Strategy Development

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and stakeholder
PowerPoint Diagram Pack Guidelines
degrees of
requirements Selection
and targets of
freedom KPIs1

Strategy Development Market-
attractiveness
(relative to
objective!)
Set the
Objectives
Competencies
required to
deliver value
proposition

Potential
Market posi- Define the
Define the Company’s
Strategic Core strengths and
tions and Value Battlefields
A detailed guide to Strategy Development, propositions Intent Competencies weaknesses

covering strategy concepts from military Competitors
ambition, posi-
tion and
Protectability
and ubiquity of
competencies
strategists (e.g. Sun Tzu’s Art of War) to capabilities

modern day strategy development thought leaders (Mintzberg and
Bower). Breaks down a 3-phase approach to Strategy Development,
including hierarchical challenges, activities, and deliverables.

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Contents

• Strategy Overview 4
• Lessons from Military Strategists 7
• Strategy Development Fundamentals 11
- Approaches to Strategy Development
- Evolution
- Thinking Today
• Elements of Strategy Development 18
- Strategic Challenges
- Strategic Intent
- Execution Design
- Initiatives
• Strategy Development Approach 26
- Strategy Hierarchies and Related Challenges
- Activities & Deliverables
learnppt.com Questions & feedback? Email me – dave@learnppt.com
The diagrams in this pack are to be used by the original buyer only. 2

Remember, the end goal of your strategy is to win—but there is more to
strategy than just winning
Primary Objectives of Strategy

OBJECTIVE TRANSLATION

1 Strategy is about value creation value proposition

2 Strategy is about winning competitive advantage

Strategy
Strategy
3 Strategy is about selectivity and focus resource allocation

THIS IS A PARTIAL PREVIEWbusiness transformation
4 Strategy is about speed and flexibility
You can preview the full PowerPoint document and
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Military strategists have been at the forefront of strategy development,
shaping strategic thinking1 of modern business organizations
Lessons from Military Strategists – Overview
MILITARY STRATEGIST MAJOR IDEAS STRATEGY

Sun Tzu2 (~400 • Winning without fighting is the acme of skill… Indirect
B.C.) • Know and attack the enemy’s strategy… strategies

Antoine-Henri
Jomini3 • Mobility and superiority: Resources have to be mobile to attack the enemy’s Strategic
(“Rationalist”) major strongholds with superior forces successively and alternatively focus
(1779 – 1869)

• Primacy of the offensive [Jena 1806]: focus forces to decide a war on the
Carl von main battlefield
Strategic
Clausewitz4 paradox,
• Supremacy of the defensive [Moskau 1812], paradox of offensive
(“Romantic”) strategies [Waterloo 1815]: “not only are obstacles annihilated but the
adaptive
(1780 – 1831) [offensive] machine itself”
strategies
Strategy as
• Decision cycle IS A PARTIAL others’ perceptions by more effective
THIS dominance “manage PREVIEW acting and
John Boyd5 observing, orienting, deciding and acting,” emphasize implicit over explicit
thinking,
(1927 – 1997)
You can preview between operational states, disrupt or incapacitate
• Fast transition
the full PowerPoint document and
adversary’s ability to cope with change
indirect
download it at http://learnppt.com/powerpoint/ strategies
1: Strategy from a military perspective usually does not include the process and definition of (political) objectives but the way to achieve those objectives
2: Sun Tzu, the art of war“, translated and with an introduction by Samuel B. Griffith; Oxford University Press, 1963
3: Strategisches Denken; Prof. Dr. Albert Stahel
4: Clausewitz und Napoleon, Jena, Moskau, Waterloo; Andreas Herberg-Rothe; Internationales Clausewitz-Zentrum, Führungsakademie der Bundeswehr
5: Colonel Peter Faber, USAF [John Boyd is considered one of the most important military strategists for the U.S.A. until recently]; based on his ideas recent thinking changes towards
Swarm tactics, Network Centric Warfare, etc.


Sun Tzu’s concept of five fundamental factors in military strategy does
significantly incorporate elements of today’s business strategy concepts
Lessons from Military Strategists – Sun Tzu, The Art of War (1 of 2)

… Sun Tzu’s five fundamental factors in … could translate into terms of business
military strategy1 … strategy as …

(Moral influence) – the right way of a … following the right purpose and objective –
government (benevolent, just and righteous) balancing the interest of all stakeholders

(Heaven/ weather) – interaction, effects of … exogenous forces/ changes in the environment
natural forces (winter‘s cold/ summer‘s heat) to be considered (PEST, market trends, etc.)

(Terrain) – geographical structures, pre- … markets, industry structures, market positions
requisites; chances/risks provided by battlefield (value propositions) and competitive forces

(Command) – general‘s wisdom,
THIS IS A PARTIAL PREVIEW leadership qualities
sincerity, benevolence, courage and strictness … top management

(Law, method) – doctrine,preview the full PowerPoint document and
You can i.e.: organization,
download it at http://learnppt.com/powerpoint/ management and
control, assignment of officers, provision of … organizational principles,
resource allocation process
principle items used by the army

1: Sun Tzu: „The art of war“, translated and with an introduction by Samuel B. Griffith; Oxford University Press, 1963


In reality, you will find varying approaches towards strategy
development, depending on the complexity of the strategic challenge
Approaches to Strategic Challenge

Easy Complex1
NATURE OF STRATEGIC CHALLENGE

Thinking First Seeing First Acting First

• Define problem • Prepare • Trial and error
• Diagnose • Incubate
• Design options • Get enlightenment
• Decide THIS ISVerify
• A PARTIAL PREVIEW


1: Complexity being defined as a function of the number of influencing variables and the velocity of their change


Since the 50s, the focus of strategic development in the corporate world
has evolved through five distinct phases
Strategy Development – Evolution
Phase 5
Effective-
ness of Phase 4
strategy
Phase 3

Phase 2

Phase 1 Strategic
Strategy Management
Strategic renewal
Long-term Planning
Financial planning
Planning

50’s 60’s 70’s 80’s 90’s - now
Key “Meet the “Forecast the “Think “Strategy as “Integrate
themes budget” future” strategically to positioning” strategic
beat competition” planning and
implementation”
Key Financial control, Growth planning, Alternative Strategic proces- Core competen-
concepts budget planning resource allocation, A PARTIAL PREVIEW
THIS IS strategies, Portfolio ses, market-based cies, strategy plan-
SWOT, Ansoff analysis, strategy, Porter 5 ning & Execution;
You can preview the full PowerPoint document Balanced Score-
Matrix BCG-Matrix Forces, Value
Chain
and
card
Key Kenneth Andrew, Kenneth Andrew, BCG Michael E. Porter, Gary Hamel, C.K.
people John MacLean, Igor Ansoff, BCG, Henry Mintzberg Prahalad, Henry
Edith Penrose Alfred Chandler Mintzberg, Bower
& Gilbert

Today, there are two primary schools of thought—Mintzberg’s
configurational school and Bower’s RAP-based strategy
Strategy Development – Thinking Today

MINTZBERG: CONFIGURATIONAL SCHOOL BOWER: RAP SCHOOL

• Organizational configuration: • Bottom up strategy development:
– Strategic management to sustain – Crafting of strategy as real time
Organizational / stability iterative process
Bottoms-up – rise of a particular set of strategies – Context dependent, evolving
Driven Strategy – organization engages in behaviours decision making in an organization
Development based on adoption to contexts – Uncertainty about decisions
– (relative) stability of an strategic consequences
organizations‘ configuration – Structure of resource allocation
shapes strategy

• Transformation: • Top down intervention:
– strategic management as ability to – Centralized strategic leadership
recognize need for and manage – Concentrated strategic decisions at
Intent / Top-down transformation top
Driven Strategy THIS IS A PARTIAL PREVIEW
– Quantum leap to another – Driven by revised strategic intent
Development configuration
You candisruptive processfull PowerPoint document and top
–
preview the formulated at the
– Constraint strategy-making process

Note: RAP = Resource Allocation Process


Bower’s concept puts the mechanisms of the strategic planning and
budgeting process at the heart of strategy development
Strategy Development – Resource Allocation Process

RAP-FRAMEWORK FOR STRATEGY DEVELOPMENT 1 EXPLANATION

Capital market • Strategic intent:
Market context – perceived and communicated “official” strategy
context
• Organizational context:
– Governance and organizational structure
Resource (power system)
allocation Organi-
Strategic – Performance measures and rewards
bottom-up stra- zational
intent – Managers’ beliefs and cognitive frames
tegy planning and context
budgeting
• Market context:
Definition Selection – Demands of existing customers (major
sources of revenue)
Projects and – Technological development
Operating System
Initiatives
• Capital market context:
– Demands and influence of capital providers
THIS IS A PARTIALResource allocation/ Strategy planning and
• PREVIEW
Realized budgeting:
You can preview
strategy the full PowerPoint document and and selection of
– bottom-up driven identification
business opportunities

1: based on Bower, J.L.; Gilbert, C.G.: “From resource allocation to strategy”; OXFORD university press, 2005


However, occasionally top-down intervention is required
Strategy Development – Top-down Opportunities
TOP-DOWN INTERVENTION
BOTTOM-UP BIAS IMPLICATION OPPORTUNITIES

• Organizational bias: Organization will not
–strengthen existing capabilities promote and fund initiatives
that: 1. Disruptive
–reward single BUs for short-
term results innovations
–conservative and risk averse • are of high uncertainty
2. Converging markets
• Market bias: • are alien to a company‘s
contexts 3. Turbulent new and/
–fit existing customers
• require high commitment or international
–fit established view on markets
with long-term pay-offs
technology
• are dysfunctional 4. Disinvestment
• Capital market bias:
regarding existing power opportunities
–favour expected, predictable system
behaviour
–provide short term results THIS IS A PARTIAL PREVIEW
Signals for the need of top-down at http://learnppt.com/powerpoint/
download it intervention may also be derived from scanning the budgeting
process for proposals with pending decisions or high commitment proposals.


Based on Mintzberg and Bower’s insights, we derive three different
types of strategic challenges for our clients
Strategic Challenges

STRATEGY DEVELOPMENT CHALLENGES

1. Design top down
intervention driven by
revised strategic intent • Framing the type of the strategic
challenge one of the most
3. Ambiguity, critical tasks in strategy
clarify nature of challenge development
and approach to it
• Prerequisite to define the
strategy development approach
2. Align execution context
to materialize intent into
realized strategyTHIS IS A PARTIAL PREVIEW


Defining a strategic intent means to set objectives, define relevant
battlefields, and define the required core competences
Strategic Intent

CONSTITUTIVE ELEMENTS OF STRATEGIC INTENT KEY QUESTIONS

Set the • Purpose, mission and priorities of
Objectives the company?
Set the
Objectives

• Battlefields relevant to achieve
Define the objectives?
Define the Battlefields
Define the Intent • Critical success factors to achieve
Core
Battlefields victory on these battlefields?
Competencies

• Competencies and resources
Define the
needed to fulfil CSFs?
Core
Competencies • Sources for sustainability of
THIS IS A PARTIAL PREVIEW victory?
What is the strategic intent the company should follow?


Defining a strategic intent means analyzing and defining each element
carefully and finding the best possible combination of all elements
Elements of Strategic Intent

Shareholder
and stakeholder
Guidelines requirements Selection
degrees of and targets of
freedom KPIs1

Market- Competencies
attractiveness Set the required to
(relative to Objectives deliver value
objective!) proposition

Potential Define the Company’s
Market posi- Define the Intent Core strengths and
tions and Value Battlefields
Competencies weaknesses
propositions

Competitors THIS IS A PARTIAL PREVIEW Protectability
ambition, posi- and ubiquity of
You
tion can preview the full PowerPoint document and
and
capabilities
competencies

1: KPI = Key performance indicators


The first step is to understand the nature and context of the strategic
challenge
Strategy Hierarchies and Related Challenges

Strategic Execution
Ambiguity
Intent Design

Corporate
Corporate
Corporate Set the
Objectives

Define the
Define the
Intent Core
Battlefields
Competencies
Business
Division/

Business
Business Business
Business Business
Business
Unit

AA BB …
… Ambiguity

Manage Design
Strategic Organizational
initiatives Execution context
Functional

Shape
R&D/
R&D/ Strategy
HR Fin Mktg IT …
Level

HR Fin Mktg Mfg. IT … Planning &
Mfg.
budgeting

THIS IS A PARTIAL PREVIEW


Each hierarchical level has specific strategic challenges in defining a
strategic intent …
Strategy Hierarchies and Related Challenges – Strategic Intent

TYPICAL STRATEGIC CHALLENGES

1 • Fit and balance requirements of capital markets and
Strategic Execution other stakeholders
Ambiguity
Intent Design • Business portfolio management and decisions
Corporate

1
2 • Create value in corporate portfolio, match corporate
requirements and market requirements
2 • Competitive strategy, market positioning and USP
Business
Division/

generation
Unit

• Product/market strategies, Channel Strategies
Functional

3 3 • Proof strategic relevance
Level

• Contribute to corporate/BU strategy
THIS IS A PARTIAL PREVIEWof sustainable competitive
• Provide sources
advantages


A strategy development project has three phases
Strategy Development Approach – Overview

1 2 3
Set strategic guidelines Define strategic intent Execution Design

Objectives

Core
Battle-
Intent Compe-
fields
tencies

Organi-
Strategic
Execution zational
Initiatives
context

Strategy
Planning &
budgeting
Significance of strategy
Significance of execution design


In the initial phase, all levels are of the organization are involved, but as
we progress, we drill down to a specific Business Unit
Strategy Development Approach – Hierarchical Involvement Breakdown
1 2 3
Set strategic guidelines Define strategic intent Execution Design

Corporate

Kick 1st 2nd
off WS WS

Business Unit

1st 2nd Final strategy
Kick
WS WS & multilevel
off
commitment

Business Unit/
Functions
Working Working
session session Options


END OF PARTIAL PREVIEW


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Strategy Development

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