Winning Strategy Overview of presentation

John Viljoen (PhD)

27 September, 2012

Summary
The presentation will focus on how to develop and implement a Winning Strategy and will stress: The attributes of a winning strategy how you can tell when you have one The strategy development processes that are most likely to lead to a Winning Strategy How to performance manage a Winning Strategy The leadership requirements for a Winning Strategy. The presentation will oer delegates with the opportunity to benchmark themselves against demonstrated best practice in strategy and will provide examples from a variety of industries to reinforce the concepts and tools.

Developing a Winning Strategy Theme 1: What is a winning strategy?

There is no such thing as a winning strategy, only your winning strategy. Every strategy is dierent, in fact dierence is a key to winning. Despite the fact that dierentiation can be created in a myriad of ways, many businesses put little eort into this aspect of their strategy. Yet almost any product or service can be dierentiated for example, some countries have even managed to dierentiate commodities like raw sugar. Winning is relative concept. Like in the Olympics, the winner does not have to beat the world record, they just have to beat the other competitors. You can get a good idea of how Winning your current strategy is by your companys relative position in the following areas: Is my brand relatively stronger than my competitors? Is my market share growing faster than my competitors? Are my customers relatively more satised than my competitors and do I get greater repeat purchases? How fast is my EBITDA increasing relative to my competitors? One of the great benets of Winning is it culminates in eective barriers to entry for other competitors because you dominate your chosen area of the market. This gives you the time you need to extract value from the investment you have made in that strategy.

Theme 2: The basics of successful strategy

One of the reasons why businesses struggle to produce a winning strategy is because they fail to grasp some strategy fundamentals, such as: Many executive teams over-engineer strategy. Keep it simple. Too many strategic plans contain spreadsheets! On the continuum of running the business, enhancing the business and transforming the business, strategy focuses on transformation. Of course transformation ultimately has implications for how a business is run and enhanced, but these are essentially operational roles, not strategic ones.
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Question: Is your strategy crystal clear on how i will transform your business? t Failing to integrate all aspects of strategy, aligning all of its key elements (see model):

Vision What we aspire to be Purpose What we will do achieve our Vision Goals What we want to achieve the specific targets Values The approach we will take to running our business

Strategies Actions we will take to achieve our Goals

Failure to understand dierent levels of strategy and to act on corporate strategy before business strategy: o Corporate level strategy deciding the scope of your product or service portfolio what will be kept in the portfolio, what will be added to the portfolio and what will be dropped from the portfolio? (For example in tourism the portfolio could include any one or all of resorts, travel agency, tours, etc, each with a local / regional / international option) o Business level strategy for each product or service in the portfolio, deciding how can we be as successful as we can possibly be?

Theme 3: The keys to a Win ning Strategy

There are 4 keys to developing a Winning Strategy:
Think / Analyse
KEY 1 KEY 2 KEY 3
Manage the present from the future Challenge conventional wisdom Effectiveness not efficiency Who can help me, who

Act
Run strategic projects Create points of difference & targeted innovation Find the elephants Build partnerships & alliances

KEY 4 can I help?

Key 1: The fundamental skill of the strategist is to be able to manage the present from the future. They stand in the future, use best available evidence to map its attributes and identify what their business needs to do to Win under these anticipated future conditions. In doing this, the volatility of most markets requires businesses to be more adept at opportunistic strategy than they have been in the past. Gone are the days of big, prestigious, well resourced strategy teams located on the same oor as

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the CEO. Instead, recognising and capitalising on opportunities quickly is essential not teams of PhDs analysing data to death. Test your strategy: Every executive team should have a common view on the 4 or 5 major dierences between their industry today versus in 3 years time. Collectively they should agree on what this means for their business and they should be testing the new strategies that they think will be required.

Key 2: This is based on the obvious point that positive dierential advantage leads to a Winning Strategy. Conversely, being completely conventional doesnt because there is no reason why a consumer should choose your product or service over any other one. Dierentiation can improve sales volumes as well as prot margins (Example: Apple and Samsung in cell phones). Winning strategies are either highly dierentiated or very low cost. (see model).
Strong
Stuck in the middle (No added value & no low cost)

Performance

Weak

Differentiation Question :

Strategy : Add value

Strategy

Low cost

Is your business stuck in the middle ?

Test your strategy: Does your business have a clear plan to prevent it becoming stuck in the middle? What are the cost and dierentiation components of this strategy?

Key 3: It is no use doing something eciently if you are doing the wrong thing in the rst place! Executives are too frequently focused on urgent operational crises that deal with eciency and fail to pay adequate attention to the important strategic issues for their business (Example: Kodak was still commissioning low cost, completely automated dark-room factories for camera lm when the digital revolution in cameras was well underway). Winning strategies are e ective strategies. Test your strategy: Where does your executive team prefer to focus, on urgent operational matters (eciency) or important strategic issues (eectiveness)? How disciplined is your executive team in removing itself from eciency-type decisions and attending to eectiveness? What tools do you use to gather evidence and avoid making purely intuitive or gut-feel strategy decisions?

Strategy : Cut costs

Gravity pull

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Key 4: Strategic alliances are becoming increasingly important in developing Winning Strategy. For example, EdEx is an alliance between Harvard University and Massachusetts Institute of Technology (MIT) that places their degree courses online. They still vigorously compete with each other for students, research funds and brand equity, but not in the course content space, because they both believe content is a commodity not worth the expense of competitive battles. This is a good example of co-opetition (ie. cooperating with a competitor in one aspect of your business but competing in another aspect). Test your strategy: What strategic alliances do you currently operate? How successful are they? What other options exist? Is co-opetition an option for you?

Implementing Win ning Strategies

Developing strategy is only one aspect of Winning Strategy. Implementing it through strong performance management and eective leadership is also essential.
Strategy development

D AN

AN D

You are only as strong as your weakest link

Performance management

Leadership
A Winning Strategy fail if it is poorly managed will

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Performance management of Winning Strategy

Some important performance management issues include: Risk assessment and management all transformations are risky. How should strategy risk be managed? Accountability for strategic initiatives what is the best balance between single-point accountability and a team approach? Capability-based strategy in volatile markets strategy assumptions can change rapidly. Does your business have the capability to adapt to these changes or are you locked in to a single approach? Recognising trade-os between speed, cost and quality when you implement strategy Coordinating all strategy implementation resources / tools especially changes to structure, systems, capabilities and culture (see model).

De ning the future

Delivering the future Hard levers Structure

Roles/teams Authority levels Business, Functional & Horizontal integration

Soft levers Systems

Performance management Risk management People management IT systems Reporting Communication

Our Vision, Values, Goals & Strategies

Capabilities
Sta skills Flexibility of people resources Capability gaps Workforce planning

Culture
Values & Behaviours Leadership (at all levels) Employee engagement

Financial plan

Leadership for Winning Strategy

Three issues relevant to leadership will be presented briey: 1. The challenge for global businesses is the need to operate globally but lead locally. What this means is that often the leadership style of the parent company tends to dominate all oces / operations around the world and it may not t with local culture. For example the slow to decide, quick to act Japanese style of leadership is problematic in the USA. More autocratic styles of leadership common in Asian countries are problematic for collegiate western leadership styles. (Examples of leadership problems encountered with the global operations of a German hospital products company and a French wine and spirits company) 2. A common technique for generating enthusiasm within the business for a Winning Strategy is the goals down, plans up leadership approach. Here senior managers communicate targets to the rest of the business (for innovation, performance, etc) but they do not say how they want this done. The how decision is negotiated with middle managers and their sta. The executive has the power of veto on any decision. This results in leadership down, ownership up. 3. Strategy transforms businesses. Good strategists need a well-balanced set of leadership skills to drive this transformation. These include analysis, judgment and decision-making skills, the ability

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to lead and inuence people, the ability to achieve outcomes and deliver required performance results and the ability to keep improving their skills and act with integrity (See model)

Pe

ga Or

nis

o ati

lc na

t ex nt

Head
Strategic thinking

rso na we l stre akn ng ess ths es &

Heart
Leading people

Transformational Leadership
iedex 2012

Feet
Delivering results

Spirit
Personal integrity

Conclusion
Although strategy transform businesses, it is important to keep it simple. There is enough complexity in running your business day-to-day without adding a complex strategy on top of that. Most Winning Strategy is represented in a plan-on-a-page.

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