Corporate Strategic Management Notes October 6, 2010

STAGE 1: Developing the Strategy
Leadership Role: CEO must drive the change agenda to reinforce the mission, vision and values.

Mission,Vision, Values
What business are we in and why? Objective: Barriers: Deliverables: y y y y Clear mission Core Values Quantifiable vision Strategic change agenda (why we exist) (our attitudes, behaviors, character) how the enterprise wants to be perceived by the world (stretch goal, definition of niche, time horizon) (compares current status of several organization structures, capabilities and processes with what they need to be in two to four years) (comprehensive picture of enabling factors to achieve the vision, including core value proposition, key processes, and intangible assets of people and technology) o Learning/Growing o Processes o Site Users o Clients o Financials Affirm high-level guidelines about organizational purpose and conduct Vision is not frequently described in terms not conducive to execution.

y

Enhanced vision

Strategic Analysis
What are the key issues? Objective: Identify through structured analysis, the events, forces, and experiences that impact and modify the strategy. Analysis is frequently focused on outcomes and not on the drivers of strategy.

Barriers: Deliverables: y

Environmental scan (PESTEL) o External Environment  PESTEL (political, economic, social, technological, environmental, legal) 1

Legal factors include discrimination law. and political stability y Economic trends. Identify what we are going to do better than our competitors for a sustainable competitive advantage. Process. career attitudes and emphasis on safety. Strategy of Record analysis o Progress of existing strategy Strategic issues y Strategy Formulation View in both strategic and operational approaches 2 . innovation. market share. technology incentives and the rate of technological change.  Competitive Assessment evaluate competitors on 2x2 matrix along competitive dimensions (product scope. tariffs. industry rivals). interest rates. y Environmental trends -Environmental factors include ecological and environmental aspects such as weather. y Technological trends. superimpose against KPIs (sales. age distribution.Technological factors include technological aspects such as R&D activity.  Porter s Five Forces (buyer bargaining power. operations. Competitive scan (SWOT) o Can be balanced against the balanced scorecard categories of: Growth. environmental law. o Internal Environment key processes.Social factors include the cultural aspects and include health consciousness. y Social trends . employment law. Specifically.  Activity-based Cost Models identifies processes and costs compared to competitors. trade restrictions. which may especially affect industries such as tourism. and health and safety law. consumer law. antitrust law. technological capabilities. and climate change. assets. availability of substitutes. farming. climate. threat of new entrants.etc). human capital.Economic factors include economic growth. and insurance y Legal trends . political factors include areas such as tax policy. and Financials. automation. technology deployment  Porter Value Chain Analysis sequence of processes necessary to deliver a company s products and services to customers. profitability). 2010 y y y Political trends.Political factors. supplier bargaining power.Corporate Strategic Management Notes October 6. labor law. population growth rate. Customer. are how and to what degree a government intervenes in the economy. exchange rates and the inflation rate.

breadth of product line.  Customer segment. Deliverables: y y Key analysis of issues Strategy Statements (OAS Statement) stated in the form of a vision statement o Objective  The ends the strategy is designed to achieve (quantitative goals like a vision statement) o Advantage  The means by which we will achieve its objective.  Defines the market segment in which we intend to compete and win.  Describes the value proposition we will offer to attract clients or users. Strategy Direction Statements (for each OAS Statement) o Strategy objectives specific goals o Do-wells what we need to master o Preliminary measures how we will measure success y 3 . There is a variety of methodologies. technology employed. and there is no consensus on which approaches to use under which circumstances. o Scope  The niche in which the domain intends to operate.  What we will do differently. 2010 In what niches do we compete? What customer value propositionwill differentiate us? What user value proposition will differentiate us? What key processes create the differentiation in the strategy? What are the human capital capabilities required by the strategy? What are the technology enablers of the strategy? Objective: Barriers: Define where and how the organization will compete. degree of vertical or horizontal integration (value chain activities). better or uniquely.Corporate Strategic Management Notes October 6.

culture) drive performance to improve critical processes that deliver value to our users. Cost per Unit Produced Customer/User Perspective: y y We create value by satisfying client and user value propositions. Repeat User Rate. Metrics: Satisfaction. Retention. Economic Value Add. clients and shareholders. This allows a company to manage short. Operating Profits. intermediate and long term value creating processes. Growth. Strategy map have several parallel themes. Metrics: Growth Perspective: y y Our assets (people.Corporate Strategic Management Notes October 6. Breadth of Site used Process Perspective: y y Our internal processes create and deliver value that satisfies our users and clients. The challenge is to overcome the silo effect of different groups building out their strategy with little interaction or consideration for an integrated approach. Revenue Per Customer. Metrics: Deliverables: y y Strategic Map (visualization) Strategic objectives 4 . technology. Metrics: ROI. Financial Perspective: y y The ultimate goal of the company is to create long term value for the shareholders. which also contributes to the financials objectives. 2010 STAGE 2: Plan the Strategy Leadership Role: Executive leaders validate the strategy map and challenges the organization with stretch targets. Strategy Maps/Themes How do we describe or express our strategy? Develop a comprehensive integrated model of the strategy that pulls together the many diverse components of the plan.

5 . Objective: What the strategy is trying to achieve Measure: How success or failure (performance) against objectives is measured Target: The level of performance or rate of improvement needed by the strategy Deliverables: y Balanced Scorecards of measures. Deliverables: Strategic initiatives budget STAGE 3: Align the Organization Leadership Role: Leadership drives organizational alignment Align Business Units How do we ensure that all organizational units are on the same page? Deliverables: Align Support Units How do we align support units with the business unit and corporate strategy? Deliverables: Align Employees How do we motivate employees to help execute the strategy? Deliverables: Communication Program (7 times 7 different ways).Corporate Strategic Management Notes October 6. 2010 Measures and Targets How do we measure our plan? Convert the strategic direction statements into measures and targets that can get linked to the management system. targets and gaps for each strategic theme Strategic Initiatives What action programs does our strategy need? Deliverables: Initiatives Portfolio Stratex Funding Special budgeting and controls on strategic projects.

and action oriented. CapEx Budget STAGE 5: Monitoring & Learning Leadership Role: Openness and skill in running strategic management reviews to improve effectiveness for fine-tuning the strategy throughout the year. OpEx Budget. Strategic Reviews Are we executing our strategy well? Plan-Do-Check-Act (PDCA) cycle leveraging balanced scorecards 6 . 2010 STAGE 4: Plan Operations Leadership Role: supports cross-organizational process improvements. Deliverables: Detailed Sales Forecast Resource Capacity Planning How do we determine resource capacities and alignment with sales demand? Deliverables: Time-Driven Activity-Based Costing (TDABC) model OpEx and CapExBudgets How much do we spend on what? Deliverables: Financial Profit Plan. Operational Review Meetings Are operations under control? Short.Corporate Strategic Management Notes October 6. data driven. Key Processes Improvements Which business process improvements are most critical for executing the strategy? How do we link strategy with operating plans and budgets? Deliverables: Dashboards Sales Forecast What is the product mix and quantities we need to sell? Forecast a rolling 5 to 6 quarters into the future (dynamic forecasting). highly focused.

2010 STAGE 6: Test and Adapt the Strategy Leadership Role: Allow for well formulated and executed strategy to be challenged in light of the changing competitive environment Is our strategy working? Review the PESTEL analysis Activity based profitability reports 7 .Corporate Strategic Management Notes October 6.