path, again with many pauses along the way for food and meditation. His average speed descending was, of course, greater than his average climbing speed.
• The Puzzle: Is there one spot along the path that the Monk occupies on both trips at exactly the same time of day? If so, prove it.
James Adams; Conceptual Blockbusting, a Guide to Better Ideas
1.09 • Generating Strategic Alternatives
30
Exercise: 30 Circles
1. Draw 30 circles on a page
2. Make 5 rows with 6 circles in each row
3. Once you have 30 circles in a 5x6 grid
4. Turn the circles into something
1.09 • Generating Strategic Alternatives
31
Intellectual
• Expert belief
• Inflexible style
• Isolated
• Wrong information
Often, our own and others’ biases get in the way of creativity.
James Adams; Conceptual Blockbusting, a Guide to Better Ideas
Perceptual
• Stereotyping
• Difficulty isolating the problem
• Choosing too tight a view
Emotional
• Fear of failure
• Embarrassment
• Uncomfortable with imagination or intuition
Cultural/Environmental
• Control is good, chaos is bad
• Not supposed to have fun
• Lack of support for new ideas
Categories of Conceptual “Blocks”:
1.09 • Generating Strategic Alternatives
32
Need-Finding
• Objective: identify unmet needs and areas of opportunity that, if solved, could bring value to all stakeholders− Note, this is about identifying needs, NOT solutions
− The best ideas are always those that meet ACTUAL end-user needs
• Needs can potentially be addressed by many different solutions− E.g., “I should get a new chair” is a narrowly-framed solution. “I need a
comfortable place to work” can be addressed by swapping chairs with someone, a comfy sofa, yoga, better lighting, a pillow, an ergonomic desk, etc.
− Getting at the core of an issue will lead to more and better alternatives
1.09 • Generating Strategic Alternatives
331.09 • Generating Strategic Alternatives
Need-Finding Tool: Idea Maps
• An Idea Map is a graphic, free-association process that helps you, the explorer, “find your way” around a topic
• This map is inside-out because you create it yourself from the location of interest− Not top-down like a regular map – you don’t want someone else’s view
− Maps are often useful in proportion to their completeness• Push for as much detail as possible
• Start at the center: what is the topic you want to understand better?− Move out from there: what are different elements to this topic?
− Continue to free-associate out from the center, identify connections and conflicts
34
Idea Mapping ExerciseIssue: I need a new car
CARS
Manufacturers
Transportation
Other UsesStyle
Ex-US
US
Reliability
Cost
Co. Viability
Unions
History
Pensions
Commute Job Location
Home
Alternatives
Bicycle
TrainCarpool
Image
Carry StuffFun
Power
Color
Activity
Mileage
Vacation
Skiing
Tahoe
Kids
2 car-seats
BuildingMaterials
More?
Sports
MovingFriends
Playhouse
Garden
Freeway
New Job
1.09 • Generating Strategic Alternatives
35
Idea Mapping Exercise: Pharma Example
Who are all the stakeholders? What are their needs in relation to the condition we are addressing?
Asthma Rx
Physicians
Managed Care
REPORT
Patients
Parents
Child/teen
Dependability
Safety
Consistency of Response
Ignore condition
Low-profile
No side effects
Good cost-to-benefit value
Reduce acute (expensive)
episodes
Easy to comply with
Good education and support programs
Minimal side effects
Manufacturer
High impact
Profitability
IP protection
1.09 • Generating Strategic Alternatives
36
More Need-Finding Tools
• Ethnographic Research− Hands-off observation of stakeholders in their “natural habitat”− Look for unconscious workarounds and haphazard fixes
• Day-in-the-Life-of (DILO) Interviews− Visit and participate in customers’ daily lives − Seek to understand what the challenges are in their jobs or lives− Only later ask, “is there a way we could help with our product or service?”
• Note: Examine the experience with fresh eyes− What does the user like/not like about the current experience? What is
lacking?− What else does this person do? Feel? Want?− What un-articulated needs might we uncover for this customer?
1.09 • Generating Strategic Alternatives
37
Idea Generation
•There are four parts to a good brainstorming session− Framing a good question
− Warming up
− the Brainstorm itself
− Naming the outcomes
1.09 • Generating Strategic Alternatives
38
Framing
Common Issues Poorly-framed… Better…
Closed-end questions
“I need ten ideas for…” “How many ways can we think of…”
Too narrow, describing methods or means
“How can we invent a new wheel barrow”
“How can I move bricks from here to there?”
Too broad or abstract
“How can we make everyone in the company happy?”
“How do we improve communication (or facilities/ planning/ etc)”
1.09 • Generating Strategic Alternatives
39
Warming-up
• To be at their best, people need to move from their analytic/critical focus to a synthesis/non-judgmental focus.
− Bring a joke book to pass around− Ask people to share a childhood nickname or hobby− Ask the team to come up with 25 uses for a paper clip− Visual games - Pictionary™, or “complete the drawing”
game• Physical environment and team dynamics matter
− Be sure to give this exercise enough time− Address any potential conflicts ahead of time− Bring food, candy, toys, etc. (play-doh, pipe-cleaners, etc.)
1.09 • Generating Strategic Alternatives
40
Brainstorming: General rules to fine-tune this familiar tool
Defer Judgment
“The dread of criticism is the death of genius.”
– William Gilmore Simms, American author,
1806-1870
Defer Judgment
“The dread of criticism is the death of genius.”
– William Gilmore Simms, American author,
1806-1870
Quantity
“To have a great idea, have a lot of them.”
– Thomas Edison, inventor, 1847-1931
Quantity
“To have a great idea, have a lot of them.”
– Thomas Edison, inventor, 1847-1931
Quality = Crazy
“One doesn’t discover new lands without first consenting to lose sight
of the shore for a very long time.”
– Andre Gide, French critic, 1869-1951
Quality = Crazy
“One doesn’t discover new lands without first consenting to lose sight
of the shore for a very long time.”
– Andre Gide, French critic, 1869-1951
Leapfrog
“Ideas are like rabbits. You get a couple and learn how to handle them, and pretty soon you have a dozen.”
– John Steinbeck, American author, 1902-
1968
Leapfrog
“Ideas are like rabbits. You get a couple and learn how to handle them, and pretty soon you have a dozen.”
– John Steinbeck, American author, 1902-
1968
1.09 • Generating Strategic Alternatives
41
Naming
•Participants often feel like nothing happened if you do not “name” and “number” the outcomes of the session− Unique ideas are given a descriptive and often funny name
that captures the essence of the idea− Things that were recorded can be combined into ideas;
likewise ideas can be split up into multiple ideas− The goal is to say “we had 52 ideas” and be able to
describe each with a unique name− Choosing the best ideas comes next
1.09 • Generating Strategic Alternatives
42
Brainstorming Exercise
• Assume that a steel pipe is imbedded in the concrete floor of a bare room as shown. The inside diameter of the pipe is 0.06” larger than the diameter of the ping pong ball that is resting at the bottom of the pipe. Your team has been given the following objects:
*James Adams; Conceptual Blockbusting, a Guide to Better Ideas
• 10 feet of clothesline, a hammer, a screw driver, a box of Corn Flakes, a file, a wire coat hanger, an old shoe, a dog leash, and a light bulb
• List all the ways you can think of to remove the ball without damaging the ball, the pipe, or the floor.
1.09 • Generating Strategic Alternatives
43
More Tools for Idea Generation (1): Morphologies
• Create new concepts by creating unnatural structures
− Make many random runs through the alternatives in a Strategy Table
− Interpret your "invention" as a Alternative; could you build a case for it?
• Example:
Cylindrical Plastic Cap Ink
Alternatives: square metal attached cap cartridge
faceted glass no cap embedded
sculptured wood retracts paper tip
beaded paper use for cleaning solid ink
>>> New Innovation: A “square (cubic), wooden, cap-less, solid ink pen", one corner of the cube writes, and each face of the cube can hold a personal picture.
1.09 • Generating Strategic Alternatives
*James Adams; Conceptual Blockbusting, a Guide to Better Ideas
44
More Tools for Idea Generation (2): Put Yourself on Someone Else’s Shoes
Role-Playing “What would we do if we were…”
− Big Pharma? A small biotech?
− Resource unconstrained?
− Serving all the needs of specific physicians?
− A Managed care provider?
− Others…
Devil’s Advocate Questioning
What could your competitor do to hurt you the most?
Back-casting Go forward into the future. Assume a resolution of the problem. How could this have occurred?
1.09 • Generating Strategic Alternatives
45
• Objective: identify a set of Alternatives that is worth evaluating
• The right set of Alternatives will…− Cover a wide range of “test wells”
• Allow the team to explore and learn from the full range of possibilities
− Push the boundaries but be realistic• Do not include options that are completely out of scope
− Gives management confidence that the topic has been fully-explored• Include options that decision-makers will want to understand better and evaluate• Be willing to share the full list and range of brainstormed ideas
1.09 • Generating Strategic Alternatives
Sorting
46
There are several prioritization approaches that can be used.
Group consensus/discussion: Ask the group to highlight the top 3-4 options and confirm agreement. − Best used if the choice is
straightforward or team is already well-aligned
Low Risk
Best Options
High
Risk
Low Value
High Value
Voting (n/3): Each participant is given a set number of votes, calculated as 1/3 the number of options under consideration. Have each person mark their votes on the wall.
− Generally shows team preference and provides guidance but is not guaranteed to provide a clear “top 3” or “top 4”. Good basis to begin discussion, however.
2x2 Matrix: Each option is mapped against a 2x2 matrix of value vs. risk., or other important characteristics of the market
− The dividing lines and specificity are less important than relative placement
− Those in the best value corner are carried forward
Scoring System: Each option is scored against commercial and technical considerations on a scale of 1 to 5
− Those with the highest overall fit (sum of scores) are carried forward.
Option 1
Option 2
Unmet Medical Need
3 4
Market Attractiveness
2 4
Competitive Advantage
2 2
Scientific Rationale
3 4
Complexity of Program
3 1
Total Score (Fit) 13 15
Matrix and Scoring require team consensus on the list and score or placement in the matrix. This may require off-line input or iteration.
Matrix and Scoring require team consensus on the list and score or placement in the matrix. This may require off-line input or iteration.
1.09 • Generating Strategic Alternatives
47
Judging the quality of alternatives indicates whether value-creation potential has been fully explored.
Creative, Doable Alternatives:
0% “Business as usual”− Only one alternative− Considering infeasible alternatives− Missing good/great alternatives
50% “Creative, good alternatives”− Alternatives that “span the space”− May need to verify feasibility− No clear winner; need evaluation
100% “Hybrid alternatives” − Explored options and gaming strategies− New alternatives combining best features− Understand how to implement each strategy
3Meaningful, Reliable
Information
4Clear
Values andTrade-offs
5LogicallyCorrectReasoning
6Commitmentto Action
0% 100%
DecisionQuality
1Appropriate
Frame
2Creative,Doable
Alternatives
2Creative,Doable
Alternatives
1.09 • Generating Strategic Alternatives
Top Related