Balanced

Scorecard
External analysis

Luis Mamani, Systems Engineer, MBA, PMP

Session 2
INSIDE-OUT OUTSIDE-IN

Source: Business Strategy: Are You Inside-Out or Outside-In? by Elisabet Lagerstedt,

 WHICH OF THESE
APPROACHES IS
BETTER?

The best organizations skillfully employ

both approaches. They are aware of their
strengths and gaps while using their
organizational "radars" to detect
opportunities or threats.

Source: Inside-out Versus Outside-in – What’s the Better Strategy? by Elena Ozeritskaya
But we have
better
probabilities
to succeed
with
Outside-In
approach!
OBSERVE, ORIENT,
DECIDE, ACT
OBSERVE ORIENT DECIDE ACT

Quickly filter what's Analyze, interpret, look At the right time, there's Run, depends on ability
important! for patterns no guarantee and experience

Source: Decision Making, Top Gun Style, HBR

SO… Aligned to STRATEGIC
CORPORATE GOALS and
STRATEGIC THEMES
within a STRATEGIC
First, we must do a STRATEGIC HORIZON of time
ANALYSIS, so that the different
external influencing factors that
are relevant to define a strategy are Applying disciplines such
IDENTIFIED then ANALYZED! as PORTER’S 5 FORCES,
PESTEL, CSF and VUCA
 1
Strategic 3
themes
OBSERVE
(5 forces,
PESTEL) 4
2 ORIENT
(CSF, VUCA
Strategic
world)
horizon
 Strategic themes
Session 1
Strategic themes play an important role The location and design of the Strategic
in the structures of a construction themes will limit future redesign actions

The same goes for the strategic themes within

a strategic plan!

THEY PROVIDE STRUCTURE, SUPPORT

AND EVEN DEFINE THE SCOPE OF THE
STRATEGIC PLAN, IN CONSEQUENCE OF
BSC
Once the desired situation of the company is
defined, it is broken down into Strategic themes

The Strategic themes are the main high-level

strategies that form the basis of the
organization's business model.

The Strategic themes are the focus areas that

organizations must achieve excellent results.
 About the strategic themes

 They are broad in scope; they must encompass the

entire organization.
Examples:
 These are aspects that a company must seek  Business growth
excellence in order to achieve the vision / mission.
 Operational excellence
 As a denomination, similarities can be found from  Excellence in customer
company to company, it varies in the expected service
results.  Innovation
 Usually, 3 or 4 strategic themes are defined.  Sustainability
 Cultural transformation
Strategic themes as a strategic element of the
BSC
Misión
Visión
Resultados estratégicos

Crecimiento del negocio

Transformación cultural
Eficiencia operacional
Finanzas

Sostenibilidad
Cliente

Procesos

Capacidad

Liderazgo comprometido – comunicación interactiva

Valores
 Strategic themes and Strategic results

• The differentiation is in the strategic results (OUTCOMES).

• Lead the transformation of the organization.

Example: Business growth

Strategic results:

Company 1:
Increase / improvement of:
 market share
 service availability ratio
 new customer acceptance rate
Company 2:
Increase / improvement of:
 international market share
 leading position ratio
 customer retention ratio
What are the Strategic themes linked to?
Corporate goals Growth Profitability Sustainability

Competitive
Product Customer
strategy adopted Cost leadership
(related to value
leadership intimacy
proposition)
• Supply chain • Innovation • Solution
• Operational • Product development
efficiency development • Customer service
Typical strategic • Operations • Speed to market • Digital
optimization • Business growth interactions
pillars • Capacity • Customer
management experience
 Strategic horizon
Session 2
 Strategic horizon

Source: Strategic Horizon by Mihai Ionescu

 Nokia's hand-held PDA Strategic
Horizon case

Source: Strategic Horizon by Mihai Ionescu

 Nokia's hand-
held PDA
Strategic
Horizon case

Source: Strategic Horizon by Mihai Ionescu

If we attempt to extend our STRATEGIC HORIZON
beyond its next anticipated major change point, we'll
face a high level of uncertainty regarding the impact
of the respective changes on the industry, taking a
high risk that the Strategy may become invalid or
obsolete beyond that point in time.

Source: Strategic Horizon by Mihai Ionescu

 Strategic
horizons
or growth

Source: Enduring Ideas: The three horizons of growth by Mc Kinsey

 Innovation
horizons –
new
approach

Source: The three horizons framework by Kate Raworth

 H2 H3

New customer
segments

Business as usual H1

New capabilities
LET’S DEFINE STRATEGIC THEMES AND
STRATEGIC HORIZONS!

Strategic Competitive
Strategic themes Strategic horizon
corporate goals strategy

Notes:
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 OBSERVE
(5 Forces,
PESTEL)
Session 3
 The STRATEGIC ANALYSIS needs to
identify the INFLUENCE FACTORS that
are relevant for our business, defined by
the STRATEGIC CORPORATE GOALS,
over the STRATEGIC
HORIZON considered, using tools
like PESTEL and PORTER'S 5
FORCES. 
WHAT ARE
Opportunities
THE favorable Influence
Factors
INFLUENC
E
FACTORS Threats
unfavorable
(TRENDS)? Influence Factors

Source: Competitive advantage by Michael Porter

How to identify TRENDS?

Trends are opportunities or threats according to MISSION,

CORPORATE GOALS, and even VISION and VALUES
 Influence factors in:
Private Universities

OPPORTUNITIES THREATS

• Increase of GDP • Better possibilities to study

• Increase of private schools
• Increase of foreign talented
professionals
• SUNEDU improves the
qualification of universities
outside the country
• Increase in the offer of on-line
programs
• Peruvian universities are not well
qualified in LATAM ranking
 Political
PESTEL
5 FORCES
Bargaining
Legal power of Buyers Economical

Competition
Bargaining power
among existing
of Suppliers
Participants
Industry
INFLUENC
E FACTORS
Threat of
Threat of New
Ecological Substitute
entrants Social
products

Technological
 BUYER POWER
How many buyers are there?
How big are their orders?
How much would it cost them to switch from
your products and services to those of a rival?
Are your buyers strong enough to dictate terms
to you?.
COMPETITIVE
RIVALRY
How many rivals do you have?
How does the quality of their products and
services compare with yours?
Is there aggressive price cuts and high-impact
marketing campaigns?.
THREAT OF NEW
ENTRY
How easy is it to get a foothold in your
industry or market? How much would it cost,
and how tightly is your sector regulated?

SUPPLIER POWER THREAT OF COMPLEMENTARY

How many potential suppliers do you have?
How unique is the product or service that they
provide?
How expensive would it be to switch from one
supplier to another?
SUBSTITUTION INDUSTRIES
How easy is to find an alternative?
How is the performance of the alternative?
How much would it cost them to switch
 P E
POLITICAL
Does a government may impose a new
tax or duty due to which entire revenue
generating structures might change?
Does a government may levy around the
fiscal year and it may affect the business
environment (economic environment) to
a great extent?
ECONOMIC
Does a rise in the inflation rate of any
economy would affect the way
companies’ price their products and
services?
Would it affect the purchasing power of a
consumer and change demand/supply
models for that economy?
S
SOCIAL
Do these factors scrutinize the social
environment of the market, and gauge
determinants like cultural trends,
demographics, population analytics etc.?

Economic factors include inflation rate,

interest rates, foreign exchange rates,
economic growth patterns etc. It also
accounts for the FDI (foreign direct
investment) depending on certain specific
industries who’re undergoing this
analysis.
 T E
TECHNOLOGIC
AL
Do these factors pertain to innovations in
technology that may affect the operations
of the industry and the market favorably
or unfavorably?
This refers to automation, research and
development and the amount of
technological awareness that a market
possesses.
L
ENVIRONMENT LEGAL
AL Are there certain laws that affect the
business environment in a certain country
Do these factors include all those that while there are certain policies that
influence or are determined by the companies maintain for themselves?
surrounding environment.
Crucial for certain industries particularly
for example tourism, farming, agriculture
etc. Factors of a business environmental
analysis include but are not limited to
climate, weather, geographical location,
global changes in climate, environmental
offsets etc.
LET’S OBSERVE THE EXTERNAL
ENVIRONMENT!

5 Forces PESTEL

Notes:
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5 FORCES PESTEL

O A
Filter by the PROBABILITY of
happening and by its IMPACT on
Mission, Corporate goals, Vision
and Values

O A
Prioritization of influential
factors
Opportunity / Probability Impact Exposition (P x I)
Threat
Finding 1, Low 1, Low 1, Low exposition
probability impact 25, High exposition
5, High 5, High
probability impact
 ORIENT
(VUCA world, CSF)
Session 4
 Are all those aspects, areas, activities in
which you should not fail, because of
CRITICAL doing so, you seriously commit the
product or service provided.
SUCCESS
FACTORS ARE
There are usually a few ones that
RELEVANT FOR can affect the business the most.

THE DEFINITION
OF THE They can change over time.

STRATEGY
Some of them are mandatory
 e.g.: Hotel industry

High quality Technological

standards in the Personalized and innovation to offer Location in
infrastructure and highly qualified national, foreign modern areas in
services of the service and executive the city
hostel. tourists
What about with Sheraton hotel
location?

Is Sheraton located in modern areas in

Lima…?
HOW CAN WE
RECOGNIZE TRENDS...
AND RESPOND
APPROPRIATELY?
 V Volatility
Recognize that new U Uncertainty
"normality" is ...
C Complexity
A Ambiguity
 How well can
you predict the
results of your
actions?

V U
C A
How much do you know
Source: HBR
about the situation?
 COMPLEXITY VOLATILITY
• Many variables and interconnected parts • Unexpected, unstable, could be variable time
• Predictable, but the amount of information or • Not necessarily complex, available
How well can its nature is complex to process information
you predict the
results of your Ex .: multiple governments, regulated, many Ex .: price fluctuation due to a disaster that
actions? currencies, cultures affects suppliers

AMBIGUITY UNCERTAINTY
• Difficult to establish cause and effect • Cause-effect relationships are established,

V U relationships
• There are no precedents, it faces the unknown
what is not available is information
• Change is known, not the moment

Ex.: immature or emerging markets; unknown Ex.: markets where the competitors "dirty" the

C A market entry market, it is unknown how they will operate.

How much do you know

Source: HBR
about the situation?
 COMPLEXITY VOLATILITY
Low High Low High

V U
AMBIGUITY UNCERTAINTY
C A Low High Low High

Source: Forbes
 COMPLEXITY VOLATILITY

V U  Restructure, bring or develop specialists.

 Recruit the right resources to handle
complexity
 Work with ease, make the equipment always
ready (Ex .: additional stock, reserve
equipment)
 Invest according to risk (expensive)

C A The more complex the world, the harder to

analyze!
The more volatile, the more constant and faster
are the changes!

AMBIGUITY UNCERTAINTY
N

 Experiment, understand the cause-effect  Invest in information, collect, interpret and

O

rules, generate hypotheses, test. share it

TI

 Design the experiments, so that the lessons  Work in information analysis networks,
AC

learned can be applied reduce uncertainty

The more ambiguous the world, the harder it is The more uncertain the world is, the harder it is
to interpret! to predict!

Source: HBR
 V U
CLARIFY VISION
C A
N

ADAPTABILITY / UNDERSTANDIN
O
TI

AGILITY G
AC

Source: VUCA-world.org
LET’S ORIENT (FIND PATTERNS) IN THE
EXTERNAL ENVIRONMENT!

CSF VUCA – patterns VUCA - strategies

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End of session!