STRM043 - Competitive

Strategy
and Innovation

Session 1
COMPETITIVE STRATEGY
INTRODUCTION:
THE STRATEGY PROCESS
Welcome!

Overview
What is strategy?
Why strategy?

The pros & cons of strategy

The many faces of strategy

The evolution of strategy
The strategy process

What is Strategy?
A much used, if not over-used,
word
Think about how you use the
word strategy in relation to
Your life
Your work

Military origins:
Comes from Greek term strategos
used in military operations and
focused upon how to win battles

What is Strategy?
Research the word strategy on
Google
Develop your own understanding
and definition
Here are some important
definitions:

What is Strategy?
The determination of the long run
goals and objectives of an
enterprise and the adoption of
courses of action and the
allocation of resource necessary
for carrying out these goals

Chandler (1963)

The long term direction of an

organisation

Johnson & Scholes (2011)

A pattern in a stream of decisions

Mintzberg (2007)

What is Strategy?
Objective of strategy
Make a return greater than cost of
capital

Or in other words be
Faster, better, cheaper

than the competition

What is Strategy?

More than a plan

Implies a long term perspective
Involves a process
Dynamic, interactive
Far reaching within the organisation

Departments and Divisions

Staf

Only visible after the event?

What is the significance of this comment

by Mintzbergs?

Distinguishing
features
According to Robert Grant

Strategy vs tactics:
Strategy is the overall analysis and plan for deploying
resources to establish a favorable position.
Tactics are a scheme for a specific initiative

Attributes of strategic decisions:

Important: involve a commitment of resources
Not easily reversible
Combine hard and soft elements
Hard / quantitative side: involves the language of ROI (return on
investment) cost of capital, risk, economics etc
Soft / qualitative side: involves people, history, corporate
culture, motivation, etc

What is Strategy?
This module focuses on the
strategy process in the first of four
sections in this module:

A: Concepts & Tools:

Foundations
B: Contexts & Cases:
Applications
C: Forces & Issues:
Reflections
D: Innovation & Creativity:
Projections
(Workshop)

Why Strategy:
For better and for worse
Chart a course
Create and maintain cohesion

Strategy
sets direction
Wrong direction

Why Strategy:
For better and for worse
Promotes coordination
Reduces disorder

Strategy
focuses effort
No peripheral vision
Groupthink

Why Strategy:
For better and for worse
Captures essential meaning
Creates shared identity

Strategy defines
the organization
Loss of richness
stereotyping

Why Strategy:
For better and for worse
Reduces ambiguity
Explains the world

Strategy provides
consistency
Can reduce creativity
Simplify to the point of distortion

The Faces of Strategy

Calculated towards achieving

Specify future choices
Made in advance of action objectives

The Faces of Strategy

Without preconception
Consistency in behaviour
Driven by actions; not design
(whether or not intended)

The Faces of Strategy

A match between organization

and context
A unique place in the environment

Finding and sustaining

rent creating situations

The Faces of Strategy

Collective concept
A world view

Intensely shared
The character of an organization

The Faces of Strategy

Strategies deliberate and emergent

Mintzbergs Critique of Formal Strategic Planning:

The fallacy of prediction the future is unknown
The fallacy of detachment - impossible to divorce formulation from
implementation
The fallacy of formalization - inhibits flexibility, spontaneity,
intuition and learning.

The Evolution of
Strategy

Corporate Planning `(1950-70s)

Forecasting, diversifying

Competitive strategy (1980-90s)

Industry analysis, portfolio planning

Strategic Management (1990s)

Re-engineering, alliances

Strategic Innovation (2000+)

New technology, CRM, innovation

Crisis Management (2007-2013)

Managing in a recession

2014 onwards??

CSR, social impact, globalisation

In response

Ten Schools of Strategy

1. Design: a process of conception
2. Planning: a formal process
3. Positioning: an analytical process
4. Entrepreneurial: a visionary process
5. Cognitive: a judgmental process
6. Learning: an emergent process
7. Political: a process of negotiation
8. Cultural: a collective process
9. Environmental: a reactive process
10. Configuration: a process of transformation

Evolution of the Ten Schools

Evolution of the Ten Schools

(contd)

Where are we now?

Late 1990s & early 2000s
Quest for Shareholder Value:
Refocusing, outsourcing, delayering, cost cutting
Quest for Competitive Advantage:
Emphasis on resources & capabilities
Flexibility & innovation
Collaborationalliances, networks
Succeeding in dynamic (Schumpeterian) markets
learning to live with disruption
Blue Ocean Strategy:
create own space with no competitors

Where are we heading?

2014+?
Quest for Stakeholder Value:
New goal of long term shareholder value not short term
profit maximisation
Fairer distribution of the rewards of business?
Quest for Competitive Advantage:
New and growing concept of shared value (CSR)
Social media and customer insights
New two way conversation with customers
The VUCA world (Volatile/Uncertain/Complex/Ambiguous)
Implications for
Governance, leadership and management
Organisational structures

Strategy Safari
Core text book
Core text books (both available as ebooks)

Johnson & Scholes (2011), Exploring Strategy, 9th

edition, Pearson for core techniques,
Mintzberg et al (2009) Strategy Safari, Prentice
Hall for thinking about strategy

Due to

Rapid change in the business world

Long run evolution in strategic thinking
Reference book for approaches to strategy

Critically reviews each school of strategy

Excellent read for deep understanding

Complementary Reading
Other good strategy text books

Grant (2010) Contemporary Strategy Analysis, 8th Edition,

Wiley
De Wit & Meyer (2010) Strategy: Process, Content, Context
4th Edition, Cengage
Mintzberg, Lampel etc al (2014) The Strategy
Process, 5th Edition, Pearson (Highly recommended)

Financial Times: www.ft.com

Available free to all NBS students via NILE

The Economist

Weekly review of the news, good strategic coverage of

industries

Key academic articles from leading

thinkers
Case studies

Case Studies:
Key component of the module

Cases give an insight into real life

Usually involve a management
decision
Need reading 2 or 3 times to benefit
Must be read before the class
discussion

Be prepared to discuss

Opportunity to work in sub-groups

Similar to Harvard Business School

Assignments are case based

Group presentation
Individual written case analysis

The Strategy PROCESS

We now start to look at the
basics of strategy and the
strategy process
Companies are assumed to be
seeking competitive advantage:
How to identify and meet customer
needs faster, better, cheaper than
competitors
Traditionally only possible 2 of 3

The Strategy Process

Decisions about
Which industries to be in
How to compete in them

Key concept of FIT between:

Internal resources
External environment

Balance between:
Competing for the present
Preparing for the future

The Basics of Strategy:

Fit between the Organisation and its
Environment

THE
THEFIRM
FIRM
Goals
Goals&&
Values
Values

THE
THE
INDUSTRY
INDUSTRY
ENVIRONMENT
ENVIRONMENT

Resources
Resources&&
Capabilities
Capabilities

Customer
Customer
needs
needs

Structure
Structure&&
Systems
Systems

STRATEGY
STRATEGY

Competitor
Competitor
actions
actions
Suppliers
Suppliers- source
sourceof
ofkey
key
resources
resources

What Makes a Successful

Strategy?
Strategic Success

EFFECTIVE IMPLEMENTATION
Long-term,
simple and
agreed
objectives

Profound
understanding of the
competitive
environment

Objective
appraisal of
resources

The Strategy Process

Where are we now?
Where do we want to get to?
How do we get there?
with some reflection on

Fit with

The business environment and customer needs?

Our mission, history, culture and staf?
Our resources and risk profile?

The Strategy Process

Internal Analysis
External Analysis
SWOT Analysis
Second stage synthesis tool!

Generate Strategic Options

Evaluate Options
Implementation Plan
Monitor and Reflect on results

Strategy the hard side

SWOT
Analysis
2nd stage tool

Adapted from: http://management-class.co.uk/management-class.co.uk/courseware/learners/strat_process.htm

McKinseys 7 S
Framework
Hard & soft elements
combined

Light blue hard elements. Dark blue soft elements

A useful over-arching framework. We will return to this later in the module

The Role of Strategic

Analysis
Strategic analysis

improves decision processes

assists us to identify and understand the main issues

but we need to explore the drivers of future changes

helps us to manage complexity

but doesnt give answers

but we must recognise that our strategy concepts & models

are simplifications of reality; they help us ask the right
questions, thereafter critical thinking and judgment are key

enhances flexibility and innovation

by supporting learning

Case study:
ROBIN HOOD
Please read this very short case at least 3 times once to
orientate yourself, second time for detail and third for
deeper insights.
Despite its brevity, this case study is very rich with many
layers, and can be looked at from a variety of perspectives
eg HR, marketing etc. Robin needs help to be able to see his
organisation from a holistic point of view, and to assess his
goals and objectives.
Task
Your tutor is Robin Hood and you are a consultant brought in
to advise Robin on his future strategy. Working in groups of
3-4 you are asked to
Undertake a strategic analysis of the present position of
Robin Hood
Identify his strategic options
Make clear recommendations as to which strategy he should
adopt and why

Readings & references

Core text books
Mintzberg et al Strategy Safari, Ch 1
Johnson & Scholes, Exploring Strategy, Ch
1
Key academic article (available on the web)
Porter, M.E. (1996) What is Strategy. HBR,
Nov-Dec