FLOWING STREAM STRATEGY

Presented By:1. Mr. S.C. Sharma 452. Tanveer Jung 503. Mohammedm Atik 224. Hina Yasmin Khan 125. K. K Tamwar 17

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INTRODUCTION

“ Continuity gives us roots ; change gives us branches , letting us stretch and grow and reach new heights”. - Pauline R. Kozer

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Flowing stream strategy provides strategic flexibility to manage continuity and change.

In stable environment: Important strategies are ‘continuity’ and logical incrementalism’.

Globalization process made the business environment highly turbulent.

Strategy deals with • change action of ‘reduce/raise ‘ some factors.• factors need to be ‘maintained/nurtured’ to take

advantage of continuity.

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The key channels of flowing stream strategy are – divert, shift, partition and integrate.

Characteristic of flowing stream is to provide a natural growth path.

Important framework• Built to Last• Ambidexterity

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MAJOR CONTINUITY FORCES

Core competence

Technology

Infrastructure

Customer Base

Supply chain and distribution network

Culture

Performance6

MAJOR CHANGE FORCES Globalization

New Opportunities

Competition

Customer needs

New Technology

e – Business

Mergers and Acquisitions

Government Policy and Legislation.7

Flowing StreamsEnterprises Prospective

Whether we take individuals or enterprises as living systems, their life trajectory can safely be treated as a flowing stream

High performing and visionary enterprises do not suddenly reach to the high level. It is preceded by a long journey of experimentation and failure

Coca Cola Started in in 1894 and still growing

Microsoft started in 1975 from a garage and still Growing

Why do some firms do spectacularly well, whilst others fail or achieve only modest grow

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High

Low

Ch

ang

e F

orc

es

Continuity ForcesLow High

Strategic Renewal andTransformation

(Wind Strategy)

ITES/BPO

)

Strategic Flexibilityfor Integrating

Opposites

(Flowing StreamStrategy)Telecom

Auto, Computers

Freewheeling andExperimentation

(Mushroom Strategy)

CoachingSmall and Tiny

Incrementalism and

Evolution

(Tree Strategy)

SteelPetroleum

Continuity-Change Matrix

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High

Low

Ch

ang

e F

orc

es

Continuity Forces

Low High

)

(Flowing StreamStrategy)

Incrementalism and Evolution- Tree Strategy

High continuity – Low Change

Steel industry:

SAILMittal Steel Tata Steel

Petro Chemical :

Reliance Petro Chemical

Tree to a flowing stream

Mergers & Acquisition

•Mittal Steel and Arceoler

•Tata Steel and Chourus

These companies ‘stabilizers

Continuous and gradual change

The change is very slow

Strategy is predominantly guided by the forces of continuity and improving business performance.

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High

Low

Ch

ang

e F

orc

es

Continuity ForcesLow High

High Change – Low Continuity

ITES/BPOICICI

Daksh

V -Customer

)

(Flow

ing Stream

Strategy)

Strategic Renewal and Transformation (Wind Strategy)

Change Masters

Low continuity pull due to less elaborateinfrastructure, faster technological obsolescence

Combination of strategic renewal and radical transformation

BPO industry is growing fast and is able to adapt to new change pressures due to lack of legacy

Emerging BPO industries might create enough continuity in terms of customer base, core competence and brand

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Strategic Renewal andTransformation(Wind Strategy)

This strategy may be typified as ‘Wind Strategy’ as the predominant driver as well as outcome of the strategy is ‘change’. 12

Microsoft co-founders Paul Allen (left) and Bill Gates in 1975

Strategic Flexibility for Integrating Opposites Flowing Strategy

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1975–1981: Microsoft boots up

1982–1985: Introducing Windows 1.0

1987–1992: Windows 2.0–2.11—More windows, more speed

1990–1994: Windows 3.0–Windows NT—Getting the graphics

1995–2001: Windows 95—the PC comes of age

2001–2005: Windows XP—Stable, usable, and fast

2006–2008: Windows Vista—Smart on security

2009–Today: Windows 7 and counting

High ‘Change ‘ and High ‘Continuity’

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Intel Processor Generations Summary

Generation IntelCPU

Approx.Year

1st Generation 8086 (1) 1980

80186 1981

80286 1982

2nd Generation 80286 (2) 1982

3rd Generation 80386 (3) 1987

4th Generation 80486 (4) 1990

 5th Generation Pentium (5) 1993

 6th Generation Pentium Pro (6) 1995

Pentium II 1996

Pent. MMX 1997

Celeron 1998

Pentium 3 1999

 7th Generation Pentium 4 (7) 2000

Celeron II 2000

Duron 2000

8th Generation Intel Core (8) 2006

This category of organizations, that are under high continuity forces as well as high change forces, are Synthesizers’

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Principles of Flowing Stream

1. Have creative discontent to reach beyond existing performance.

2. Focus on customer requirements rather product/service.3. Have a Divert the Continuity Momentum.4. flexible synthesis of multiple options.5. Follow multiple routes and create a web.6. Institute processes for continuous vitalization of the

organization.7. Overcome hurdles in flow.8. Merge into Blue Ocean.

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1.Divert the continuity momentum

• Highlights the significance of continuity and its leverage without sacrificing the change agenda.

• Channel created: divert• Divert the momentum of continuity to suit new requirement.• Identify the change force that would leverage the momentum

of a particular continuity force.• Example:

Cannibalization Strategy.Microsoft upgrading its OS software .Intel

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2.Have creative discontent to reach beyond existing performance

• Pleads for a creative discontent towards continuity.• Question: Can we remain satisfied with current

situation?• Leads to change:

– Gradual like TQM– Radical like BPR

• Channel created : partition.• Partition existing performance.• Focus on priority areas of performance for change.• Example: M&A where focus is

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• Merger in steel industry are horizontal focusing size & efficiency.

While acquisition in oil sector were vertical focusing on synergy on improving the value chain.

• Major change programs TQM & BPR.

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3.Focus on customer requirements rather than product/service

• Don’t be obsessed with existing products/services.• Calls for focus on customer requirements .• Channel: integrate• Focus on customer requirements will help to identify areas of

continuity and change. • Customer wants continuity in some areas while change in

others.

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• Continuity: Failure of New Coke and DSK Keyboard. • Change (Incremental): Mobile hand sets. Serves the basic

function of communication also gives additional benefits like entertainment, music, photography, enables business transaction and much more.

• Change (Significant): Restructuring of HP

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4.Have a flexible synthesis of multiple options

• Characterises synthesis or dynamic interplay of thesis and the antithesis with minimum time and efforts i.e. systemic flexibility

• Central principle of flowing stream strategy• Channel: integrate• Growth strategy of an enterprise can be:

• Continuity dominated focusing on expansion• Change dominated focusing on diversification

e.g. Bharti Airtel

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5.Follow multiple routes and create a web

• Highlights the significance of multiple path (like outsourcing, partnerships, consortia, alliances)and web creation.

• Bigger the stream, larger the web.• Channel: Shift• Web helps enterprise act as change enabler rather than a

change inhibitor• Web provides cushioning effect to all the partners• E.g. Dell

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6.Institute processes of continuous vitalization of the organisation

• Guides meta-processes of continuous vitalization of the organization

• Channel: integrate• Help create a continuously renewing continuity with higher

and higher vitality• Four Types of organizational vitality.

1. Operational or physical 2. Intellectual 3. Emotional4. spiritual

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Life mantra of

Operational and intellectual vitality• L-Learning• I-Innovation• F-Flexibility• E-Entrepreneurship

Emotional and Spiritual Vitality• L-Love• I-Inspiration• F-Fun• E-Enlightenment

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7.Overcome hurdles in flow

• Don’t confront the big hurdles, find ways to overcome (circumvent) them.

• Hurdles: major competitor, alliance problem, takeover etc.• Channel: divert.• Use innovation to overcome hurdles.• Circumventing may provide inspiration to create blue ocean.• Example: Honda civic problem.

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8.Merge into a blue ocean

• Ultimate aim of flowing stream is blue ocean.• Brings out the complementarity and synergy of the flowing

stream and blue ocean strategy.• Provides both occasional and perpetual strategic frameworks

in unison• Channel: shift• Some divisions get radically shifted from business model to

create value.e.g. Creation of Blue Ocean by Apple through development of i-pod.

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Key channel framework

How to utilize the strength of the continuity momentum by diverting it to change initiatives?

How to shift the burden of continuity so as to create an

enterprise amenable to strategic change?

How to overcome the paradox by partitioning the continuity and change factors?

How to develop strategic flexibility so as to integrate the continuity and change forces upfront?

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PartitionFactors for continuity &factors for change

Restructuring

Flowing Stream Strategy

DivertMomentum of continuityto change.

CannibalizationExtending

Shift Burden of continuityOutsourcingBlue Ocean

Integrate Continuity and change by synthesizing multiple options

Offering solutionsReinventing

Flowing Stream Strategy Framework

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Divert Momentum of continuity to Initiate Change

• Momentum of continuity- rich legacy of customer base, infrastructure, technology, core competency, brand equity and culture

• Changed strategic situation need change• Strategic channel play role with required change with

minimal disruption to continuity divert momentum in the new direction

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Microsoft case

• Microsoft trapped in inertia of its key technology i.e. Operating system (OS)• First phase of change driven by emergence of GUI

technologies partly re-channelized continuity momentum by cannibalizing its leading product DOS with windows.

• In second phase driven by net based technology it extended its core competency on OS tech to net platform

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IBM

• IBM to divert its R&D capabilities to new PC platform• In a subsequent stage of flow it resorted to higher order

channels of shift and partition.

FORD and GMAuto giants like Ford and GM get into exploitation syndrome

trapped in to changed scenario of high quality fuel efficient car by Japanese partial diversion to wards designing and manufacturing small cars

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Channel 2-shift burden of continuity

• Shift the unwanted burden of continuity, the most popular way is outsourcing

• CISCO-During IT recession Cisco could not sustain growth 40% adapt two way of shift ,one to move to optical communication, other by outsourcing the manufacturing its existing product nearly to 75%

• Bharti Airtel shifted its burden of continuity i.e. telecom network to IBM and Nokia ,marketing and branding function remain with Bharti gave enough flexibility to maneuver to new alternatives and cost saving on other hand

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Shift burden of continuity……

• Shift channel may be used in other ways also than outsourcing i.e.

• developing flexible supply chain• Hiving off strategic entrepreneurial units and creating blue

ocean.

• This channel provide strategic flexibilities than divert, but more complexities in implementation.

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Channel -3: Partition Continuity and Change Factors

The next higher maturity strategic channel Handling both the continuity and change factors

simultaneously, but partitioning them at different planesThe opposite factors centralization and decentralization ,

globalization-localization managed by using strategic channel of partition

Fordism give way to new breed HP and Motorola, HP with extreme decentralization restructured in four division

We may select separate factors for globalize and localize respectively.

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Channel 4: Integrate continuity and change

• The highest maturity level of strategic flexibility ,operated by synthesizing the opposite forces continuity and change upfront.

• The implementation of this channel require ingenious ways of synthesizing the paradoxically opposite forces yet provide cohesive and pragmatic mechanism that can be effectively implemented

• Continuity itself propel changes • 3 M with seeped in innovation GE as learning orgn. Both

have strong track record

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Integrate…..

• IBM and HP were suppose to acquire and integrate communication competencies ,whereas the communication co. AT&T were reqd. to muster computer competencies, this resulted into integrated information and communication technology(ICT)

• A successful implementation of this channel would result in emergence of truly flowing stream

• The organization at this level of strategic flexibility maturity would be able to easily implement the other three strategic channel as well.

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THANK YOU

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