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Winning Strategy

Winning Strategy. John Viljoen (PhD) 19 October, 2012. Presentation overview. The impact of volatility on strategy Four keys to a winning strategy. Shorter product life cycles. Local, regional, global regulations. Economic / GFC. New or game changing Technologies. Volatility.

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Winning Strategy

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  1. Winning Strategy John Viljoen (PhD) 19 October, 2012

  2. Presentation overview The impact of volatility on strategy Four keys to a winning strategy

  3. Shorter product life cycles Local, regional, global regulations Economic / GFC New or game changing Technologies Volatility Increased employee churn Increased customer churn Changed distribution channels Increased or unexpected Competition Number of volatility factors

  4. Volatility causes reduced business predictability Forecasting errors Contingency planning and scenarios, “what if….?” Reluctance to invest at scale Less product testing /smaller production trials Customer base uncertainty Build brand equity, how do we become “first choice”? Unexpected competitors How can we build barriers to entry?

  5. Volatility affects every aspect of “Strategy” Vision What we aspire to be Values The approach we will take to running our business Purpose What we will do achieve our Vision Goals What we want to achieve – the specific targets Strategies Actions we will take to achieve our Goals

  6. Winning strategies are clear and simple Strategy produces business transformation RUN – ENHANCE – TRANSFORM Big fixes, big innovation, big change 2. Keep strategy simple Strategic plan-on-a-page Simple does not mean “easy” “Sir, I am writing you this long letter because I didn’t have time to write a short one” Sir Winston Churchill

  7. Our Strategic Plan-on-a-Page Strategic Goals Growth Customer satisfaction Quality at feasible cost Skilled employees Strategic Priorities Tasks and accountabilities Partnerships Technical innovation Easiest to work with Distribution channels Strategic KPIs Lower employee turnover Revenue increase Increase in customer satisfaction Quality improvement

  8. Four Keys to a winning strategy

  9. Key #1 to a winning strategy

  10. Efficiency (doing things right) Effectiveness (doing the right things) Managing the present from the future builds effectiveness “There is a propensity in most organisations to do better and better that which should not be done at all” Peter Drucker

  11. Increased “Scope” helps businesses cope with volatility Corporate Strategy What lines of business should we be in? SCOPE Business Strategy In each of these lines of business, how can we be as successful as possible? OPTIMISE

  12. Scope change can also put your winning strategy at risk Ansvar: A specialist insurance business Churches Heritage buildings Museums Private schools Global operations The “general insurance products” decision Home and content Motor cars Income protection

  13. Priorities for scope increase What opportunities lie here? Products EXISTING NEW Markets Market Penetration Product/service development EXISTING NEW Diversification Market development

  14. Volatility requires more “live” testing of strategy No Go Ongoing core business operations • Test / pilot / roll-out • By distribution channel • By region • By product • By service • By technology • Decide “go / no go” Strategy development under volatility Risk filter Go Options for test selected Unexpected “+” or “-” Rapid assessment Traditional strategy development cycle (stability) Select preferred option Exhaustive options & risk analysis Direct transition Scenarios & detailed data analysis PresentFuture

  15. Key #2 to a winning strategy

  16. Challenge conventional wisdom

  17. Why we need to challenge convention We create convention In the face of change We “lock-in” strategies that work for us, through structure, systems and expert staff The business environment of is characterised by constant change Strategists “zero base” their decisions

  18. Convention creates “stuck-in-the-middle” Stuck in the middle (No added value & no low cost) Strong Strategy: Add value Performance Strategy: Cut costs “Gravitypull” Weak Differentiation Strategy Low cost Question: Is your business “stuck in the middle”?

  19. Winning strategy creates “patterns of investments” Differentiation Add product features Build product and business brand profile Heavy customer focus Service support – nothing is too difficult Do whatever it takes to support a price premium Low cost Scalability Process integration Streamlining Reducing input costs Mass distribution Just-in-time Get the quality & features right and then “squeeze” Mutually exclusive “patterns of investment”

  20. Protect your differentiation • Creates value as defined by the customer (revenue impact) • Difficult to copy (barrier to entry by competition) • Sustainable in the longer term (time to generate ROI) Differentiating raw sugar (commodity) Customer service differentiation (Australia) Technical differentiation (Brazil)

  21. 2 “What is it we currently can’t do, but if we could, wouldn’t that be something?” Work on your business not in it 1 Find a way to differentiate, or fail. “I am famous because everyone understands me, Einstein is famous because nobody understands him” Charlie Chaplin 3 “If we weren’t already doing this, would we bother to get in to it now”?

  22. Key #3 to a winning strategy

  23. Strategy development AND AND You are only as strong as your weakest link Strategy Implementation Leadership A Winning Strategy will fail if it is poorly managed

  24. Single point accountability For each manager….. I am accountable for this strategy My part of this strategy is….. I have no role in this strategy My supporting role for this strategy is…. Manager’s Performance Agreement

  25. Balanced strategy implementation plans Defining the future Delivering the future “Hard” levers“Soft” levers Our Vision, Values, Goals & Strategies and funding plan Structure Systems Capabilities Culture • Roles/teams • Authority levels • Business, Functional & Horizontal integration • Performance management • Risk management • People management • IT systems • Reporting • Communication • Values & Behaviours • Leadership • Quality • Professionalism • Teamwork • Staff skills • Flexibility of people resources • Capability gaps • Workforce planning Financial management

  26. Key #4 to a winning strategy

  27. Strategy development AND AND You are only as strong as your weakest link Strategy Implementation Leadership A Winning Strategy will fail if it is poorly managed

  28. Volatility and leadership 1. How many squares are there?

  29. Volatility and leadership 1. How many squares are there? 2. How can we win the next T20 World Cup?

  30. Strategy solves problems that have no solution Complex issues Complicated issues Versus Predicaments Problems Many possible solutions Right/wrong solutions Versus Leadership to inform & implement Leadership to build agreement Versus

  31. “Is sought out for advice on big business issues” “Knows when to make a decision – not too early, not too late” “Is original and value-adding” “Looks for clear, straightforward solutions” Excels when business issues get really complex or difficult” Leadership for a winning strategy in Pernod Ricard

  32. Four Keys to a winning strategy

  33. Thank you.

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