This is a introduction course about the definition of strategy ... given to Master and specialized master students ... It explain in details what is and what is not strategy. This course is based on the book "Exploring Strategy" 9th Edition. It is also based on the strategy course I've had at MIT Sloan and Harvard Business School. Many thanks to Cynthia Montgomery, Raj Gulati, Ken Morse and Manuel Hensmans.
1. C1 – Definition of strategy
GEST - 468 & MISM
Strategy & Strategic Analysis
Pr Bruno Wattenbergh 1
2. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
Sign in for Dilbert daily cartoon http://www.dilbert.com
2
3. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
• Reminder !
3
4. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
Secretary of the Course ?
• Elected or not ?
•
• …
4
5. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
Books to acquire :
1. Exploring Strategy
9th Edition
2. Business Model
Generation
3. The Strategist
5
6. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
Cases ? Articles ? Blog ?
• Have you got the cases ?
• Do you know you can find them in the ULB
Library
• Have you found the blog ? It works ?
6
7. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
• Have you got your September
issue of HBR ?
And October is published
already !
7
8. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
Objectives of the course ?
• Understanding the Strategic Imperative to create,
deliver and capture value ; understand what is - and
where are the sources of - competitive advantage ;
defining strategy and other relevant elements as
vision, mission statement, value ; discover
methodologies to understand “Business models”, to
analyze environment and understand industries
dynamics ; understand the challenge to implement
and execute strategy. Consider to be a “strategist” …
8
9. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
1. Introduction
2. Definition of strategy
3. Business Model
4. Environment Analysis
5. Capacities
6. Culture, vision, missions &
Purpose
7. Value chain
8. Generic strategies, positioning
& Value propositions
9. Blue Ocean Strategies
10. M a r k e t S e g m e n t a t i o n ,
D i s t r i b u t i o n c h a n n e l s &
Customer relationships
11. Internal growth strategies
12. M&A and Alliances
13. Internationalization
14. Innovation
15. The Strategist
Structure of the course
9
10. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
Readings for this session ?
• HBR : What is strategy ?
• HBR : Can you say what
strategy is ?
• Book Exploring Strategy 9th
Edition :
– Pages 3 to 21
– Table 1.1 “The strategy checklist”
10
11. 11
@
each
new
course
…
You
give
me
some
takeaway
from
the
previous
course
!
What
do
you
remember
of
the
introduc<on
…
?
Or
any
ques<on
…
?
Come
on
!
Dare
…
J
12. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
12
13. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
Why do you have a “Strategy Course” ?
• … ?
• … ?
• … ?
13
?
14. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
Why do you have a “Strategy Course” ?
• Because the (financial) performances of companies
can be dramatically different … even in the same
sector …
• From 1919 à 2000 :
– 1$ invested in a representative portfolio of US stocks à
4,200$
– 1$ invested in Coca-Cola à 200,000$
14
15. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
• The “Firm” effect : ≠ in profitability within the same
industries …
15Source
:
“The
Strategist”
Cynthia
A.MONTGOMERY
16. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
This means that …
16
17. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
Need to analyze & understand the factor(s) of firms performances
“So many options” !
• Innovation or Operational Efficiency ? Fast or low growth ?
• Dominate the market or niche market ?
• Adapt to or escape the given (evolving) environment(s) : legal, human,
financial, environmental, … ?
• Be better … ? Or be different ? How ?
• …
17
18. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
Who are those people ?
What do they have in common ?
18
21. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
David & Lady Gaga … ?
Are they any better than the others (competitors) ?
… or they are different ?
David … has no military experience, refuses to wear an armor
… Any military executive would seek more experienced and
bigger / stronger warrior … Better or different ?
Lady Gaga … follows fashion or creates her own fashion and
trends ? Better or different ?
21
22. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
Conclusion @bout David & Lady Gaga … ?
• Winning strategy comes not necessarily from
being always better than the competitors …
• Being different … behaving differently … has
to be considered as a potential winning
strategy …
22
23. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
Case to prepare ?
WSJ & Yahoo Peanut Butter
M a n i f e s t o o f B r a d
Warlinghouse VP of Yahoo.
Try to identify which
elements of the text can be
qualified as “strategic” ?
Assignments for the next session (C1)
23
24. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
Yahoo in trouble …
24
25. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
• Brad Warlinghouse … MBA – HBS 97’
• Hired @ Yahoo in 2003 à 2006 – Senior VP Comm.
• http://www.bloomberg.com/video/brad-garlinghouse-s-
p e a n u t - b u t t e r - m a n i f e s t o - p a r t - 2 -
KQm_RZ4rSg6F2mYDeaWzbg.html
• h t t p s : / / w w w. l i n k e d i n . c o m / t o d a y / p o s t / a r t i c l e /
20130104145057-3807-what-i-got-wrong-in-the-peanut-
butter-manifesto
What do you think @bout the story ?
25
26. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
Yahoo Peanut Butter Manifesto WSJ 06’
Internal memo to the top managers of Yahoo!
Arguing that :
“Yahoo! is spreading his resources too thinly
like peanut butter on a slice of bread” …
What does this mean ?
26
27. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
Yahoo peanut butter manifesto WSJ 06’ …
“We lack a focused, cohesive vision for our company. We
want to do everything and be everything – to everyone.
We’ve known this for years, talk about it incessantly, but do
nothing to fundamentally address it. We are scared to be
left out. We are reactive instead of charting an unwavering
course.”
“Our inclination and proclivity to repeatedly hire leaders
from outside the company results in disparate visions –
rather than a leadership team rallying around a single
cohesive strategy.”
27
28. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
Yahoo peanut butter manifesto WSJ 06’ …
• Why the themes in Brad’s note can be
qualified of “strategic” ?
– Quote the key strategic elements in the note …
– Explain why there are “strategic issues” …
28
29. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
29
Courtesy
Of
Mr
Walid
Safaan
30. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
Remember the
“Corporate Strategy
Model”
Exploring Strategy
9th Edition
30
31. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
Remember the
“Corporate Strategy
Model”
Exploring Strategy
9th Edition
31
Do
every<ng
and
be
everything
Be
reac<ve
and
not
proac<ve
Organized
in
silos
Focus
on
nothing
in
par<cular
32. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
32
Courtesy
Of
Mr
Walid
Safaan
33. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
Remember the
“Corporate Strategy
Model”
Exploring Strategy
9th Edition
33
34. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
Remember the
“Corporate Strategy
Model”
Exploring Strategy
9th Edition
34
Redundancy
Bureaucra<c
Collision
Dropped
balls
Timid
in
pursuing
goals
35. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
35
Courtesy
Of
Mr
Walid
Safaan
36. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
Remember the
“Corporate Strategy
Model”
Exploring Strategy
9th Edition
36
37. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
Remember the
“Corporate Strategy
Model”
Exploring Strategy
9th Edition
37
No
hairy
decision
Analysis
paralysis
No
macro
perspec<ve
Lack
of
focus
&
ownership
Analysis
paralysis
Analysis
paralysis
38. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
38
Ok we do agree we
have some strategic
problems …
What would you
do ?
What have you
found in Brad’s
Memo ?
39. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
39
Courtesy
Of
Mr
Walid
Safaan
40. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
40
Courtesy
Of
Mr
Walid
Safaan
41. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
41
42. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
Free association ?
• Name now three words that come to mind
when you hear the word “Strategy” … ?
– … ?
– … ?
– … ?
Tell us “why” ?
42
43. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
43Courtesy
of
Cynthia
Montgomery
(HBS)
44. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
Examples of “Strategic issues”
• How should Google – originally a search company – manage its
entry into the market for mobile phones ?
• Should universities concentrate their resources on research
excellence or teaching quality or try to combine both ?
• How should a small video games producer relate to dominant
console providers such as Nintendo and Sony ?
• What should a rock band do to secure revenues in the face of
declining CD sales ?
Strategy 9th Edition
44
45. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
45
46. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
Let’s search for a definition of “strategy” ?
… the direction and scope of an
organization over the long-term, which
achieve advantage for the organization
through its configuration of resources within
a changing environment to the needs of
m a r k e t s a n d f u l f i l l s t a k e h o l d e r s
expectations …
Gerry Johnson & Kevan Scholes
Strategy 9th Edition
46
47. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
Let’s search for a definition of “strategy” ?
… the determination of the basic long-term
goals and objectives of an enterprise, and the
adoption of courses of action and the
allocation of resources necessary for
carrying out these goals …
Alfred CHANDLER
Professor of business history
47
48. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
Let’s search for a definition of “strategy” ?
… the deliberate search for a plan of action
that will develop a business’s competitive
advantage and compound it …
Bruce Henderson
Founder of the Boston Consulting Group
48
49. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
Let’s search for a definition of “strategy” ?
… the strong focus on profitability not just
growth, an ability to define a unique value
proposition and a willingness to make though
trade-offs in what not to do …
Michael Porter
Author of 18 books and numerous articles including Competitive
Strategy, Competitive Advantage, Competitive Advantage of
Nations, and On Competition.
6 time winner of the Mc Kinsey Award for the best Harvard
Business Review article of the year.
Most cited author in business and economics
49
50. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
Let’s search for a definition of “strategy” ?
… the strong focus on profitability not just growth,
an ability to define a unique value proposition and
a willingness to make though trade-offs in what not
to do …
Michael Porter
50
51. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
51
52. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
Let’s search for a definition of
“strategy” ?
“...the purposeful creation of a
favorable inequality in a
l a n d s c a p e o f c h a n g i n g
conditions.”
Sir Alexander D. Ferguson
52
53. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
Let’s search for a definition of “strategy” ?
“...the purposeful creation of a
favorable inequality in a landscape of
changing conditions.”
Sir Alexander D. Ferguson
53
What
is
/
could
be
such
a
“favorable
inequality”
?
54. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
54
55. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
Let’s listen to Michael PORTER … in “What is strategy” (HBR
nov.-déc 1996) :
• What are the key learning's in this article ?
• What have you learned ? What has been wondering you ?
• What kind of statement confirm your own experience ?
• Do you think / consider this (old) article still pertinent today ? Why ?
• What are your conclusions ?
• Are you ready to write down your own definition ?
55
56. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
Which are the words we have so far ?
56
ü
ü
ü
ü
ü
ü
ü
ü
?
57. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
Which are the words we have so far ?
57
• Direction
• Scope
• Long-term
• Advantage
• Configuration
• Resources
• Environment (changing …)
• Needs of the market
• …
• Stake(share)holders
• Adoption
• Course of action
• Deliberate search
• Business competitive advantage
• Focus
• Unique Value Proposition
• Trade-offs / choices
• …
58. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
Which concepts do we have so far ?
58
• Strategy à long-term direction of the firm
• Strategy à the overall plan … to deploy any resources the firm possess
• Strategy implies to make choices (though choices) :
– Directions à clear image (control ex-post)
– Way of doing things (execution)
– What to do / not to do à value chain !
– What to do / not to do à value proposal !
• Strategy is about achieving unique positioning (<-> competitors)
• Strategy ultimate goal is a sustainable competitive advantage over competitors
to preserve lasting profits
59. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
Strategy is about … ?
59
Strategy is about helping the Manager in the quest to make the most of the firm’s assets !
Managing is related to decision-making à “Executive” !
– Which Investment, which human resource management policies, which
organizational structure, … ?
Strategy is about developing a set of tools and conceptual maps for uncovering the
systematic relationships between the choices the Manager makes and the performance the
firm realizes …
Many people take decisions in the firm … Strategy is about aligning those decision …
avoiding that this process is only driven by the buffeting it receives from the competition
(MeToo / Copy Cat).
Strategy is about developing a clear vision … and a common sense about how to achieve it !
60. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
Strategy is not …
" About following fashion …
" Or jumping on the bandwagon … but trends
matter J
" New technology …
60
61. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
61
62. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
Strategy is not …
" Internationalization …
" M&A ...
" And not about doing things better à operational
effectiveness
62
63. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
Specificity of the “Strategy”
• Take into consideration the enterprise as a whole and not only one
domain (marketing – production – RH – finance - …) à « Strategic
Fit »
• Synthesis of the other domains ? … NO … !
– Use information's from other domains … but …
– … use its own methodologies.
• Freedom (Free will) of the Executives managers !
63
64. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
Ultimate definition ?
Strategy is the direction and scope of an
organisation over the long term, … which
achieves (lasting) competitive advantage … in a
c h a n g i n g e n v i r o n m e n t … t h r o u g h i t s
configuration of resources and competences …
with the aim of fulfilling stakeholder expectations.
64
65. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
65
66. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
Is good strategy so common ?
Survey June 2013 Booz & Co.
• Most Executives do not think their strategy will lead to success (54%)
!!!
• Most (53%) think employees & customers do not understand their
strategy
• 67% deem they are not leveraging distinctive capabilities
Please read :
http://www.strategyand.pwc.com/global/home/what-we-think/cds_home/
the_concept/our_leading_research_on_strategy
66
67. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
67
68. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
What is the timeline and the
lifetime of a strategic decisions
?
68
69. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
Strategies typically
measured over years …
• 3 great horizons of time
for business & activities :
1. Extend and defend core
business (declining trend).
2. B u i l d e m e r g i n g
businesses (new sources
of profits).
3. Create viable options
(uncertain future).
69
70. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
The goal of strategy ?
Is it a long run sustainable competitive
advantage … one that accumulates such a
powerful lead over competitors that no one
can catch up ?
Courtesy Cynthia Montgomery (HBS)
70
71. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
Is a competitive advantage made to last ?
71hXps://www.youtube.com/watch?v=sYiaAtPSp2s
72. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
72
Regression Toward the Mean
Most Competitive
Advantages are Fleeting
Top Third
Middle Third
Bottom Third
50
40
30
20
10
0
Courtesy
Cynthia
Montgomery
-‐
HBS
73. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
73
The Evanescence of a Difference that Matters
Whatever constitutes
strategic advantage
WILL EVENTUALLY
CHANGE.
What endures is the ongoing need to
ADD VALUE. The ongoing need to
guide and develop an organization
so IT CONTINUES TO MATTER.
Courtesy
Cynthia
Montgomery
-‐
HBS
74. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
74
Pablo Picasso
Success is dangerous. One begins
to copy oneself, and to copy
oneself is more dangerous than
to copy others. It leads to sterility.
Courtesy
Cynthia
Montgomery
-‐
HBS
75. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
75
76. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
Levels of strategy …
• Corporate-level strategy is concerned with the overall purpose and
scope of an organization and how value will be added to the
different parts (business units) of the organization.
• Business-level strategy is about how to compete successfully in
particular markets (also named competitive strategy).
• A strategic business unit is a part of an organization for which there
is a distinct external market for goods or services that is different
from another SBU.
• Operational strategies are concerned with how the component of
an organization deliver effectively the corporate - and business -
level strategies in terms of resources, processes and people
76
77. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
77
78. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
What about the “Strategic Management” ?
Strategic management includes understanding the
strategic position of a organization, making strategic
choices for the future, and managing strategy in
action.
3 great strategic area of responsibilities
for the CEO or Board …
78
79. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
79
Corporate
Strategy
Model
From
the
book
Exploring
Strategy
80. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
80
Corporate
Strategy
Model
From
the
book
Exploring
Strategy
Forces ?
Weaknesses ?
DNA ?
Opportunities ?
Threats ?
Mission Statement ?
A picture !
A static analysis
Vision ?
Path to
growth ?
Decision ?
Action !
Source !
Operation !
81. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
Strategic position ?
81
82. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
What is a “Strategic Position” ?
Strategic position is concerned with the impact
on strategy of the external environment, an
organisation’s strategic capability (resources &
competences) and the expectations and
influence of stakeholders.
Can be used as a “Diagnostic Tool”
82
84. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
Fundamental questions for Strategic Position :
– What are the environmental opportunities and
threats ?
– What are the organization's strengths and
weaknesses ?
– What is the basic purpose of the organization ?
– How does culture shape strategy ?
84
85. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
85
O.T.
S.W.
S.W.O.T
D.N.A & Values
Specific Know How
Specific Competences
What we have
been created for !
The reason we are
existing as a firm
Mission
Statement
86. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
But strategy is also an integrated set of choices :
– Who will you serve,
– Where a company will play,
– How it will play,
– What it wants to accomplish.
86
87. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
87
88. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
Strategic choices involve understanding the
underlying bases for future strategy at both the
business unit and corporate levels and the options
for developing strategy in terms of both the directions
and methods of development.
à Choices !
Can be named the “Deliberate Strategy”
88
89. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
Some examples of strategic choices ?
89
Directions
• The options for strategy in
terms of directions in which
the strategy might move …
• Objectives …
• Visions …
• Scope : industry, markets,
customer, zone, …
Methods
• The options for strategy in
terms of methods by which
strategy might be pursued
• Model
• Positioning
• Activities : value chain (let
do or diy ?)
90. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
Strategic choices ?
90
Scope
Allocation of
resources
The company
Vision
Future products &
markets à Future
cash cows
The industry where the
company decide to
compete (Market scope)
The
geographic
scope
Organic or
external
growth
Share R&D ?
Level of
autonomy ?
91. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
Deliberate Strategy ?
– The intentions : written strategy issued from the
strategic process, validated by the executives
and communicated …
OR …
Emerging Strategy ?
– Emerging strategy is a set of actions, or
behavior, consistent over time, “a realized pattern
[that] was not expressly intended” in the original
planning of strategy
http://hbswk.hbs.edu/item/6991.html
91
92. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
Deliberate or/and Emerging strategy ?
• “Emergent” vs “Deliberate” strategies : The idea of “emergent strategy is
pursued by Rosabeth Moss Kanter, a professor at Harvard Business School.
• Based on the experiences of companies interviewed in a recent research project
(including Williams-Sonoma, Sun Microsystems and Reuters) she promotes the
“improvisational” model, named after the techniques of improvisational theatre and
to be distinguished from the 'scripted' model of traditional planning (akin to
traditional theatre).
• The improvisational model does not rely on a full script, brings in the audience, and
trusts the actors to be unpredictable to produce innovation.
• Improvisers invent strategy by exploring new possibilities they create as they
interact with their audience. Speedy response is more important than early
perfection.
92
93. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
Strategy in action is concerned with ensuring that strategies are
working in practice.
93
94. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
Strategy vs Tactic ?
Savielly Tartakover (chess master) :
"Tactics is knowing what to do when there is
something to do”.
“Strategy is knowing what to do when there is
nothing to do.”
94
95. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
14 questions to understand and describe strategy ?
95
Page
19
96. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
96hXps://hbr.org/2012/08/simplify-‐your-‐strategy.html
97. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
“Vision without execution is hallucination.”…
Thomas Edison !
97
98. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
Executing Strategy ?
A brilliant strategy may put you on the competitive map. But only solid
execution keeps you there. Unfortunately, most companies struggle with
implementation. That’s because they over-rely on structural changes, such as
reorganization, to execute their strategy (Gary L. Neilson, Karla L. Martin, and
Elizabeth Powers).
It’s hard to balance pressing operational concerns with long-term strategic
priorities. But balance is critical : World-class processes won’t produce
success without the right strategic direction, and the best strategy won’t get
any- where without strong operations to execute it (Robert S. Kaplan and
David P. Norton - Harvard Business Review January 2008).
http://www.iveybusinessjournal.com/topics/strategy/the-execution-imperative-the-gap-closing-trade-
secrets-of-companies-that-consistently-get-things-done#.UfjFOxa3U1w
98
99. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
Executing Strategy ?
• Research by Neilson, Martin, and Powers shows that execution exemplars
focus their efforts on two levers far more powerful than structural change:
– Clarifying decision rights—for instance, specifying who “owns” each
decision and who must provide input
– Ensuring information flows where it’s needed—such as promoting
managers laterally so they build networks needed for the cross-unit
collaboration critical to a new strategy
• W.Chan Kim and Renée Mauborgne (in Harvard Business School Press
October 2006) identify an additional lever essential for strategy execution:
the alignment of people behind a strategy. Incentives don’t in themselves
create alignment. You also need a culture of trust and commitment.
99
100. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
10
0
The
Corporate
Strategy
Model
101. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
10
1
102. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
10
2
hXps://hbr.org/2013/03/diagnos<c-‐thinking.html
103. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
Strategy as a job ?
• Not a privilege of top management : strategy, is part of many managers’ ordinary
jobs à the Strategist (book of Cynthia Montgomery) !
• Middle and lower-level managers have to work within their organization's strategy,
meeting the objectives set by the strategy and observing the constraints.
• Managers have to communicate strategy to their teams, and will achieve greater
performance from them the more convincing they are in interpreting it .
• There are also specialist strategists as well, in both private and public sectors. In
house or consultant.
• Strategy consulting has been a growth industry in the last decades.
10
3
104. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
The origin of the word “strategy” ?
Stratosà “Army” + Ageînà “Leading”
– Means the “Art of commanding the army to the fight” & “to coordinate the actions on a
consistent manner”.
• Polemology word !
• In the 50’ it becomes a business word
– 1960 à SWOT model
– 1970 à Limited resources & crisis à Choice of sector (McKinsey, …)
– 1980 à Study of the competition à Michael Porter
– 1990 à Stop the strategic planning à agility + niche
– 2000 à New Economy
10
4
105. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
Some great authors about “Strategy” :
• Sun Tzu
• Xenophon
• Machiavelli
• Carl Von Clausewitz
• Michael Porter
• Henry Mintzberg
10
5
106. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
3 great strategists in the ages ?
Who are they ?
10
6
107. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
What would be their position today ?
10
7
Sun
Tzu
VP
Strategy
Machiavelli
Consultant
in
Strategy
Xenophon
CEO
108. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
Is strategy a science, an art or a daily experience ?
10
8
Strategic
Management
ANALYSING
Thinking
-‐
Science
SEEING
Insight
–
Art
?
DOING
CraG
-‐
Experience
Courtesy
of
Pr
Manuel
Hensmans
109. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
Science ? Risk à Paralysis by analysis ?
10
9
Analysis
paralysis
or
paralysis
of
analysis
is
an
an<-‐paXern,
the
state
of
over-‐analyzing
(or
over-‐thinking)
a
situa<on
so
that
a
decision
or
ac<on
is
never
taken,
in
effect
paralyzing
the
outcome.
A
decision
can
be
treated
as
over-‐
complicated,
with
too
many
detailed
op<ons,
so
that
a
choice
is
never
made,
rather
than
try
something
and
change
if
a
major
problem
arises.
Courtesy
of
Pr
Manuel
Hensmans
110. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
Doing ? Risk à Experience doesn’t lead to commitment
11
0
Courtesy
of
Pr
Manuel
Hensmans
111. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
Seeing ? Risk à too many visions …
11
1
Dangerous
Visions
from
Orion
Books
by
Vincent
Chong
Courtesy
of
Pr
Manuel
Hensmans
112. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
What is this course about ?
• This course is mostly about …
– Science / analysis
• Less about
– Art / Insights
– Craft / practical learning
• You can increase your exposure to craft/insights
– By critically reading newspapers (HBR, MIT Business Review)
– By critically reading cases (HBR, …)
– By doing internships (Strategy Company), going to seminars, ...
11
2
113. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
Recommended readings
• M. Porter, ‘What is strategy?’, Harvard Business
Review, November–December 1996, pp. 61–78;
• F. Fréry, ‘The fundamental dimensions of strategy’, MIT
Sloan Management Review, vol. 48, no. 1 (2006), pp.
71–75.
• “Can you say what you strategy is” by by David J.
Collis and Michael G. Rukstad, , Harvard Business
Review
11
3
114. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
Books to acquire :
1. Exploring Strategy
9th Edition
2. Business Model
Generation
3. The Strategist
11
4
115. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
Other recommended books :
Key Strategy Tools : +80 tools for every
manager to build a winning strategy
Competitive Advantage : Creating and
Sustaining Superior Performance Hardcover
Competitive Strategy : Techniques for
Analyzing
Industries and Competitors
Strategic Transformation : Changing While
Winning Hardcover (Chapter 1, 7 & 8 in
particular) by Manuel Hensmans + …
11
5
116. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
Debate and thinking ?
1. What have you learned in the Peanut Butter Manifesto ?
2. What do you think about the last note of Brad considering the situation of Yahoo!
today ?
3. What could be now your personal definition of “Strategy” ?
4. Which are the elements you could use to analyze the company you have
chosen ?
5. How would you present this company to explain its strategy ?
11
6
117. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
Integrative Case (Strategy Analysis)
At this stage …
1. Do you perceive better the strategy of the chosen
company ?
2. Can you identify its competitive advantage(s) ?
3. Can you identify some major trade-offs the chosen
company has made ?
4. Have you found their vision / mission / value … ?
11
7
118. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
Relevant book section (9th Edition) ?
• Pages 1 to 24
• Read Illustration 1.2 : Strategy Statements
• Take a look on Illustration 1.3 : Strategists
• Read and understand the 1.5 Section with the “Exploring Strategy
Model” as the whole course is based on this model
• Read carefully the Table 1.1 “The Strategy Check-List” as you will
have to use it to describe the strategy of the integrative case you
have chosen
• You don’t have to read the strategy lenses … But take a look on the
summary
11
8
119. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
Potential Exam questions (1) ?
ü Describe and explain the Corporate Strategy Model used in the book.
ü Give your own definition of strategy in general and business strategy in
particular ; justify why this specific definition. Describe in 2 or 3 sentences
max the strategy of the company you have chosen for the integrative
case (don’t forget to indicate the name of the company).
ü Explain the reasons you have a strategy course.
ü What can you say about the perception of the strategy by both the
managers and the staff in most of businesses.
ü What from your point of view is the essence of the strategy ?
11
9
120. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
Potential Exam questions (2) ?
ü What is the “sweet spot” as explained in the HBR Article “Can you explain
what your strategy is ?” ? Can you explain what is the sweet spot of the
company you have chosen for your integrative case ?
ü When assessing the strategy of a company, how can you define the
scope of a company ?
ü Can you explain why “operational effectiveness” can not be called a
“strategy” ?
ü Explain your perception vis-à-vis the “sustainable competitive advantage”
or “sustainable strategic position” Give an example using the integrative
case you have chosen (don’t forget to indicate the name of the company).
12
0
121. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
Potential Exam questions (3) ?
ü Explain why trade-offs are essentials to strategy ; list and briefly describe the types
of “trade-offs” a strategist has to make. Give an example of trade-offs using the
integrative case you have chosen (don’t forget to indicate the name of the
company).
ü Explain the notion of “strategic fit”, list the 3 types of fit. Give an example of
strategic fit using the integrative case you have chosen (don’t forget to indicate the
name of the company).
ü What does Sir Alex Ferguson means when he describes strategy as “... the
purposeful creation of a favorable inequality in a landscape of changing
conditions.” What could be such an “favorable inequality” for the company of the
integrative case you have chosen (don’t forget to indicate the name of the
company).
ü What is the lifetime of a strategic decision and why a manager can’t change the
strategy every year ?
12
1
122. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
Potential Exam questions (4) ?
ü Describe in details what is the “deliberate strategy” and the choices
behind it ?
ü Describe and explain the difference between “deliberate strategy”
and “emergent strategy” and how ; explain the evolution of those
last years ; what would you recommend to a manager nowadays ?
ü Is strategy an art or a science ?
ü Which are the different levels of strategies in a company ? Give
examples using the integrative case you have chosen (don’t forget
to indicate the name of the company)
ü …
12
2
123. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
12
3
124. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
Some videos to see for next session ?
• HBR – The secret origin of Corporate Strategy 9’42 :
https://www.youtube.com/watch?v=DQVf7984YDA
• The 2 choices in Strategy 2’43 :
https://hbr.org/2013/01/the-two-choices-to-make-in-str.html?cm_mmc=npv-_-
YOUTUBE-_-VIDEO_LINK-_-012913
• Michael Porter – Mistakes in strategy – 1’47 :
http://www.youtube.com/watch?v=ibrxIP0H84M
• Strategy in a downturn 13’07 :
http://www.youtube.com/watch?v=mwc073nNl3Q&feature=player_detailpage
• ¨The 5 components of a business strategy 5’54 :
http://www.youtube.com/watch?v=BnNW5VViGJs
• Levels of Strategy 2’05 :
https://www.youtube.com/watch?
v=uhfFoINNEKI&list=PLGRwBJuam6M2VL_0JyMDbsiXPEKefoO08&index=4
12
4
125. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
Some interesting video channels for you ?
• https://www.youtube.com/channel/
UCWo4IA01TXzBeGJJKWHOG9g
• https://www.youtube.com/user/stanfordbusiness
• https://www.youtube.com/user/businessmodeltv
• https://www.youtube.com/channel/
UCc5cYNhQ8oYNdjmXBy7Z-ug
12
5
126. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
Subscribe to some interesting newsletters @bout
strategy ?
• http://blogs.hbr.org
• http://hbr.org/tip
• http://sloanreview.mit.edu
• http://www.strategy-business.com
• http://www.mckinsey.com/insights
12
6
127. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
Many thanks to :
• Pr Manuel HENSMANS (Toulouse Business School), Pr Cynthia
Montgomery (Harvard Business School) for the authorization to
use some of their slides and some results of their research.
• Ken Morse (MIT Sloan), Pr Alfredo HAX (MIT Sloan), Pr Bill
AULET (MIT Sloan), Pr Raj GULATI (HBS) and Pr Marc
BERTONECHE (HBS) for their inspiring sessions and debate.
• Pr Olivier WITMEUR for his constant support and confidence.
• My students for the motivating exchanges of ideas we have in
class
12
7
128. M1 GEST 468 2015-2016 Pr Bruno Wattenbergh C1 – Definition of Strategy
See you next session !
12
8