BN 926 Strategy and Management of Change

1. BN 926 Strategy and Management of Change What Is Strategy and what are the future challenges to its successful management? Professor Julian Lowe

3. Re – introduce the concept of strategy • How does strategy work in successful organizations? • Assess strategic tensions and resolution of dilemmas in strategy • What is strategy and what it is not? • Does strategy matter and how do we know? • Key challenge to effective strategy and its management in the 21st Century Aims of Session

4. The Impact of Strategy • $1 in Coca Cola in 1919 now worth $200,000 • $1 in a portfolio of Forbes in 1919 now worth $4100 • Why do some firms do spectacularly well, whilst others fail or achieve only modest growth?

5. The Impact of Strategy • Take any three organizations of you think are successful. • What is it that they do right? • Is this strategy?

6. A history of strategy 5. Strategy as organisation, interpretation, chaos Hypercompetition/moving on 4. Strategies for stretch Create the future 3. Planning for fit Think strategically Dynamic analysis Static analysis 2. Forecast-Based Planning Predict the future • Financial Planning • Meet annual budget

7. Strategy as the Resolution of Strategic Tension

8. Mission Vision and Strategy Mission This is what we do and how we relate to stakeholders Vision These are our aspirations and what we hope to become Strategy This is how we will achieve our goals, more towards our vision and fulfill our mission

9. Seeing Strategy From Different Perspectives Processes Content Context

10. Images of strategy Stephen Cummings and David Wilson • Strategy and ethos • Strategy as organizing • Strategy as intention and anticipation • Strategy as orchestrating knowledge • Strategy as data plus sense-making • Strategy as creativity • Strategy as process, power and change • Strategy as animation and orientation

11. Plan • Position • Pattern • Perspective • Ploy Mintzberg’s 5 Ps

12. Portfolio management v. positioning • Synergy and structure v. SBU performance • Setting organisational parameters v. competitive strategy • Scope of corporation v. scope of SBU Corporate V. Competitive

13. 30% 25% 20% 15% 10% 5% 0% 27.5% 22.4% 20.5% 10.7% Eli Lilly Arnold Industries Industry average Industry or enterprise?

14. Porters Critique Too Many Firms Pursue Best Practice and Seek Operational Effectiveness Through Benchmarking, TQM, JIT Etc. But This Is Not Strategy. Strategy Is About Being Different, Not Being ‘As Good As’.

15. The Failure to Choose • Flawed Strategic Thinking • Best practice mentality is pervasive • Industry conventional wisdom homogenizes competition • ‘Customer focus’ is misinterpreted to mean serving all customer needs • Managers believe that tradeoffs no longer exist • Making tradeoffs is perceived as organisationally risky (no choices v. bad choice) • Leaders are reluctant to disappoint valued managers or employees by setting limits • .

16. Operational Effectiveness • Strategic Positioning • Strategy is about trade-offs, choosing what not to do as well as what to do • Strategy is fit • Strategy is about continuity over time • Strategy in the past and the future

17. … … Beyond a static view

18. Strategy, was … is Long-term = Distant return Ambition = Risk-taking Commitment = Big bucks The new frame we are suggesting here is different: Long-term = A point of view about industry evolution and how to shape it Ambition = A stretching aspiration that is derisked through the tools of resource leverage Commitment = An intellectual and emotional commitment that ensures consistency and constancy

19. Paradigm Representative authors addressing strategic management questions Nature of rents Fundamental units of analysis Short-run capacity for strategic reorientation Role of industrial structure Focal concern (1)Attenuating competitive forces Porter (1980) Chamberlinean Industries, Firms, Products High Exogenous Structural conditions and competitor positioning (2) Strategic conflict Ghemawat (1986) Chamberlinean Firms, Products Often infinite Endogenous Strategic interactions (3) Resource-based perspectives Wernerfelt (1984) Ricardian Resources Low Endogenous Asset fungibility (4) Dynamic capabilities perspective Dosi, Teece, and Winter (1989) Prahalad and Hamel (1990) Schumpeterian Processes, Positions, Paths Low Endogenous Asset accumulation, replicability and inimitability Paradigms of Strategy(Teece, Pisano and Schuen)

20. nbnbnbn Markides’ critique • Strategy must decide on a few parameters • Which customers and which not • What products and what not • How will it be done ie which activities and which not • Who comes up with the ideas? • Everyone! • Utilise ideas throughout the organisation • Get variety in teams, institutionalise a culture of innovation • Who decides? • Strategy is a mosaic of overlapping systems and activities – synergy • Achieve fit without losing flexibility • Strategy needs to be supported by an appropriate organisational • environment • No strategy lasts forever

23. Why has GE been so successful? • How would you describe strategy at the corporate and competitive level in GE? • What role did Jack Welch play? • Assess Jeffrey Immelt’s leadership since 2001 • What contrasts do you perceive between their strategy and leadership styles? GE Case