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BN 926 Strategy and Management of Change. What Is Strategy and what are the future challenges to its successful management? Professor Julian Lowe. Re – introduce the concept of strategy How does strategy work in successful organizations?

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bn 926 strategy and management of change

BN 926 Strategy and Management of Change

What Is Strategy and what are the future challenges to its successful management?

Professor Julian Lowe

aims of session
Re – introduce the concept of strategy
  • How does strategy work in successful organizations?
  • Assess strategic tensions and resolution of dilemmas in strategy
  • What is strategy and what it is not?
  • Does strategy matter and how do we know?
  • Key challenge to effective strategy and its management in the 21st Century
Aims of Session
slide4

The Impact of Strategy

  • $1 in Coca Cola in 1919 now worth $200,000
  • $1 in a portfolio of Forbes in 1919 now worth $4100
  • Why do some firms do spectacularly well, whilst others fail or achieve only modest growth?
slide5

The Impact of Strategy

  • Take any three organizations of you think are successful.
  • What is it that they do right?
  • Is this strategy?
slide6

A history of strategy

5. Strategy as organisation, interpretation, chaos

Hypercompetition/moving on

4. Strategies for stretch

Create the future

3. Planning for fit

Think strategically

Dynamic analysis

Static analysis

2. Forecast-Based Planning

Predict the future

  • Financial Planning
  • Meet annual budget
slide8

Mission Vision and Strategy

Mission This is what we do and how we relate to stakeholders

Vision These are our aspirations and what we hope to become

Strategy This is how we will achieve our goals, more towards our vision and fulfill our mission

slide10

Images of strategy

Stephen Cummings and David Wilson

  • Strategy and ethos
  • Strategy as organizing
  • Strategy as intention and anticipation
  • Strategy as orchestrating knowledge
  • Strategy as data plus sense-making
  • Strategy as creativity
  • Strategy as process, power and change
  • Strategy as animation and orientation
mintzberg s 5 ps
Plan
  • Position
  • Pattern
  • Perspective
  • Ploy
Mintzberg’s 5 Ps
corporate v competitive
Portfolio management v. positioning
  • Synergy and structure v. SBU performance
  • Setting organisational parameters v. competitive strategy
  • Scope of corporation v. scope of SBU
Corporate V. Competitive
slide13

30%

25%

20%

15%

10%

5%

0%

27.5%

22.4%

20.5%

10.7%

Eli Lilly Arnold Industries

Industry average

Industry or enterprise?

porters critique

Porters Critique

Too Many Firms Pursue Best Practice and Seek Operational Effectiveness Through Benchmarking, TQM, JIT Etc. But This Is Not Strategy. Strategy Is About Being Different, Not Being ‘As Good As’.

slide15

The Failure to Choose

  • Flawed Strategic Thinking
  • Best practice mentality is pervasive
  • Industry conventional wisdom homogenizes competition
  • ‘Customer focus’ is misinterpreted to mean serving all customer needs
  • Managers believe that tradeoffs no longer exist
  • Making tradeoffs is perceived as organisationally risky (no choices v. bad choice)
  • Leaders are reluctant to disappoint valued managers or employees by setting limits
  • .
slide16

Operational Effectiveness

  • Strategic Positioning
  • Strategy is about trade-offs, choosing what not to do as well as what to do
  • Strategy is fit
  • Strategy is about continuity over time
  • Strategy in the past and the future
slide18

Strategy, was … is

Long-term = Distant return

Ambition = Risk-taking

Commitment = Big bucks

The new frame we are suggesting here is different:

Long-term = A point of view about industry evolution and how to shape it

Ambition = A stretching aspiration that is derisked through the tools of resource leverage

Commitment = An intellectual and emotional commitment that ensures consistency and constancy

slide19

Paradigm

Representative authors addressing strategic management questions

Nature of rents

Fundamental units of analysis

Short-run capacity for strategic reorientation

Role of industrial structure

Focal concern

(1)Attenuating competitive forces

Porter (1980)

Chamberlinean

Industries, Firms, Products

High

Exogenous

Structural conditions and competitor positioning

(2) Strategic conflict

Ghemawat (1986)

Chamberlinean

Firms, Products

Often infinite

Endogenous

Strategic interactions

(3) Resource-based perspectives

Wernerfelt (1984)

Ricardian

Resources

Low

Endogenous

Asset fungibility

(4) Dynamic capabilities perspective

Dosi, Teece, and Winter (1989)

Prahalad and Hamel (1990)

Schumpeterian

Processes, Positions, Paths

Low

Endogenous

Asset accumulation, replicability and inimitability

Paradigms of Strategy(Teece, Pisano and Schuen)

slide20
nbnbnbn

Markides’ critique

  • Strategy must decide on a few parameters
  • Which customers and which not
  • What products and what not
  • How will it be done ie which activities and which not
  • Who comes up with the ideas?
  • Everyone!
  • Utilise ideas throughout the organisation
  • Get variety in teams, institutionalise a culture of innovation
  • Who decides?
  • Strategy is a mosaic of overlapping systems and activities – synergy
  • Achieve fit without losing flexibility
  • Strategy needs to be supported by an appropriate organisational
  • environment
  • No strategy lasts forever
ge case
Why has GE been so successful?
  • How would you describe strategy at the corporate and competitive level in GE?
  • What role did Jack Welch play?
  • Assess Jeffrey Immelt’s leadership since 2001
  • What contrasts do you perceive between their strategy and leadership styles?
GE Case