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Shareholder and stakeholder requirements

PowerPoint Diagram Pack

Strategy Development

Guidelines degrees of freedom Marketattractiveness (relative to objective!) Potential Market positions and Value propositions

Selection and targets of KPIs1 Competencies required to deliver value proposition


Define the

Set the

Objectives

A detailed guide to Strategy Development, covering strategy concepts from military strategists (e.g. Sun Tzus Art of War) to modern day strategy development thought leaders (Mintzberg and Bower). Breaks down a 3-phase approach to Strategy Development, including hierarchical challenges, activities, and deliverables.
Competitors ambition, position and capabilities

Battlefields

Define the

Strategic Intent

Core Competencies

Companys strengths and weaknesses

Protectability and ubiquity of competencies

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Contents
Strategy Overview Lessons from Military Strategists Strategy Development Fundamentals - Approaches to Strategy Development - Evolution - Thinking Today Elements of Strategy Development - Strategic Challenges - Strategic Intent - Execution Design - Initiatives Strategy Development Approach - Strategy Hierarchies and Related Challenges - Activities & Deliverables learnppt.com
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Remember, the end goal of your strategy is to winbut there is more to strategy than just winning
Primary Objectives of Strategy

OBJECTIVE

TRANSLATION

1 Strategy is about value creation

value proposition

Strategy is about winning 2 Strategy 3 Strategy is about selectivity and focus

competitive advantage

resource allocation

Strategy is THIS IS A PARTIAL PREVIEW about speed and flexibility business transformation 4

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Military strategists have been at the forefront of strategy development, shaping strategic thinking1 of modern business organizations
Lessons from Military Strategists Overview
MILITARY STRATEGIST MAJOR IDEAS STRATEGY

Sun Tzu2 (~400 B.C.) Antoine-Henri Jomini3 (Rationalist) (1779 1869) Carl von Clausewitz4 (Romantic) (1780 1831) John Boyd5 (1927 1997)

Winning without fighting is the acme of skill Know and attack the enemys strategy

Indirect strategies

Mobility and superiority: Resources have to be mobile to attack the enemys major strongholds with superior forces successively and alternatively

Strategic focus

Primacy of the offensive [Jena 1806]: focus forces to decide a war on the main battlefield Supremacy of the defensive [Moskau 1812], paradox of offensive strategies [Waterloo 1815]: not only are obstacles annihilated but the [offensive] machine itself Decision cycle IS A PARTIAL others perceptions by more effective THIS dominance manage PREVIEW observing, orienting, deciding and acting, emphasize implicit over explicit Fast transition can preview between operational states, disrupt or incapacitate the full PowerPoint document and adversarys ability to cope with change

Strategic paradox, adaptive strategies Strategy as acting and thinking, indirect strategies

You download it at http://learnppt.com/powerpoint/ 1:Strategy from a military perspective usually does not include the process and definition of (political) objectives but the way to achieve those objectives

2: Sun Tzu, the art of war, translated and with an introduction by Samuel B. Griffith; Oxford University Press, 1963 3: Strategisches Denken; Prof. Dr. Albert Stahel 4: Clausewitz und Napoleon, Jena, Moskau, Waterloo; Andreas Herberg-Rothe; Internationales Clausewitz-Zentrum, Fhrungsakademie der Bundeswehr 5: Colonel Peter Faber, USAF [John Boyd is considered one of the most important military strategists for the U.S.A. until recently]; based on his ideas recent thinking changes towards Swarm tactics, Network Centric Warfare, etc.

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Sun Tzus concept of five fundamental factors in military strategy does significantly incorporate elements of todays business strategy concepts
Lessons from Military Strategists Sun Tzu, The Art of War (1 of 2)
Sun Tzus five fundamental factors in military strategy1 could translate into terms of business strategy as

(Moral influence) the right way of a government (benevolent, just and righteous)

following the right purpose and objective balancing the interest of all stakeholders

(Heaven/ weather) interaction, effects of natural forces (winters cold/ summers heat)

exogenous forces/ changes in the environment to be considered (PEST, market trends, etc.)

(Terrain) geographical structures, prerequisites; chances/risks provided by battlefield (Command) generals wisdom, sincerity, benevolence, courage and THIS strictness

markets, industry structures, market positions (value propositions) and competitive forces

top management IS A PARTIAL PREVIEW leadership qualities

You can preview the (Law, method) doctrine, i.e.: organization,full PowerPoint document and organizational principles, control, assignment of officers, provision of download it at http://learnppt.com/powerpoint/ management and resource allocation process principle items used by the army
1: Sun Tzu: The art of war, translated and with an introduction by Samuel B. Griffith; Oxford University Press, 1963

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In reality, you will find varying approaches towards strategy development, depending on the complexity of the strategic challenge
Approaches to Strategic Challenge
Easy NATURE OF STRATEGIC CHALLENGE Complex1

Thinking First

Seeing First

Acting First

Define problem Diagnose Design options Decide

THIS

Prepare Trial and error Incubate Get enlightenment ISVerify A PARTIAL PREVIEW

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1: Complexity being defined as a function of the number of influencing variables and the velocity of their change

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Since the 50s, the focus of strategic development in the corporate world has evolved through five distinct phases
Strategy Development Evolution
Effectiveness of strategy

Phase 5 Phase 4 Phase 3

Phase 2 Phase 1 Financial Planning 50s Key themes Meet the budget Long-term planning Strategic Planning Strategy renewal Strategic Management

60s Forecast the future

70s Think strategically to beat competition Alternative

80s Strategy as positioning

90s - now Integrate strategic planning and implementation

Key concepts

Financial control, budget planning

Key people

Kenneth Andrew, John MacLean, Edith Penrose

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Kenneth Andrew, Igor Ansoff, BCG, Alfred Chandler BCG Michael E. Porter, Henry Mintzberg

Growth planning, THIS IS resource allocation, SWOT, Ansoff Matrix

Core competencies, strategy plananalysis, strategy, Porter 5 ning & Execution; BCG-Matrix Forces, Value the full PowerPoint document Balanced Scoreand Chain card

A PARTIAL PREVIEW strategies, Portfolio ses, market-based

Strategic proces-

Gary Hamel, C.K. Prahalad, Henry Mintzberg, Bower & Gilbert


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Today, there are two primary schools of thought Mintzbergs configurational school and Bowers RAP-based strategy
Strategy Development Thinking Today
MINTZBERG: CONFIGURATIONAL SCHOOL BOWER: RAP SCHOOL

Organizational / Bottoms-up Driven Strategy Development

Organizational configuration: Strategic management to sustain stability rise of a particular set of strategies organization engages in behaviours based on adoption to contexts (relative) stability of an organizations configuration

Bottom up strategy development: Crafting of strategy as real time iterative process Context dependent, evolving decision making in an organization Uncertainty about decisions strategic consequences Structure of resource allocation shapes strategy

Intent / Top-down Driven Strategy Development

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Transformation: Top down intervention: strategic management as ability to Centralized strategic leadership recognize need for and manage Concentrated strategic decisions at transformation top THIS IS A PARTIAL PREVIEW Quantum leap to another Driven by revised strategic intent configuration formulated at the candisruptive processfull PowerPoint document and top preview the Constraint strategy-making process

Note:

RAP = Resource Allocation Process


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Bowers concept puts the mechanisms of the strategic planning and budgeting process at the heart of strategy development
Strategy Development Resource Allocation Process
RAP-FRAMEWORK FOR STRATEGY DEVELOPMENT1 EXPLANATION

Market context

Capital market context Resource allocation

Strategic intent:
perceived and communicated official strategy

Organizational context: Strategic intent Organizational context


Governance and organizational structure (power system) Performance measures and rewards Managers beliefs and cognitive frames

bottom-up strategy planning and budgeting

Market context:
Demands of existing customers (major sources of revenue) Technological development

Definition Projects and Initiatives

Selection Operating System

Capital market context:

Realized strategy You can preview

THIS IS A PARTIALResource allocation/ Strategy planning and PREVIEW


budgeting:

Demands and influence of capital providers

the full PowerPoint document and and selection of bottom-up driven identification business opportunities download it at http://learnppt.com/powerpoint/

1: based on Bower, J.L.; Gilbert, C.G.: From resource allocation to strategy; OXFORD university press, 2005

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However, occasionally top-down intervention is required


Strategy Development Top-down Opportunities
BOTTOM-UP BIAS IMPLICATION TOP-DOWN INTERVENTION OPPORTUNITIES

Organizational bias: strengthen existing capabilities reward single BUs for shortterm results conservative and risk averse Market bias: fit existing customers fit established view on technology Capital market bias:

Organization will not promote and fund initiatives that: are of high uncertainty are alien to a companys contexts require high commitment with long-term pay-offs are dysfunctional regarding existing power system

1. Disruptive innovations 2. Converging markets 3. Turbulent new and/ or international markets 4. Disinvestment opportunities

favour expected, predictable behaviour provide short term results THIS

IS A PARTIAL PREVIEW

You can preview the full PowerPoint document and download it intervention may also be derived from scanning the budgeting Signals for the need of top-down at http://learnppt.com/powerpoint/
process for proposals with pending decisions or high commitment proposals.

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Based on Mintzberg and Bowers insights, we derive three different types of strategic challenges for our clients
Strategic Challenges
STRATEGY DEVELOPMENT CHALLENGES

1. Design top down intervention driven by revised strategic intent 3. Ambiguity, clarify nature of challenge and approach to it 2. Align execution context to materialize intent into realized strategyTHIS

Framing the type of the strategic challenge one of the most critical tasks in strategy development Prerequisite to define the strategy development approach

IS A PARTIAL PREVIEW

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Defining a strategic intent means to set objectives, define relevant battlefields, and define the required core competences
Strategic Intent
CONSTITUTIVE ELEMENTS OF STRATEGIC INTENT KEY QUESTIONS

Set the

Objectives
Set the

Purpose, mission and priorities of the company?

Objectives Battlefields relevant to achieve objectives? Critical success factors to achieve victory on these battlefields?

Battlefields

Define the

Intent

Core Competencies

Define the

Define the

Battlefields

THIS IS A

Competencies and resources needed to fulfil CSFs? Core Sources for sustainability of Competencies PARTIAL PREVIEW victory?
Define the

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What is the strategic intent the company should follow?

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Defining a strategic intent means analyzing and defining each element carefully and finding the best possible combination of all elements
Elements of Strategic Intent

Guidelines degrees of freedom Marketattractiveness (relative to objective!) Potential Market positions and Value propositions

Shareholder and stakeholder requirements

Selection and targets of KPIs1 Competencies required to deliver value proposition


Define the

Set the

Objectives

Battlefields

Define the

Intent

Core Competencies

Companys strengths and weaknesses

THIS IS A PARTIAL PREVIEW Protectability Competitors ambition, posiand ubiquity of tion can preview the full PowerPoint document and and competencies You capabilities download it at http://learnppt.com/powerpoint/
1: KPI = Key performance indicators

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The first step is to understand the nature and context of the strategic challenge
Strategy Hierarchies and Related Challenges

Strategic Intent Corporate

Ambiguity

Execution Design

Corporate Corporate

Set the

Objectives
Define the

Battlefields

Define the

Intent Ambiguity

Core Competencies

Division/ Business Unit

Business Business A A

Business Business B B

Business Business

Strategic initiatives

Manage

Execution Strategy Planning & budgeting


Shape

Organizational context

Design

Functional Level

HR HR

Fin Fin

Mktg Mktg

R&D/ R&D/ Mfg. Mfg.

IT IT

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Each hierarchical level has specific strategic challenges in defining a strategic intent
Strategy Hierarchies and Related Challenges Strategic Intent
TYPICAL STRATEGIC CHALLENGES

1 Fit and balance requirements of capital markets and


Strategic Intent Ambiguity Execution Design

other stakeholders Business portfolio management and decisions

1 2 Create value in corporate portfolio, match corporate 2


requirements and market requirements Competitive strategy, market positioning and USP generation Product/market strategies, Channel Strategies

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Corporate
Division/ Business Unit

Functional Level

3 Proof strategic relevance

THIS IS A PARTIAL PREVIEWof sustainable competitive Provide sources


advantages You can preview the full PowerPoint document and download it at http://learnppt.com/powerpoint/

Contribute to corporate/BU strategy

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A strategy development project has three phases


Strategy Development Approach Overview

Set strategic guidelines

3
Define strategic intent Execution Design

Objectives Battlefields Core Competencies

Intent

Strategic Initiatives

Execution

Organizational context

Strategy THIS IS A PARTIAL PREVIEW

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Significance of strategy Significance of execution design

Planning & budgeting

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In the initial phase, all levels are of the organization are involved, but as we progress, we drill down to a specific Business Unit
Strategy Development Approach Hierarchical Involvement Breakdown

1
Corporate

Set strategic guidelines

3
Execution Design

Define strategic intent

Kick off

1st WS

2nd WS

Business Unit Kick off 1st WS 2nd WS Final strategy & multilevel commitment

Business Unit/ Functions

THIS IS A PARTIAL PREVIEW You can preview the full PowerPoint document and download it at http://learnppt.com/powerpoint/
Working session Working session Options
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END OF PARTIAL PREVIEW You can preview the full PowerPoint document and download it at http://learnppt.com/powerpoint/

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