Strategic Thinking Prof. Abhishek Nirjar Strategic Management Group

1. Strategic Thinking Prof. Abhishek Nirjar Strategic Management Group Indian Institute of Management, Lucknow

2. Content for the session • Strategy • Strategic Mindset • Tools for developing Strategic Thoughts

3. Strategy • The aim of strategy is to choose a unique strategic position for the Organisation • 2. Generate Options • Strategic choice/s • Combine to create a reinforcing assortment • The assortment must achieve fit with the firm’s environment without sacrificing flexibility • 4. The assortment of activities is the firm’s strategy. It needs organizational support to function properly

4. Customer group Customer function Alternate Technologies Unique Position • Who should I target as my customers? • What products and services should I be offering? • How should I do all this in an efficient manner?

5. In our context….. • Where is the school now? • Where does the school want to be in 3, 5, 10, 20 years? • How are we going to get there?

6. A Reinforcing Assortment • After the choice resources are allocated and activities identified • Fit and Flexibility has to be balanced: With pros and cons • an Example

7. Choice of Customers Manufacturing Choice of Products Inventory Distribution Creating Internal and External Fits The Firm’s Strategy Internal Organisational Environment Culture Structure Incentives The Firm’s Environment People

8. No Strategy Remains Unique For Ever Playing the Game Differently Playing the Game Better Operational Excellence: Focus on existing Position Restructuring Refocusing Process Re-engineering Quality Programmes Empowering Employees Strategic Innovation: New or unexpected customer segments to focus on New Customer Needs New ways of producing, delivering Selling and distributing your products/ Services

9. What is the purpose of a business firm? The strategic purpose of a firm is to create value that meets the need of its stakeholders. Who are the stakeholders? All parties that have an interest (or a stake) in the success or performance of the firm are its stakeholders. All the parties that stand to benefit from a firm’s successful operation, including owners, suppliers, customers, employees, local communities, trade associations, and society at large.

10. Focal Point Of Strategy :Competitive Advantage • Competitive Advantage can be defined as the • ability of a firm to outperform its industry • to earn higher rates of profits than the industry norm. • Create more value for the customer than the competitor does • Customers want goods and services which are • better, (Differentiation) • cheaper (Cost Leadership) • faster (Quick response)

11. Intended Strategy Realized Strategy EmergentStrategy Unrealized Strategy Forms Of Strategy DeliberateStrategy

12. Sustaining Competitive Advantage • Creating superior customer value • Creating superior value for the shareholders • Disciplined and passionate execution of strategy • The ability to innovate strategically.

13. Managerial Mindset • Reactive, goals arise out of necessity not dreams • See themselves as conservators and regulators of existing order • Involved in situational and contextual characteristics of day-to day activities • Engage in and support short term least cost behaviour to enhance financial performance figures

14. Strategic Focus adopts • Takes a long term focus • Requires coordination of complex, multi-pronged initiatives • Aims at order-of magnitude benefits, rather than incremental gains • Assumes that risk is inherent, and is (usually) willing to spend money to manage risk

15. Strategic Mindset • Combine both strategic and operating matters • Formulate and implement strategies for both immediate and long term goals that ensure long-term survival • Use linear and non-linear thinking • Believe in strategic choice

16. Strategic Thinking Purpose is to discover novel, imaginative strategies which can re-write the rules of the competitive game. Envision potential futures significantly different from the present Creative, synthetic and divergent Strategic Planning Purpose is to operationalise the strategies developed through strategic thinking and to support the strategic thinking process Analytical, Convergent and Conventional

17. Effective Strategic Thinking contributes to…. • Determining strategic direction • Exploiting and maintaining competencies • Developing human capital • Sustaining an effective organizational culture • Emphasizing ethical practices • Establishing balanced organizational control

18. Systems perspective Intent Focused Strategic Thinking Intelligent opportunism Thinking in time Hypothesis driven Model of Strategic Thinking (Liedtka, ’98)Elements of strategic thinking

19. Systems Perspective: • A strategic mindset has a mental model of the complete end to end system of value creation and the interdependencies within. • New insights conflict with deeply held internal images of ‘how the world works’ • Clear understanding of internal and external factors- business ecosystem essential

20. Intent Focused • Long term market or competitive position a firm hopes to build over a decade or so. • conveys a sense of direction

21. Intelligent opportunism • Adaptability • Thinking in Time • the past has predictive value • present is the departure from the past • Continuous comparison, thoughtful of prospective change • Use both an intuition memory and its broad historical context to think well about creating the future • Hypothesis driven • Strategic thinking has to be creative and critical in nature • Use scientific methods • What ifs… and the …if… then....

22. How can we build a Strategic Mindset? • Realize the importance of future based thinking • How to improve the value of your company by thinking in time • Understanding the forces driving change • How can future based thinking benefit my organization • Initiate a thought process among all

23. Understanding the cycle time of Organizations • Do companies have life cycles? • Are all companies fated to die? • How can companies beat the odds? • What mental models do managers have? Can we change them?

24. Thank you