stratmgmt
TRANSCRIPT
Strategic Management
GM 105Dr. Lindle Hatton
CANOE THEORY Think of your organization as a long canoe The canoe has a destination Everyone in the canoe has a seat and paddle Everyone is expected to paddle Those who won’t paddle have to get out of the
canoe Those who prevent others from paddling have
to re-adjust or get out of the canoe There are no passengers in the canoe The canoe theory understands crisis The canoe theory says you have the right to be
happy
CANOE THEORY
BUILT TO LAST
Preserve the Core
Stimulate Progress
GOOD TO GREAT Level 5 Leadership First Who…Then What Confront the Brutal Facts The Hedgehog Concept A Culture of Discipline Technology Accelerators The Flywheel and The Doom Loop
Private versus Public Organizations Purpose Goals Financing Decision-Making Key Stakeholders
Strategic ManagementVersus
Strategic Planning
Features of Successful Strategic Management Has support of organization’s executive
officer. Is user friendly. Is participatory, not left to planners. Is flexible. Leads to resources decisions. Engages and motivates all staff. Is fresh and continuous, not static and
stale.
Features (Continued) Is Proactive Not a Quick Fix Part of Quality Management Payoffs Increase over Time
Lessons Learned About Strategic Planning Plans must be tailored to
organization. No one size ‘fits’ all. Time to complete takes longer –
expect 50% more than planned. Process needs a shepherd. Visionaries needed at beginning and
detail types thereafter.
Why Managers Don’t Plan Time Consuming High Demands Not Rewarded Executives Don’t Support It Too Risky
Strategic Management Model Scanning
Where are we now?
Strategy Formulation Where do we want to be?
Strategy Implementation How do we get there?
Measurement/Performance How do we measure our progress?
Strategic Management Model Strategy Formulation
Where do we want to be? Vision Mission Values Goals Objectives
VISION
Vision without Action is a DaydreamAction without Vision is a Nightmare
Not Optional Stretch – 30+ Years 8-10 Words in length Future State Brief and Memorable
VISION (Continued) Inspiring and Challenging Descriptive of the Ideal
Vision Examples “Light the Fire Within” “A Safer Future for All Communities” “See the Mountains – Breathe
Freely” To Be the Happiest Place on Earth To Be the World’s Best Quick
Service Restaurant
Vision Levels of People Some people never see it. (Wanderers) Some people see it but never pursue it
on their own. (Followers) Some people see it and pursue it.
(Achievers) Some people see it and pursue it and
help others see it. (Leaders)
John Maxwell, Developing The Leader Within You, 1993.
VISION EXERCISE
Mission Statement
In the absence of a clearly defined direction one is forced to concentrate on confusion that will ultimately consume you.
MISSION What is our purpose? Describes current state Timeline is 3-5 Years Builds on our distinctive
competencies Tends to focus on Core Business 30-35 Words in length
Mission Examples “To Lead All Communities in Disaster
Preparedness, Mitigation, and Recovery by Maximizing Assistance and Support.”
“Caltrans Improves Mobility Across California.”
To produce superior financial returns for our shareholders as we serve our customers with the highest quality transportation, logistics, and e-commerce.
MISSION EXERCISE
Corporate Governance What is it? Codes of Governance Role of the Board of Directors Role of Top Management Team Executive Compensation
Corporate Governance System by which a firm’s owners
control its affairs. Does it work?
Codes of Governance The Cadbury Code: 1992 Sarbanes-Oxley Act: 2002 Public Company Accounting Oversight Board “Triple bottom line” Four major issues:
Ownership structure and influence Fianacial Stakeholder rights and relations Financial transparency and information disclosure Board structure and processes (audit)
Role of the Board of Directors Monitor Evaluate and influence Initiate and determine Organization of Board
Insiders versus outsiders CEO/chair position
Committees’ Effectiveness
Role of Top Management Team Who is the TMT? Executive Leadership and Strategic Vision
Articulates strategic vision for corporation Sets the model for others to identify and
follow Communicates high performance standards
and builds confidence in followers’ abilities to meet standards
Managing strategic planning process
Executive Compensation Incentive alignment Executive Ownership Incentive compensation
Salary Bonus Stock Options LT Bonus
VALUES Guiding Principles Help establish Culture Part of Preserving the Core Core Ideology
Value Examples CHP PRIDE HP WAY J & J Credo “Build the Spirit of the Place”
Ethical Awareness Model Organizational Ethics Individual Ethics Personal Values
VALUES EXERCISE
Strategic Management Model Scanning:
Where are we now? Macro Analysis (STEP, PESTEL, ETC.) Industry Analysis – Competitive
Intelligence SWOT Analysis Internal versus
External Elements
Why Scan? To know your position in the environment To respond effectively to constant
change To see the organization as a whole To avoid surprises To survive To lay the foundation for strategic issues
SCANNING: Key Environmental Variables Macro Environment: STEP, PESTEL Task Environment: Industry Internal Environment: Focal
Organization
Socio-Cultural Variables Lifestyle Changes Career Expectations Regional Shifts in Population Life Expectancies More women in workforce Greater concern for fitness Postponement of family formation Increase in temporary workers
Technological Variables Total Federal Spending for R&D Total Industry Spending for R&D Focus of Technological Efforts Patent Protection Wireless Communications Nanotechnology Productivity Improvements Genetic engineering
Economic Variables GDP Trends Interest Rates Money Supply Inflation Rates Unemployment Levels Wage/Price Controls Energy Availability & Cost Disposable & Discretionary Income
Political-Legal Variables Antitrust Regulations Tort Reform Environmental Protection Laws Taxation at local, state, federal levels Hiring and Promotion Laws Americans Disabilities Act of 1990 Sarbanes-Oxley Act of 2002
Demographic Variables Aging Population Rising affluence Changes in Ethnic Composition Geographic distribution of
population Disparities in income levels
Global Variables Increasing Global Trade Currency Exchange Rates Emergence of Indian and Chinese
Economies Trade agreements (NAFTA, EU,
ASEAN) Creation WTO
STEP EXERCISE Socio-Cultural Technological Economic Politico-Legal
Industry Analysis 6 Forces Analysis
Industry Competitors Suppliers/Vendors Customers/Clients Potential New Entrants Substitutes Other Stakeholders
Role of Complementors
New Entrants and Entry Barriers Absolute cost advantages Access to inputs Government policy Economies of scale Capital requirements Brand identity Switching costs Access to distribution Proprietary products
Buyer Power (Channel and End Consumer)
Buyer volume and information Brand identity Price sensitivity Threat of backward integration Product differentiation Substitutes
Supplier Power Supplier concentration Differentiation of inputs Switching costs Threat of forward integration Cost relative to total purchases in
industry
Substitutes Switching costs Buyer inclination to substitute Variety of substitutes Price-performance tradeoff of
substitutes Necessity for product or service
Degree of Rivalry Exit barriers Industry concentration Fixed costs Industry growth Intermittent overcapacity Switching costs Brand identity Diversity of rivals Corporate stakes
Other Stakeholders Employees Unions Government Trade and Professional
Associations Other Direct Influencers
Role of Complementors Number of complements Relative value added Difficulty of engaging complements Buyer perception of complements Complement exclusivity Tend to increase profits by
increasing demand for an industry’s products
6 FORCES EXERCISE
Competitive Profile Analysis Identify Key Competitive Factors Identify key Competitors
COMPETITIVE PROFILE EXERCISE
Industry ForesightCustomerNeeds
Unarticulated
Articulated
Customer
Served Unserved Types
Internal Environment Internal Profile Analysis SWOT Analysis
Internal Profile Analysis Identify Key Core Functions Identify Key Measures for Core
Functions Build Matrix
SWOT Analysis Internal Environment
Strengths Weaknesses
External Environment Opportunities Threats
SWOT EXERCISE
Strategic Management Model Strategy Formulation
Where do we want to be? Vision Mission Values Goals Objectives
GOAL Supports the Mission Deals with One Issue or Item of Focus Reflects a primary activity or
strategic direction Describes the “To Be” State “BHAG” Encompasses a long period, i.e. at
least 3 years
Goal Examples Achieve excellence in the delivery of
disaster recovery and mitigation programs. Professionally develop our employees as a
reflection of DAD’s key attributes and values.
Increase the supply of housing, especially affordable housing.
Become a model for customer service. To provide benefits in correct amounts and
issued in a timely manner.
Goal Statements Litmus Test
Goal Exercise
OBJECTIVES Add specificity beyond Goals Answer the questions
What is to be accomplished? When?
Should contain the SMART Elements
OBJECTIVES: SMART Model Specific Measurable Aggressive but Attainable Results-Oriented Timeframe
Strategic Objective Examples By June 30, 2005 achieve 75% rating on
the DAD service index from all stakeholders.
Increase sales growth 6-8% in the next 5 years. (P&G)
Cut corporate overhead costs by $30 million per year. (Fortune Brands)
Operate 6,000 stores by 2010 – up from 3,000 in the year 2000. (Walgreen’s)
Reduce greenhouse gases by 10 percent (from a 1990 bast) by 2010. (BP Amoco)
Objectives Litmus Test
Strategic Objective Exercise
Strategic Management Model Strategy Implementation
Everyone is Responsible Few Guidelines No Easy 10-Step Checklist to Follow
Strategic Management Model Strategy Implementation
Most open-ended part of Strategic Mgmt
People implement strategies not Organizations
Strategic Management Model Strategy Implementation
How do we get there? Work Action Plans GOOMs
Strategy Implementation Considerations 7-S Framework – Strategic Fit Human Resources Patience
7-S Framework Shared Values Strategy Structure Systems Skills Style Staff
Human Resource Rule Hire Smart Train Hard Manage Easy
Parable of the BambooIt takes patience and discipline to develop and
empower people; in fact, it’s like growing bamboo. Once the seed is planted, you must water it daily for four years before the tree breaks ground – then it grows 60 feet in 90 days! Executives who nurture people can get similar results…How, you ask, can such rapid growth be possible? It results from the miles of roots that develop in those first four years. Preparing people to perform is the task of leadership.
Implementation Strategies GOOMs Implementation Conference CEO involvement Other Strategies?
GOOMs Goals Outcomes Objectives Measures
Definitions Goal: Broad, General BHAG Outcome: Desired end result and
report performance Objective: What and When Measure: A quantified unit that
assesses progress or achievement
GOOM Example
Goal 1: Achieve excellence in the delivery of disaster recovery and mitigation.
Outcome: Increased Customer Satisfaction
Objective 1.1: By June 30, 2005, achieve 75% rating on the DAD Service Index from all stakeholders.
Measure: DAD Service Index (DSI)
GOOM Exercise
Work Action Plan Template
Sponsor: Completion Date Organization: n.n Goal
Outcome
n.n Objective
Measure
Task Description Team Lead Staff Hours Completion
Date
Plan- D
o-Check-A
ct
Strategic Management Model Measurement / Performance
Why do we measure our progress?
Why Measure?
Reactive Reasons Government Intervention Fewer Resources and Smaller
Budgets Increased Demand for
Accountability Mandated
Why Measure?Proactive Reasons Makes us more responsive to public
needs Provides feedback on mission
accomplishment Creates blueprint for linking budget to
outcomes Good management and good public
policy
Measurement / Performance
How do we measure our progress? 5 Types of Measures
Input Output Outcome Quality Efficiency
INPUT MeasureAmount of resources needed to provide a
particular product or service.Examples: Number of FTEs or PYs Number of eligible clients Number of customers requesting
service Number of applications received Number of sales orders received
OUTPUT Measure
Amount of products or services providedExamples: Percent of highways resurfaced Number of police reports filed Number of vaccinations given to school-
age children per year Number of shafts produced in a single
operating shift
OUTCOME MeasureReflect the actual results achieved and/or
their impact or benefit. Examples: Reduction in incidence of disease Percentage of discharged patients living
independently Percent of increase in tourists Percent of monthly programmed sales
orders filled on time
QUALITY Measure
Reflect the effectiveness in meeting the expectations of customers and stakeholders
Examples: Number of defect reports compared to
number of reports produced Number of course ratings in highest
category related to total number of course ratings
EFFICIENCY Measure
Also known as productivity measures. Reflect the cost of providing products or services.
Examples: Output/Input Output/Time Output/Cost Outcome/Cost
Keeping Plans Off The Shelf All Staff Meeting Announce Phases Review and Assess Plans at
Quarterly Sessions Sponsors and Team Leads for
Strategic Goals and Strategic Objectives
Deming Philosophy – PDCA
Developing Bench Strength “Drill Down” Application Sponsors, Team Leads, and Team
Members Work Action Plan “Project” Champion Leadership Training Leadership Conference Presentations
Establishing Organizational Permanence Training Emphasis Certification Awards & Recognitions “Caught-Ya” Celebrations Walk the Walk
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