Identifying Opportunities And Threats (pest Framework)

Envisioning Strategy Business Models Visualized (created for and by students)

© Sunil Mehrotra

What you will learn in this course: •

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Envisioning Strategy – Definition – Framework – Visual Models External Analysis – PEST – PEST Impact Analysis Industry and Competitive Analysis – Industry Structure – Evolution of Industries – Industry Supply Chain – Potential Industry Earnings – Porter’s 5 Forces Analysis – Competitive Intensity – Strategies for minimizing competitive forces – Perceptual Map – Barriers to Entry/Incumbency advantages – DSIR effect Company Resources and Capabilities – ARC Analysis/HR – SWOT Analysis – Value Creating Processes/Core Competencies – Strategic Game Board – Balanced Scorecard – Change Management

© Sunil Mehrotra

How you will do it 

Visualize

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Think Clearly

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Understand Deeply

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Communicate Effectively

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Share the Vision

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Act Coherently www.idiagram.com

Envisioning Strategy: Visual Models 3 1

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www.idiagram.com

Visualize

Think Clearly

Thinking clearly stretches your mind

"A mind once stretched by new thoughts can never regain its original shape." -Albert Einstein

Why Visualization works: Factoid Total Bandwidth (bits/second)

Eyes Ears Skin Taste Smell

10,000,000 100,000 1,000,000 1,000 100,000

Conscious Bandwidth (bits/second)

40 30 5 1 1

http://www.informaworld.com/smpp/section?content=a743900378&fulltext=7 13240928

Dan Roam on Visual Thinking http://www.thebackofthenapkin.com /

Visualization helps to think clearly and communicate effectively: examples http://awesome.goodmagazine.com/goodsheet/goodsheet004gas.html Where does your money go when you buy a gallon of gas? http://awesome.goodmagazine.com/goodsheet/goodsheet006economy.html It's the Economy Stupid! http://nytimes.com/interactive/2008/07/20/business/20debt-trap.html Debt trap.

http://blogs.wsj.com/health/files/2008/04/waystogo.jpg Odds of Dying http://www.susannahertrich.com/img/RC_screen.jpg Actual versus Perceived threats http://awesome.goodmagazine.com/transparency/007/trans007studentdebt.html Student debt http://www.nytimes.com/interactive/2008/05/03/business/20080403_SPENDING_GRAPHIC.html All of inflations little parts

Business Ecosystem A Visual Model The environment Governments Standards bodies New entrants Competitors Supplier’ Supplier’s suppliers

Suppliers

Organisation

Customers

Customer’ Customer’s customers

Substitutes

Stakeholders International law New Paradigm Consulting

Business Ecosystem: A more granular view

Mbam619 framework models

Strategic Management • Deals with – How to grow the business – How to satisfy customers – How to compete with rivals – How to respond to changing environment – How to manage each functional piece of the business – How to build organizational capabilities and align organization to achieve desired goals – How to achieve strategic and financial objectives

Strategic Planning • Planning is not about predicting the future • Planning is not about writing a detailed road map into the future • Planning is not about a few people writing a vision statement & then getting ‘buy-in’ from everyone else

Mbam619 framework models

Strategic Planning

• Planning is about learning • Planning is about increasing the possibilities for the organisation • Planning is about discovering how fit the organisation is for its environment • Planning is about discovering and telling compelling stories about the future

Strategic Management in a nutshell ! What is the vision?

Strategic Management • Is the process by which an organization –Establishes its goals and objectives both short and longterm –Formulates plans and charts a course of action for meeting these goals and objectives in the desired time-frame. –Implements the actions –And analyzes progress and result 

Behind every strategy should be solid financial reasoning

Mission, Vision and Values • Vision articulates a view of a realistic, credible, attractive future for the organization…it is the allimportant bridge from the present to the future of the organization. • Mission describes the purpose of the organization. It represents the present. • Values reflect the organization’s culture and norms of corporate behavior.

Goal, Scope and Objectives • Goal articulates a desired outcome for the business over a specific time period • Scope describes the focus of the business– geography, product lines and customer segments. • Objectives are the measurable and tangible results to be achieved over a specified time period

Source: "Thinking Strategically", McKinsey Quarterly, 2000

Understanding Strategic Management is like pealing an onion

Strategic Planning Framework External Factors

Analyzing the Environment

Analyzing the Industry

Internal Factors

Analyzing the Competition

Analyzing the firm’s Strengths & Weaknesses

Firm’s Resources & Capabilities

Market Opportunities

Aligning Market Opportunities to firm’s resources and capabilities

•What strategic options does the firm realistically have? •What is the best strategy for maximizing Shareholder value?

Analyzing the firm’s Architecture, Routines & Culture

Shareholder Returns

The right of any corporation to exist is not perpetual but has to be continuously earned. —Robert Simons

Strategy: Whose responsibility is it? • Ultimately the CEO/leader “owns” the company's strategy and is responsible for executing against the strategy. • Leadership styles vary • Commanding • Logical • Inspirational • supportive • Nature of strategic initiative may require a particular style for success

Leadership matters, why?

Make choices/ decisions How?

Leadership role Lead people to implement

Leadership style http://www.nytimes.com/2008/12/06/business/06motors.html?_r =1&pagewanted=2&ref=business

Performance

Outcome

Transformational

Logical ●

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Uses reasoning Expects commitment Systems-oriented Looks for new directions Incremental improvements Structured problem solving

N a rrow a n d S h ortR a n g e S p ec if ic

Commander ●

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Intuitive Demands loyalty Expects results Takes charge Insists on compliance Finds workable solutions

Leadership Style

B roa d a n d fu tu re o rien ted

scope

Imaginative ●

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Engenders trust Has charisma Creates future visions Envisions new opportunities Empowers others Very creative Heuristic solutions Supportive Is considerate Peer approbation Cooperative environment Relates well with others Tries for mutual agreement

http://gbr.pepperdine.edu/084/leadership.html

Leadership Patterns •

Pattern 1: Ideation. Ideation is a combination of the logical and imaginative basic styles. This pattern hinges on visualizing or imagining a future that is both achievable and practical and is helpful in planning an organization’s strategic future. Ideation is the hallmark of successful CEOs, top executives, and those who are determined to achieve a new vision for their organization. Leaders in this category use logic and detailed analysis as well as vision and imagery to direct the organization.

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Pattern 2: Stewardship: A combination of the logical and the commander basic styles, it is necessary in areas of financial or risk management within organizations. Leaders who utilize this style focus on resources—conserving them, allocating them wisely, and acquiring sufficient amounts to carry out the mission of the organization. Effective executives with this pattern are financial planners, managerial accounting analysts, and managers of detail and logistics.

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Pattern 3: Coordination. A combination of the logical, commander, and imaginative basic styles, this triangular pattern is more common in smaller firms and in the second- and third-tier levels of larger organizations. The logical/commander components of this style tend to be almost equal, with an imaginative backup. In small entrepreneurial firms, the imaginative style may be the most dominant, with the commander style a strong second and the logical style a weak backup. This coordination leadership pattern represents the popular, "traditional" uppermanagement pattern from the study of 294 male managers that established the "norm" for Decision Systems Analysis (DSI) and has held constant for the LSI as well.

http://gbr.pepperdine.edu/084/leadership.html

Leadership Patterns •

Pattern 4: Exploration. This combination of imaginative and commander styles is typical of leaders in entrepreneurial start-ups, especially female entrepreneurs. The imaginative style tends to dominate and the "follow-the-star" method of reaching a desired goal trumps everything.

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Pattern 5: Customer-Centric. This pattern represents a combination of the supportive and commander basic styles and is dominant in strong marketing- and sales-oriented organizations. Supportive behavior comes first because empathy for customer needs is more important than the drive to convince or persuade. Empathy means understanding and wanting what is best for the customer because satisfying the customer is also in the best interests of the firm. Nonetheless, leaders must also utilize the commander style to drive results.

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Pattern 6: Employee-Centric: A combination of the supportive and imaginative basic styles, this pattern is necessary for understanding and supporting the needs of employees, associates, and customers, as well as having the imagination to inspire through external and internal public relations, advertising, promotion, and employee empowerment programs. It is essential for human resource leaders.

http://gbr.pepperdine.edu/084/leadership.htm l

Leadership traits

Pay for performance?

http://www.nytimes.com/imagepages/2006/04/09/business/09value.graphic.html Pay for Performance of CEOs? Sometimes!

Nappies—Key Concepts The power of visual thinking?

What is Strategic Management? -strategic planning framework

What is the role of the CEO/Leader? -Leadership styles

Mnemonic 1