Strategic Thinking: Jim Clawson University of Virginia

STRATEGIC THINKING
Jim Clawson
University of Virginia
www.powerpoint4u.blogspot.com 05/21/11
STRATEGIC ISSUES
A Strategic Issue is any issue that
significantly influences a person’s, a
work group’s or an organization’s ability
to develop and maintain a competitive
advantage.
STRATEGIC DOMAINS
● Organizational
● Work Group or Function
● Individual
COMPETITIVE ADVANTAGE
A competitive advantage has three key
characteristics:
1. it provides superior value to customers
2. it is hard to imitate
3. it enhances one’s ability to respond to
changes in the environment.
Adapted from George Day (1994)
SOURCES OF
COMPETITIVE ADVANTAGE
● Government subsidy or support
● Established or monopolistic markets
● Product innovation
● Process innovation, Cost efficiencies
● Superior Service
● Human Resource Management
Every CEO has to spend an enormous
amount of time shuffling papers. The
question is, how much of your time can
you leave free to think about ideas? To
me the pursuit of ideas is the only thing
that matters. You can always find
capable people to do almost everything
else.”
Michael Eisner, Fortune, December 4, 1989, page 116.
Strategy is the art of creating value. It provides
the intellectual frameworks, conceptual models,
and governing ideas that allow a company’s
managers to identify opportunities for bringing
value to customers and for delivering that value
at a profit. In this respect, strategy is the way a
company defines its business and links
together the only resources that really matter in
today’s economy: knowledge and relationships
or an organization’s competencies and
customers.
Normann, R. and Ramirez, R., “From Value Chain to Value Constellation:
Designing Interactive Strategy,” Harvard Business Review, July-August 1993, p.65.
“Ten short years.... the one thing that we
have done consistently is to change .... It may
seem easier for our life to remain constant,
but change, really, is the only constant. We
cannot stop it and we cannot escape it. We
can let it destroy us or we can embrace it.
We must embrace it.”
Michael Eisner
Disney 1994 Annual Report
WALT DISNEY Productions
● Burning vision
● Immediate flexibility
● Innovative service and technology
● Leading edge products
● Synergism between lines of business
● Learning from each experience
● Strong organizational culture
● Strong, complementary leadership
Strategic Mindsets
STRATEGIC FIT STRATEGIC INTENT
MODEL MODEL
Strategic thinking is driven by Strategic thinking is driven by

the match between current bridging gap between today’s
capabilities and existing reality and tomorrow’s vision
opportunities
Finding ways to leverage
Searching for sustainable resources
advantages
Outpacing competitors in building
Finding protected niches new advantages
Making new industry rules
Source, Hamel and Prahalad, Strategic Intent, HBR
Four Questions that Guide Strategic Choices
WHAT CAN WHAT MIGHT
WE DO? WE DO?
(strengths and (external opportunities
weaknesses) and threats)
STRATEGY
WHAT DO WE WHAT DO OTHERS

WANT TO DO? EXPECT US TO DO?
(organizational and (stakeholder
individual values) expectancies)
ur Related Questions that Guide Strategic Choi
WHAT CAN WHAT MIGHT
WE DO?new
What HowWEdoDO?
we
(strengths anddo we
capabilities (external
create new
opportunities
weaknesses)
want to develop? possibilities
and threat)?
STRATEGY
WHAT What do we
DO WE How do we partner
WANT TOneedDO?to WHAT DO OTHERS
to build shared
learn to and
(organizational care EXPECT US TO DO?
expectancies?
individualabout?
values) (stakeholder
expectancies)
Porter’s Five Forces Model
NEW
ENTRANTS
INDUSTRY
SUPPLIERS BUYERS
COMPETITORS
SUBSTITUTES
Porter’s Generic Value Chain
FIRM INFRASTRUCTURE
HUMAN RESOURCE MANAGEMENT
M
AR
TECHNOLOGY DEVELOPMENT
G
IN
PROCUREMENT
Out- Market- Service
M
Inbound Oper-
AR
bound ing &
Logistics ations
G
Logistics Sales
IN
Adapted from Michael Porter, Competitive Advantage, Free Press, New York, 1985, p. 46
GENERAL VALUE CHAIN
Raw
Transport Processing
Materials
Forming
What’s your value chain?

What are the margins in each link? Assembly
Where are your competitive strengths?
Where is your strategic intent? Distribution
Sales
Service
Creating Core Capabilities
● The building blocks of corporate strategy are not products and
markets but business processes.
● Competitive success depends upon transforming a company’s
key processes into strategic capabilities that consistently
provide superior value to customers
● Companies create these capabilities by making strategic
investments in a support infrastructure that links together and
transcends traditional functions.
● Capability-based strategies, because they cross functions, must
be championed by senior leadership.
Stalk, Evans, and Shulmand (1992)
Broadening the Pond
Every Business is a Growth Business,

Ram Charan and Noel Tichy,
Random House, NY, 1998
Defining Growth Trajectories
D C
New
NEEDS
A B
Existing
Existing New
Charan and Tichy CUSTOMERS
Defining Growth Trajectories
D C
New
Response
eap
L
um
NEEDS
n t
ua
A Q B
Existing
$XB
Global
Push Past
Your
Share
Existing New
Charan and Tichy CUSTOMERS
Organization Charters
● Mission Statement
● Vision Statement
● Values Statement
● Strategy
● Operating Goals
● Leadership
ORGANIZATION CHARTERS
LEADERSHIP
Strategy
Mission Vision
Goals
Values
1. Mission Statement 4. Strategy

2. Vision Statement 5. Operating Goals and Milestones
3. Values Statement 6. Leadership
PROBLEM LEADERSHIP
LEADERSHIP ACTIVITY Questions Answers
Problem Solving Old New
Problem Finding New Old
Problem Creating New New
Adapted from Pathfinding by Harold Leavitt, 1995
SECOM, KK
● Technological innovation
● Fast customer response
● Leading edge synergies
● Investing in core capabilities
● BUT reinventing the future?
Indirect Influence
on Outcomes
Environ- Leader- Design Culture Results

ment ship Decisions
Competitive Advantage Through People
● Employment Security ● Self-Managed Teams
● Selectivity in Recruiting ● Training and Skill Development
● High Wages ● Cross Utilization and Training
● Incentive Pay ● Symbolic Egalitarianism
● Employee Ownership ● Wage Compression
● Information Sharing ● Promotion from Within
● Participation and
Empowerment
Jeffrey Pfeffer, Producing sustainable competitive advantage through the effective management of
people, Competitive Advantage through People, HBS Press, 1994, (AME, 1995, V. 9. N. 1
FMC ABERDEEN
● Leadership’s indirect influence on
outcomes
● Importance of interaction of all design
elements
● Human Resource Management as a
competitive weapon
● Importance of strong, consistent
leadership in culture building
Leading Strategic Change
is choosing to influence others to
alter their long-term competitive
capabilities willingly.
There are always two parties, the
party of the past and the party of
the future; the establishment and
the movement.
Ralph Waldo Emerson.
In the traditional planning process,
outcomes are likely to cluster around
senior managers’ prejudices; the gap
between recommendations and pre-
existing predilections is likely to be
low.
Hamel
Khrushchev, once criticizing Stalin, was
asked, “You were there. Why didn’t you
stop it?”
Khrushchev angrily asked, “Who said
that?” And then he ordered the man shot.
As they were taking him out, he said,
“Wait! Now you know!”
Strategy as Revolution
● Rule Makers
● Rule Takers
● Rule Breakers
Strategy as Revolution, Gary Hamel, HBR July-August, 1996,

96405, p. 69
Strategy as Revolution
● Planning isn’t strategic.
● Strategy making must be subversive.
● The Bottleneck is at the top of the bottle.
● Revolutionaries exist in every company.
● Strategy making must be democratic.
● Change is not the problem, engagement is.
● Anyone can be a strategy activist.
● Perspective is worth 50 IQ points.
● Top down and Bottom up are not alternatives.
● You can’t see the end from the beginning.
Revolutionizing Strategy
● Radically improving the value equation
● Separating form and function
● Achieving Joy of Use
● Pushing the bounds of universality
● Striving for individuality
● Increasing accessibility
● Re-scaling Industries
● Compressing the Supply Chain
● Driving Convergence
Strategy as Revolution, Gary Hamel, HBR July-August, 1996, 96405, p. 69
Strategy is revolution; everything else is
tactics.
In industry after industry the terrain is
changing so fast that experience is irrelevant
and even dangerous.
The objective is not to get people to support change
but to give them responsibility for engendering
change, some control over their destiny.
Hamel
Who Should Be Involved in
Democratic Strategy Making?
● People geographically on the periphery

● Newcomers
● Young people
Change the Rules
The future is not the result of choices
among alternative paths offered in the
present -- it is a place that is created --
created first in the mind and will; created
next in the activity.
One must care more for one’s
community than for one’s position in
the hierarchy.
Top down process achieves unity of
purpose, Bottom’s up can achieve diversity,
but we need to balance the two so we need
deep diagonal slices in the strategy making
process.
Hamel
To invite new voices into the strategy making
process, to encourage new perspectives, to
start new conversations that span
organizational boundaries, and then to help
synthesize unconventional options into a
point of view about corporate direction, those
are the challenges for senior executives who
believe that strategy must be a revolution.
Hamel
Democratic Strategy Making
● Look for potential discontinuities
● Define and elaborate core
competencies
● Ferret out corporate orthodoxies
● Search for unconventional options
CHICAGO PARK DISTRICT
● Immense historical momentum
● Big Bang Approach
● Consistency of mission and strategy
● New, strong leadership
● Value of Information Technology
● Decentralizing the process
● Responding to the End User
STRATEGIC THINKING
● Systems Perspective (Interconnections)
● Focus on Intent (Vision and Capabilities)
● Intelligent Opportunism (What’s there?)
● Thinking in Time (Past, present, future)
● Hypothesis driven (If A, then B?)
Adapted from Jeanne Liedtka, Elements of Strategic Thinking
CONCLUSION
● What’s your charter?
● What competitive advantage will
achieve your charter?
● Are you internally consistent?
● Nurture your revolutionaries.
● Create problems that build the future.
THANK YOU
www.powerpoint4u.blogspot.com
www.bookfiesta4u.blogspot.com

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STRATEGIC THINKING

Adapted from George Day (1994)

Strategic thinking is driven by Strategic thinking is driven by

WHAT DO WE WHAT DO OTHERS

Out- Market- Service

What’s your value chain?

Stalk, Evans, and Shulmand (1992)

Every Business is a Growth Business,

1. Mission Statement 4. Strategy

Problem Finding New Old

Problem Creating New New

Adapted from Pathfinding by Harold Leavitt, 1995

Environ- Leader- Design Culture Results

Strategy as Revolution, Gary Hamel, HBR July-August, 1996,

Strategy as Revolution, Gary Hamel, HBR July-August, 1996, 96405, p. 69

● People geographically on the periphery

Adapted from Jeanne Liedtka, Elements of Strategic Thinking

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