Making Making Flowing Stream StrategyFlowing Stream Strategy

Work WorkDr. Manoj K Sharma, Ph.D.Honorary Professor of Management Practices

Delhi School of Management(Delhi Technological University, Govt. of NCT of Delhi)

Email: prof.management@aol.inCell phone: +91-9968690009

22

AgendaAgenda

1.1. Management of Continuity and Management of Continuity and ChangeChange

2.2. Flowing Stream Strategy Flowing Stream Strategy FrameworkFramework

3.3. Steps in the ProcessSteps in the Process

4.4. Case Study of IBMCase Study of IBM

5.5. Case study of GMCase study of GM

6.6. Q&AQ&A

Change versus Change versus ContinuityContinuity

ContinuityContinuity ChangeChange

PastPast FutureFuture

ExploitationExploitation ExplorationExploration

DefendDefend ProspectProspect

Fend-off Fend-off encroachmentencroachment

Uncontested Uncontested Market spaceMarket space

Flo

win

g S

trea

m S

trat

egy

•Continuity gives us roots; change Continuity gives us roots; change gives us branches, letting us gives us branches, letting us stretch and grow and reach new stretch and grow and reach new heights.heights.

- Pauline R. KozerPauline R. Kozer

Major Continuity ForcesMajor Continuity Forces

Core Competence

TechnologySupply Chain

and Distribution Network

Infrastructure Culture

Customer Base

Performance

Continuity Forces

Flo

win

g S

trea

m S

trat

egy

66

Major Change ForcesMajor Change Forces

Change Forces

Globalization

Government Policy and

Legislation

New Opportunities

Mergers and Acquisitions

Competition

e-Business

Customer Needs

New Technology

Flo

win

g S

trea

m S

trat

egy

77

Continuity-Change (C-C) MatrixContinuity-Change (C-C) Matrix

Change Masters(Wind)

Quick Encashers(Mushroom)

Synthesizers(Flowing Stream)

Stabilizers(Tree)

High

Low

HighLow

a

d

b

c

Continuity Forces

Ch

an

ge F

orc

es

Flo

win

g S

trea

m S

trat

egy

88

Flexible Strategy MatrixFlexible Strategy Matrix

Strategic Renewal and Transformation

Freewheeling and Experimentation

Strategic Flexibility for Integrating

Opposites

Incrementalism and Evolution

High

Low

HighLow

a

d

b

c

Continuity Forces

Ch

an

ge F

orc

es

Flo

win

g S

trea

m S

trat

egy

99

Flowing Stream StrategyFlowing Stream Strategy

• How to integrate continuity and change to How to integrate continuity and change to

naturally grow and open new vistas?naturally grow and open new vistas?

Flo

win

g S

trea

m S

trat

egy

1010

Eight PrinciplesEight Principles

• Divert the continuity momentum. Divert the continuity momentum. (Divert)(Divert)

• Have creative discontent to reach beyond Have creative discontent to reach beyond existing performance. existing performance. (Partition)(Partition)

• Focus on customer requirements rather than Focus on customer requirements rather than product/ service. product/ service. ( Integrate)( Integrate)

• Have a flexible synthesis of multiple options. Have a flexible synthesis of multiple options. (Integrate)(Integrate)

Flo

win

g S

trea

m S

trat

egy

1111

• Follow multiple routes and create a web. Follow multiple routes and create a web. (Shift)(Shift)

• Institute processes for continuous vitalization Institute processes for continuous vitalization of the organization. of the organization. (Integrate)(Integrate)

• Overcome hurdles in flow. Overcome hurdles in flow. (Divert)(Divert)

• Merge into a blue ocean. Merge into a blue ocean. (Shift)(Shift)

Eight PrinciplesEight Principles contd…contd…

Flo

win

g S

trea

m S

trat

egy

1212

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

Flo

win

g S

trea

m S

trat

egy

Flowing Stream Strategy Framework

1313

Steps in the ProcessSteps in the Process

1.1. Continuity-Change matrix mappingContinuity-Change matrix mapping2.2. Assessment of continuity and Assessment of continuity and

change forceschange forces3.3. Strategic factor deploymentStrategic factor deployment4.4. Strategic crystal analysisStrategic crystal analysis5.5. Selection of channels and Selection of channels and

strategiesstrategies6.6. Implementation and learning Implementation and learning

Strategic ToolsStrategic Tools

1.1. Continuity-Change questionnaireContinuity-Change questionnaire2.2. Continuity-Change matrixContinuity-Change matrix3.3. VDB assessment of continuity forcesVDB assessment of continuity forces4.4. Impact assessment of change forces Impact assessment of change forces 5.5. Strategy landscapeStrategy landscape6.6. Factor strategy diagram Factor strategy diagram 7.7. Flowing Stream Strategy CrystalFlowing Stream Strategy Crystal8.8. Channel selection matrixChannel selection matrix9.9. Strategy selection matrixStrategy selection matrix10.10.SAP-LAP AnalysisSAP-LAP Analysis

Flo

win

g S

trea

m S

trat

egy

Charting Strategic Charting Strategic TrajectoriesTrajectories

1.1. Strengthening/extending existing core Strengthening/extending existing core competence and acquiring new core competence competence and acquiring new core competence

2.2. Strengthening/extending/repositioning existing Strengthening/extending/repositioning existing brand and create new brandsbrand and create new brands

3.3. Different product-market combinationsDifferent product-market combinations

4.4. Retaining existing customers and creating new Retaining existing customers and creating new accountsaccounts

5.5. Integrating existing customers needs and new Integrating existing customers needs and new opportunitiesopportunities

6.6. Develop competitiveness in existing bases of Develop competitiveness in existing bases of competition and create new dimensions of competition and create new dimensions of competitioncompetition

7.7. Exploit existing/promising technology and explore Exploit existing/promising technology and explore new technology frontiersnew technology frontiersF

low

ing

Str

eam

Str

ateg

y

Relating with Known Strategy Relating with Known Strategy FrameworksFrameworks

• SWOT analysisSWOT analysis– SW – Continuity, OT - ChangeSW – Continuity, OT - Change

• Product-Market matrixProduct-Market matrix

• Balanced scorecardBalanced scorecard

• Emergent StrategyEmergent Strategy

Flo

win

g S

trea

m S

trat

egy

VDB Assessment of VDB Assessment of Continuity ForcesContinuity Forces

AssessmentAssessment Continuity Continuity ForcesForces

Strategic Strategic ActionsActions

VitalVital Customer baseCustomer base Use with a Use with a change forcechange force

DesirableDesirable Core competenceCore competence Partly modifyPartly modify

BurdenBurden Outdated Outdated technologytechnology

DropDrop

Flo

win

g S

trea

m S

trat

egy

Impact Assessment of Impact Assessment of Change ForcesChange Forces

AssessmentAssessment Change Change ForcesForces

Strategic Strategic ActionsActions

High ImpactHigh ImpactNew TechnologyNew Technology Use with a Use with a

continuity forcecontinuity force

Medium ImpactMedium Impact E-BusinessE-Business Partly accountPartly account

Low ImpactLow Impact Government Government PolicyPolicy

IgnoreIgnore

Flo

win

g S

trea

m S

trat

egy

Strategic FactorsStrategic Factors

Customer Customer FactorsFactors•CostCost

•ChoiceChoice

•DeliveryDelivery

•ConnectivityConnectivity

•ServiceService

•SpeedSpeed

Firm FactorsFirm Factors•Financial Financial PerformancePerformance

•Customer Customer satisfactionsatisfaction

•ProductivityProductivity

•QualityQuality

•FlexibilityFlexibility

•RiskRisk

•Learning LevelLearning Level

Flo

win

g S

trea

m S

trat

egy

Balanced Scorecard Adapted in Terms Balanced Scorecard Adapted in Terms of Firm and Customer Factorsof Firm and Customer Factors

Firm Factors

Financial Factors

Internal Factors

Learning and Change Factors

Customer Factors

Flo

win

g S

trea

m S

trat

egy

Strategy LandscapeStrategy Landscape (Merger of Air India and Indian)(Merger of Air India and Indian)

Pre Merger

Schedule

New FactorInternational Reach

Domestic Connectivity

Frequency Convenience

Post Merger

Flo

win

g S

trea

m S

trat

egy

Factor Strategy DiagramFactor Strategy Diagram(Merger of Air India and Indian)(Merger of Air India and Indian)

Maintain

Raise

Reduce

(International Reach, Domestic Connectivity)

(Cost)

(Convenience, Service level, Schedule)

Flo

win

g S

trea

m S

trat

egy

2323

Flowing Stream Strategy Flowing Stream Strategy

CrystalCrystal F

low

ing

Str

eam

Str

ateg

y KeyCustomer Factors

Change Forces

KeyFirm

Factors

Continuity

Forces

Relationship of Elements in the Relationship of Elements in the

CrystalCrystal S. S. No. No.

RelationshipRelationship Nature of InteractionNature of Interaction

11 Continuity Forces – Continuity Forces – Customer Factors Customer Factors

Identify customer factors that need to Identify customer factors that need to be maintained/nurtured to take be maintained/nurtured to take advantage of strengths of continuity advantage of strengths of continuity forces forces

22 Continuity Forces – Firm Continuity Forces – Firm Factors Factors

Identify firm factors that need to be Identify firm factors that need to be maintained/nurtured to take advantage maintained/nurtured to take advantage of strengths of continuity forces of strengths of continuity forces

33 Continuity Forces – Continuity Forces – Change Forces Change Forces

Identify the channel and strategies that Identify the channel and strategies that suit the pairs of continuity and change suit the pairs of continuity and change

forcesforces 44 Change Forces – Change Forces –

Customer Factors Customer Factors Identify customer factors that need to Identify customer factors that need to be changed to meet the requirements of be changed to meet the requirements of change forceschange forces

55 Change Forces – Firm Change Forces – Firm Factors Factors

Identify firm factors that need to be Identify firm factors that need to be changed to meet the requirements of changed to meet the requirements of change forceschange forces

66 Firm Factors – Firm Factors – Customers Factors Customers Factors

Identify the impact of customer and firm Identify the impact of customer and firm factors on each other factors on each other

Flo

win

g S

trea

m S

trat

egy

Channel Selection Channel Selection MatrixMatrix

HighHigh SHIFTSHIFT INTEGRATEINTEGRATE

Change Change LowLow

PARTITIONPARTITION

DIVERTDIVERT

LowLow

ContinuityContinuity

HighHigh

Flo

win

g S

trea

m S

trat

egy

Channel Selection Channel Selection MatrixMatrix

HighHigh PARTITIONPARTITION INTEGRATEINTEGRATE

Strategic Strategic LowLow

FlexibilityFlexibility

DIVERTDIVERT SHIFTSHIFT

LowLow

StrategicStrategic

HighHigh

LeverageLeverage

Flo

win

g S

trea

m S

trat

egy

Strategy Selection Strategy Selection MatrixMatrix

Change Change ForcesForces

Customer Customer

BaseBase Core Core Compe-Compe-

tencetence

CulturCulturee

TechnologTechnologyy

Infra-struInfra-stru

cturecture

GlobalizationGlobalization

CompetitionCompetition

New New opportunitiesopportunities

New New technologytechnology

CannibalizatiCannibalizationon

Continuity Forces

CASE STUDYCASE STUDY

IBMIBM

2929

IBM in 80s.& 90s…IBM in 80s.& 90s… BackgroundBackground

• In mid-1980s IBM enjoyed 40 percent of the computer In mid-1980s IBM enjoyed 40 percent of the computer industry’s sales and 70 percent of its profit. industry’s sales and 70 percent of its profit.

• By 1990 IBM sales were five times their nearest rival, By 1990 IBM sales were five times their nearest rival, but growth had slowed to less than six percent.but growth had slowed to less than six percent.

• Analysts at the time described the company’s Analysts at the time described the company’s position as a position as a “dangerous mix of arrogance and “dangerous mix of arrogance and complacency.” complacency.”

• In the early 1990s, many Wall Street analysts had In the early 1990s, many Wall Street analysts had written off IBM as a company; its stock price was the written off IBM as a company; its stock price was the lowest it had been since 1983 lowest it had been since 1983

3030

IBM IBM today…..today…..

• IBM has undergone a remarkable IBM has undergone a remarkable transformation from a struggling seller of transformation from a struggling seller of hardware to a successful broad range hardware to a successful broad range solutions provider solutions provider

• Today, IBM has revenues of around $100 Today, IBM has revenues of around $100 billion, more than 70% from software and billion, more than 70% from software and services (as compared to 27% in 1993)services (as compared to 27% in 1993)

• During a 20 year period, IBM has gone from During a 20 year period, IBM has gone from success to failure to successsuccess to failure to success; from a ; from a technology company to a broad-based technology company to a broad-based solutions provider to, perhaps solutions provider to, perhaps

3131

Pillars of IBM successPillars of IBM success….….

• Dynamic Management CapabilitiesDynamic Management Capabilities• IBM Business LeadershipIBM Business Leadership

•IBM ValuesIBM Values •StrategyStrategy

• Business Design CreationBusiness Design Creation• Management of Confluence of Management of Confluence of

Continuity and change at IBMContinuity and change at IBM

3232

IBM Business LeadershipIBM Business Leadership

3333

IBM ValuesIBM Values

Dedication to everyclient’s success

Innovation that matters –for our company and forthe world

Trust and personalresponsibility in allrelationships

What does it take to achieve client’s success? What information is needed to measure it? How canconflicts be addressed in the design of the business and organization?

Which innovation will matter, and towhom? Is this a technologyinnovation only, or are therebusiness models, processes,management or other elements toconsider? How will peoplecontribute and drive innovation thatmatters?

What will foster an environment of trust and responsibility? Whatinterdependencies create potential conflicts and how should they be addressed? Is the business designed to enable people to make and keep commitments? Areauthorities and resources sufficient for success?

IBM Values

3434

IBM’s Strategy Formulation..IBM’s Strategy Formulation..

3535

Business Design Creation Business Design Creation

3636

Key to sustainable growth at Key to sustainable growth at IBM…IBM…

Management of Management of ConfluenceConfluence

of of

Continuity & Change Continuity & Change

at IBMat IBM3737

Continuity Forces at IBMContinuity Forces at IBM

• Huge customer baseHuge customer base: : IBM has a presence in 75 IBM has a presence in 75 countries and serves clients in 174 countries. IBM’s countries and serves clients in 174 countries. IBM’s client are vast in number, globally distributed and client are vast in number, globally distributed and leading in their industries leading in their industries

• Well entrenched infrastructureWell entrenched infrastructure : IBM employs 70,000 : IBM employs 70,000 business and industry experts and 170,000 technology business and industry experts and 170,000 technology expertsexperts

• Core competenceCore competence : Core competence arises from the : Core competence arises from the unique and distinctive way that organization builds and unique and distinctive way that organization builds and develops , integrates and deploys its resources and develops , integrates and deploys its resources and competences. IBM has reconfigured its core competences. IBM has reconfigured its core competence by becoming a customer centric service competence by becoming a customer centric service organization. organization.

• TechnologyTechnology: IBM has one of the world’s leading : IBM has one of the world’s leading intranets – a virtual work environment that provides intranets – a virtual work environment that provides enterprise-wide information, applications and enterprise-wide information, applications and collaboration toolscollaboration tools

3838

Continuity Forces at Continuity Forces at IBM….IBM….contdcontd• Global Supply chain and distribution networkGlobal Supply chain and distribution network

IBM has Global sales systems that capture opportunity IBM has Global sales systems that capture opportunity and enhance client service byand enhance client service by

• Freeing up client teams’ time Freeing up client teams’ time • Improved sales pipeline visibility Improved sales pipeline visibility • Common business processes Common business processes • Integrated, dedicated teams for key accounts Integrated, dedicated teams for key accounts

• Existing cultureExisting culture : IBM lauds itself as a corporate culture : IBM lauds itself as a corporate culture more diverse than any other.. IBM has a culture of more diverse than any other.. IBM has a culture of innovation which it anticipates will succeed in the this innovation which it anticipates will succeed in the this era of business, create sustained brand equity and drive era of business, create sustained brand equity and drive greater shareholder value. greater shareholder value.

• PerformancePerformance: IBM has been relentlessly pursuing : IBM has been relentlessly pursuing Innovation and Commoditization in its business Innovation and Commoditization in its business practices practices

3939

Focus on innovation has led IBM to Focus on innovation has led IBM to become number one company in become number one company in patents granted around the world……patents granted around the world……

3,621

2,4512,366

2,2282,110

1,9591,771 1,731 1,671

1,610

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

IBM Samsung Canon Matsushita HPQ Intel Sony Hitachi Toshiba Micron

4040

15 Years of IBM Patent 15 Years of IBM Patent Leadership – 2007Leadership – 2007

1,0851,298

1,383

1,8671,724

2,6582,756

2,886

3,4113,288

3,4153,248

2,941

3,621

3,125

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

4141

Summary of Impact of Summary of Impact of Continuity ForcesContinuity Forces

Impact of Continuity Forces

0.001.002.003.004.005.00

Cus

tom

erba

se

Entr

ench

edin

fras

truc

tur

e

Cor

eco

mpe

tenc

e

Tech

nolo

gy

Glo

bal

Supp

ly c

hain

and

dist

ribut

ion

netw

ork

Exis

ting

cultu

re

Perf

orm

ance

Continuity Forces

Valu

es

4242

Change Forces at IBMChange Forces at IBM• Globalization: Globalization: The IBM of 30 years ago, was in many The IBM of 30 years ago, was in many

respects an emblematic multinational. Over the past respects an emblematic multinational. Over the past decade, IBM and its clients have changed structurally, decade, IBM and its clients have changed structurally, operationally, and culturally in response to globalization operationally, and culturally in response to globalization and new technology.and new technology.

• New Opportunities:New Opportunities: The globally integrated enterprise like The globally integrated enterprise like IBM can deliver enormous economic benefits to both IBM can deliver enormous economic benefits to both developed and developing nations. developed and developing nations.

• Competition:Competition: vast number of information utilities have vast number of information utilities have evolved, and rivals such as Sun are likely to give IBM a evolved, and rivals such as Sun are likely to give IBM a run for its money.run for its money.

• Customer Needs:Customer Needs: Over the next decade, customers would Over the next decade, customers would increasingly value companies that could provide solution - increasingly value companies that could provide solution - solutions that integrated technology from various solutions that integrated technology from various suppliers and, more importantly, integrated technology suppliers and, more importantly, integrated technology into the processes of the enterprise into the processes of the enterprise

4343

Change Forces at IBM…Change Forces at IBM…contdcontd

• New Technology New Technology ::IT industry has been characterized IT industry has been characterized by the cycle of innovation and commoditization and by the cycle of innovation and commoditization and with it, high risk and high reward with it, high risk and high reward

• e-Business:e-Business: It is primarily a business-to-business It is primarily a business-to-business focus. The e-commerce play for lowering costs and focus. The e-commerce play for lowering costs and increasing revenue is business to business .increasing revenue is business to business .

• Mergers and Acquisitions :Mergers and Acquisitions : Mergers and acquisitions Mergers and acquisitions continues to take place as the e-commerce industry continues to take place as the e-commerce industry matures.matures.

• Government Policy and Legislation: Government Policy and Legislation: various various regulations regarding the environmental protection regulations regarding the environmental protection and public health will form an important change force and public health will form an important change force to reckon with and IBM will have to take this into to reckon with and IBM will have to take this into consideration for its business performance.consideration for its business performance.

4444

Summary of Impact of Summary of Impact of Change ForcesChange Forces

Impact Of Change Forces

0.001.002.003.004.005.006.00

Glo

baliz

atio

n

New

Opp

ortu

nitie

s

Com

petit

ion

Cus

tom

erN

eeds

New

Tech

nolo

gy

e-B

usin

ess

Mer

gers

and

Acq

uisi

tions

Gov

ernm

ent

Pol

icy

and

Legi

slat

ion

Change Factors

Val

ues

4545

Mapping IBM on the Mapping IBM on the Continuity - Change MatrixContinuity - Change Matrix

Change Masters (Wind)

Quick Encashers (Mushroom)

IBMSynthesizers ( Flowing Stream)

Stabilizers(Tree)

Continuity forces

Ch

ang

e fo

rces

5

High

2.5

Low

1

1 Low 2.5 High 5

4646

Analysis and Strategic Analysis and Strategic Actions for Continuity Actions for Continuity

Forces of IBMForces of IBMAssessmentAssessment Continuity ForcesContinuity Forces Strategic ActionsStrategic Actions

VitalVital 1 Customer base1 Customer base2 Existing culture2 Existing culture

Use with change forces viz: Competition, Use with change forces viz: Competition, Customer need and New Opportunities Customer need and New Opportunities

DesirableDesirable

1 Core competence1 Core competence2 Existing infrastructure2 Existing infrastructure3Technology3Technology4 Performance4 Performance5 Supply Chain & 5 Supply Chain & Distribution NetworkDistribution Network

Modify to suit the emerging scenario Modify to suit the emerging scenario presented by change forces of New presented by change forces of New technology, Globalization, Mergers and technology, Globalization, Mergers and Acquisitions and e-BusinessAcquisitions and e-Business

BurdenBurden1 Outdated technology1 Outdated technology2 Bureaucratic part of existing 2 Bureaucratic part of existing

cultureculture DropDrop

4747

Analysis and Strategic Actions Analysis and Strategic Actions for Change Forces at IBMfor Change Forces at IBM

AssessmentAssessment Change ForcesChange Forces Strategic ActionsStrategic Actions

High ImpactHigh Impact

GlobalizationGlobalizationCompetitionCompetitionCustomer needsCustomer needsNew OpportunitiesNew OpportunitiesNew TechnologiesNew Technologies

This can be used with following continuity This can be used with following continuity forces for getting better performance:forces for getting better performance:Customer baseCustomer baseInnovation focus of IBM’s existing cultureInnovation focus of IBM’s existing cultureCore CompetenceCore Competence

Medium Medium ImpactImpact

Government policies and LegislationsMergers and Acquisitione-Business

Partly account for when formulating future Partly account for when formulating future strategiesstrategies

Low ImpactLow Impact ---- IgnoreIgnore

4848

Flowing Stream Strategy Crystal Flowing Stream Strategy Crystal

AnalysisAnalysis

Key Firm Factors

Financial Financial PerformancPerformance e

Customer Customer satisfaction satisfaction

ProductivitProductivity y Quality Quality

FlexibilitFlexibility y Risk Risk

Learning Learning Level Level

Key Customer Factors

Cost Cost ChoiceChoiceDelivery Delivery Connectivity Connectivity

Service Service Change

Forces

G4.

50

NO5.

00

C4.

33

CN4.

00

NT3.

50

e-B3.

00

M&A

3.00

GP&L

3.25

Continuity Forces

CB3.75

EI3.75

CC3.67

T4.33

SC&DN

3.20

EC4.40

P3.75

4949

Relationship of Elements in the Relationship of Elements in the Flowing Stream Strategy CrystalFlowing Stream Strategy Crystal

S. No. S. No. RelationshipRelationship Nature of InteractionNature of Interaction

11

Continuity Forces Continuity Forces – Customer – Customer

Factors Factors

Due to increasing competition and difficulty in getting new customers, having a Due to increasing competition and difficulty in getting new customers, having a large customer base is very critical in IT industry. However to meet the large customer base is very critical in IT industry. However to meet the customer needs and expectation of customer needs and expectation of cost choice and deliverycost choice and delivery IBM will have to IBM will have to effectively utilize its legacy of providing economical solutions by maintaining effectively utilize its legacy of providing economical solutions by maintaining 1.Its 1.Its core competence core competence of providing customized solutionsof providing customized solutions2.By optimally taking advantage of its entrenched 2.By optimally taking advantage of its entrenched infrastructureinfrastructure for managing for managing the solution development processthe solution development process

22Continuity Forces Continuity Forces

– Firm Factors – Firm Factors

The firm factors are more critical in shaping the strategy of an organization to carry The firm factors are more critical in shaping the strategy of an organization to carry forward it’s the legacy of working. This would require IBM toforward it’s the legacy of working. This would require IBM to1.To continue its focus on 1.To continue its focus on performance performance for achieving the set goals for financial for achieving the set goals for financial performanceperformance2.Customer satisfaction 2.Customer satisfaction will depend to a large extent on the will depend to a large extent on the work culture work culture prevalent in IBM.prevalent in IBM.3.Productivity improvement 3.Productivity improvement will be determined by the effectiveness of the will be determined by the effectiveness of the existing technologyexisting technology and the supply chain and distribution network and the supply chain and distribution network

33

Continuity Forces Continuity Forces – Change – Change Forces Forces

The channel of The channel of divert divert has been used by IBM but with the maturity in the strategic has been used by IBM but with the maturity in the strategic performance it has started adopting the strategy of performance it has started adopting the strategy of integration.integration.

5050

Sushil/IIT Delhi/2008Sushil/IIT Delhi/2008

Relationship of Elements in the Relationship of Elements in the Flowing Stream Strategy CrystalFlowing Stream Strategy Crystal

44

Change Forces Change Forces – Customer – Customer

Factors Factors

Customer factors are the one of the main forces to drive the change. In case of IBM the Customer factors are the one of the main forces to drive the change. In case of IBM the customer factors like customer factors like connectivity, service and speed connectivity, service and speed will require to be changed to meet will require to be changed to meet the challenges presented by change forces of new and better technologies, the challenges presented by change forces of new and better technologies, customer customer needs,e-Business and ,to some extent,globalisation needs,e-Business and ,to some extent,globalisation

55Change Forces Change Forces – Firm Factors – Firm Factors

The firm factors are the most important for determining how effectively IBM can The firm factors are the most important for determining how effectively IBM can handle the change forces. Factors like fhandle the change forces. Factors like flexibility lexibility will have to be changed as per the will have to be changed as per the emerging globalization of business .Similarly the risk factor will depend on the level of emerging globalization of business .Similarly the risk factor will depend on the level of competition being faced in new business competition being faced in new business environmentenvironment. Development and adaptation of . Development and adaptation of new technologies will drive the learning level requirements of new technologies will drive the learning level requirements of IBM.Megers and IBM.Megers and Acquisitions and government policy Acquisitions and government policy will require a change in the quality level and will require a change in the quality level and flexibility factors of IBMflexibility factors of IBM

66

Firm Factors – Firm Factors – Customers Customers Factors Factors

1 The customer need of 1 The customer need of cost cost depends on the IBM’s depends on the IBM’s financial performance financial performance projection projection and risk level of business, for determining the sale value of its servicesand risk level of business, for determining the sale value of its services2 2 Customers choice Customers choice and service factor will govern IBM’s ability to maintain the and service factor will govern IBM’s ability to maintain the customer satisfaction customer satisfaction and being flexible in its new service development and being flexible in its new service development 3 3 DeliveryDelivery factor of customer depends on the factor of customer depends on the productivity and quality productivity and quality parameters of parameters of IBMIBM4.Connectivity and speed 4.Connectivity and speed will to a large extent depend on the will to a large extent depend on the learning level learning level of the IBM of the IBM and its ability to be flexible for providing better IT solutionsand its ability to be flexible for providing better IT solutions

S. No. S. No. RelationshipRelationship Nature of InteractionNature of Interaction

5151

Key Strategic Channels Key Strategic Channels FrameworkFramework

SHIFT INTEGRATE

PARTITION &

DIVERT

Continuity forces

Ch

an

ge

fo

rces

5

High

2.5

Low

1

1 Low 2.5 High 5

5252

CASE STUDYCASE STUDY

GENERAL MOTORSGENERAL MOTORS

5353

GENERAL MOTORS…. GENERAL MOTORS…. backgroundbackground

• For the almost 76 years, General Motors For the almost 76 years, General Motors Corporation has been the annual global industry Corporation has been the annual global industry sales leader.sales leader.

• Established in 1908, GM today employs 0.3 million Established in 1908, GM today employs 0.3 million people around the world. people around the world.

• It has a global presence with manufacturing centers It has a global presence with manufacturing centers in 33 countries.in 33 countries.

• In 2006, 9.1 million GM cars and trucks were sold In 2006, 9.1 million GM cars and trucks were sold globally under the following brands: Buick, Cadillac, globally under the following brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, HUMMER, Chevrolet, GMC, GM Daewoo, Holden, HUMMER, Opel, Pontiac, Saab, Saturn and Vauxhall. Opel, Pontiac, Saab, Saturn and Vauxhall.

• Even in vehicle safety, security and information Even in vehicle safety, security and information services GM's On Star subsidiary is the industry services GM's On Star subsidiary is the industry leaderleader

5454

GENERAL MOTORS…. GENERAL MOTORS…. backgroundbackground

5555

GM- GM- Opportunities & ChallengesOpportunities & Challenges

5656

Continuity ForcesContinuity Forces at GMat GM

Impact Of Continuity Forces

3.003.203.403.603.804.004.20

Cus

tom

erba

se

Ent

renc

hed

infr

astr

uctu

re

Cor

eco

mpe

tenc

e

Tech

nolo

gy

Glo

bal

Sup

ply

chai

nan

ddi

stri

butio

nne

twor

k

Exi

stin

gcu

lture

Per

form

ance

Continuity Factors

Val

ues

5757

Change ForcesChange Forces at GMat GM

Impact of Change Factors

0.001.002.003.004.005.006.00

Glo

baliz

atio

n

New

Opp

ortu

nitie

s

Com

petit

ion

Cus

tom

erN

eeds

New

Tech

nolo

gy

e-B

usin

ess

Mer

gers

and

Acq

uisi

tions

Gov

ernm

ent

Pol

icy

and

Legi

slat

ion

Change Factors

Val

ues

5858

Mapping GM on the Mapping GM on the

Continuity - Change MatrixContinuity - Change Matrix

Change Masters (Wind)

Quick Encashers (Mushroom)

GMSynthesizers ( Flowing Stream)

Stabilizers(Tree)

Continuity forces

Ch

ang

e fo

rces

5

High

2.5

Low

1

1 Low 2.5 High 5

5959

Analysis and Strategic Actions for Analysis and Strategic Actions for Continuity Forces of GMContinuity Forces of GM

AssessmentAssessment Continuity ForcesContinuity Forces Strategic ActionsStrategic Actions

VitalVital

Customer baseCore competenceSupply Chain and Distribution Network

Use with change forces viz: Competition, Customer needs, New Opportunities

DesirableDesirableExisting infrastructureTechnologyPerformance

Modify to suit the emerging scenario presented by change forces of New technology, Globalization, Mergers and Acquisitions and Government policies and Regulations

BurdenBurdenOutdated technologyExisting Culture

Drop

6060

Analysis and Strategic Actions Analysis and Strategic Actions

for Change Forces of GMfor Change Forces of GM AssessmentAssessment Change ForcesChange Forces Strategic ActionsStrategic Actions

High High ImpactImpact

GlobalizationGlobalizationCompetitionCompetitionCustomer needsCustomer needsNew OpportunitiesNew OpportunitiesNew TechnologiesNew Technologies

This can be used with following continuity This can be used with following continuity forces for getting better performance:forces for getting better performance:Customer baseCustomer baseCore CompetenceCore CompetenceSupply chain and distribution networkSupply chain and distribution network

MediumMediumImpactImpact

Government policies and LegislationsMergers and Acquisitione-Business

Partly account for when formulating future Partly account for when formulating future strategiesstrategies

Low Low ImpactImpact

---- IgnoreIgnore

6161

Flowing Stream Strategy Crystal Flowing Stream Strategy Crystal

AnalysisAnalysis Key Customer Factors

Cost Cost ChoiceChoiceDeliverDeliver

y y ConnectiConnecti

vity vity Service Service Speed Speed

Continuity Forces

CB 3.50

EI 4.00

CC 3.33

T 4.00

SC&DN 3.60

EC 3.60

P 4.00

Change Forces

G 5.00

NO 3.50

C 5.00

CN 4.00

NT 4.00

e-B 1.50

M&A 3.33

GP&L 3.25

Key Firm Factors

Financial Financial PerfoPerformanrmance ce

Customer Customer satisfsatisfactioaction n

ProductiviProductivity ty Quality Quality

FlexibilitFlexibility y Risk Risk

Learning Learning Level Level

6262

Key Strategic Channels Key Strategic Channels FrameworkFramework

SHIFT INTEGRATE

PARTITION &

DIVERT

Continuity forces

Ch

ang

e fo

rces

5

High

2.5

Low

1

1 Low 2.5 High 5

6363

6464

6565