Strategy New Approches

Simineh Aghajanian

PhD in Strategy

MBA

simineh.aghajanian@gmail.com

https://ir.linkedin.com/in/simineh-aghajanian-201a6110

https://bontech.ir/

https://bontech.ir/

https://bontech.ir/blog

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STRATEGY CONCEPTS TIMELINE

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BLUE OCEAN SHIFT

Source: blueoceanstrategy

WHAT IS BLUE OCEAN SHIFT?

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• Blue Ocean Shift is a roadmap to move you, your team, and your organization to new heights of confidence, market creation and growth.

• Whether you are a cash-strapped start-up or large, established company, non-profit or national government, you can SHIFT from cutthroat markets – red oceans – to wide-open new markets – or blue oceans of uncontested market space – by following a five-step process that brings your people along so they own and drive the process.

BLUE OCEAN SHIFT PROCESS

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1. Select the right scope for your blue ocean initiative and build your people‘s confidence

• Begin by working out which business, product or service you‘re going to tackle (the pioneer-migrator-settler map). This will help you target the area where you have the most to gain. You should put together the right team that is going to carry out the blue ocean initiative, and build their confidence for more effective buy-in.

2. Next, get super clear about the current state of play

• Next you need to ask yourself the following question: Do I have one simple picture that everyone can understand and puts everyone on the same page? Having a clear and shared picture of the current strategic landscape is critical (a tool that shows the current strategic landscape in one simple picture). It reveals how similar yours and your competitors‘ strategies look to buyers and customers and why this is driving your industry toward the red ocean.

3. Identify the hidden constraints that you can turn into opportunities

• Once you see the big picture, it‘s time for you to imagine where you could be. The challenge is to develop an equally clear, big-picture view of how the assumptions and boundaries of your industry also limit its appeal and size by causing ―pain points‖ (use the buyer utility map to discover what these pain points are). These pain points are not constraints; they are hidden opportunities to break away from the competition and provide new solutions to existing problems. This brings you to the next task: understanding precisely who your noncustomers are and why they tend to stay away from your industry (the three tiers of noncustomers, an analytic framework helps organizations broaden their vision and convert latent demand into real demand in the form of new customers).

BLUE OCEAN SHIFT PROCESS

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4. Go from the big picture to creating practical blue ocean options • Now your team is ready to generate practical blue ocean options that pursue both

differentiation and low cost. This means applying a systematic process to reconstruct market boundaries and create new market space (use the six paths framework that will help you see opportunities where others see only red oceans of competition, use the four actions framework to make sense of these insights and formulate them into strategy. This will focus your team on what they can eliminate, reduce, raise and create, and construct six potentially viable blue ocean strategic moves).

5. Launch your blue ocean move • The fifth and final step is where you‘ll learn how to select your blue ocean move, rapidly

test it in the market, and refine it to maximize its potential (choose which blue ocean move to pursue by hosting a blue ocean fair, that is designed to take the politics out of the decision-making process, get feedback, and consolidate people‘s commitment to their chosen move). Now you‘re ready to launch your blue ocean strategic move.

BLUE OCEAN SHIFT PROCESS

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THREE KEY COMPONENTS OF A SUCCESSFUL BLUE OCEAN SHIFT

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PERSPECTIVE: DO YOU HAVE THE MIND OF A BLUE OCEAN STRATEGIST?

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ROADMAP: BLUE OCEAN STRATEGY & SHIFT TOOLS

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TOOLS: ERRC GRID

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• The Eliminate-Reduce-Raise-Create (ERRC) Grid developed by W. Chan Kim and Renée Mauborgne is a simple matrix like tool that drives companies to focus simultaneously on eliminating and reducing, as well as raising and creating while unlocking a new blue ocean

TOOLS: ERRC GRID

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• This analytic tool pushes companies not only to ask the questions posed in the Four Actions Framework but also to act on all four to create a new value proposition (or strategic profile), which is essential to unlocking a new blue ocean. The grid gives companies four immediate benefits:

• It pushes them to simultaneously pursue differentiation and low cost to break the value-cost trade off.

• It immediately flags companies that are focused only on raising and creating, thereby lifting the cost structure and often over-engineering products and services – a common plight for many companies.

• It is easily understood by managers at any level, creating a high degree of engagement in its application.

• Because completing the grid is a challenging task, it drives companies to thoroughly scrutinize every factor the industry competes on, helping them discover the range of implicit assumptions they unconsciously make in competing.

CONFIDENCE: YOU NEED ‘HUMANNESS’ TO MAKE A BLUE OCEAN SHIFT

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• Three tools that address different aspects of our humanness which are

built into the blue ocean process

• Atomization

The whole process of a blue ocean shift is daunting to contemplate. Instead, break the

challenge into small, concrete steps that can be easily grasped, acted on, and ‗won.‘

• Firsthand discovery

When people are told that change must happen, they do not commit to the process and will

be resistant and even resentful. Instead, create the conditions that allow people to make

discoveries for themselves. Not only will this prevent people from feeling manipulated, the

very act of discovery helps people to develop a more open and forward-looking mindset.

They will see things they had never thought of before.

CONFIDENCE: YOU NEED ‘HUMANNESS’ TO MAKE A BLUE OCEAN SHIFT

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• Three tools that address different aspects of our humanness which are built

into the blue ocean process

• The exercise of fair process

This requires three fundamentals: engagement, so that people are actively involved in driving the

process; explanation, so that people are reassured that they understand the thinking behind each stage;

and clear expectations, so that no-one is surprised. This contributes to an atmosphere of trust, helping

to ensure everyone‘s voluntary cooperation.

Taken together, these three elements make it possible for people not only to buy into the

whole process of a Blue Ocean Shift, but also to be willing to actually implement the

changes required to make it happen.

EXAMPLE: CITIZENM

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EXAMPLE: CITIZENM

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TRANSIENT ADVANTAGE

Source: Rita G. McGrath, HBR

TRANSIENT ADVANTAGE

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• In a world where a competitive advantage often evaporates in less than a year, companies can‘t afford to spend months at a time crafting a single long-term strategy.

• To stay ahead, they need to constantly start new strategic initiatives, building and exploiting many transient competitive advantages at once. Though individually temporary, these advantages, as a portfolio, can keep companies in the lead over the long run.

• View strategy differently—as more fluid, more customer-centric, less industry-bound

The Anatomy of a Transient Advantage

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• Any competitive advantage—whether it lasts two seasons or two decades—goes through the same life cycle. But when advantages are fleeting, firms must rotate through the cycle much more quickly and more often, so they need a deeper understanding of the early and late stages than they would if they were able to maintain one strong position for many years.

The Anatomy of a Transient Advantage

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• Competitive advantage begins with a launch process, in which the organization identifies an opportunity and mobilizes resources to capitalize on it. In this phase a company needs people who are capable of filling in blank sheets of paper with ideas, who are comfortable with experimentation and iteration, and who probably get bored with the kind of structure required to manage a large, complex organization.

• In the next phase, ramp up, the business idea is brought to scale. This period calls for people who can assemble the right resources at the right time with the right quality and deliver on the promise of the idea.

The Anatomy of a Transient Advantage

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• Then, if a firm is fortunate, it begins a period of exploitation, in which it captures profits and share, and forces competitors to react. At this point a company needs people who are good at analytical decision making and efficiency. Traditional established companies have plenty of talent with this skill set.

• Often, the very success of the initiative spawns competition, weakening the advantage. So the firm has to reconfigure what it‘s doing to keep the advantage fresh. For reconfigurations, a firm needs people who aren‘t afraid to radically rethink business models or resources.

• In some cases the advantage is completely eroded, compelling the company to begin a disengagement process in which resources are extracted and reallocated to the next-generation advantage. To manage this process, you need people who can be candid and tough-minded and can make emotionally difficult decisions.

HOW TO ASSESS WHETHER CURRENT ADVANTAGES ARE AT RISK

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• Which of these statements is true of your company

• I don‘t buy my own company‘s products or services

• We‘re investing at the same or higher levels and not getting better margins or growth in return

• Customers are finding cheaper or simpler solutions to be ―good enough‖

• Competition is emerging from places we didn‘t expect

• Customers are no longer excited about what we have to offer

• We‘re not considered a top place to work by the people we‘d like to hire

• Some of our very best people are leaving

• Our stock is perpetually undervalued

• If you nodded in agreement with four or more of these, that‘s a clear warning that you may be facing imminent erosion

MAJOR SHIFTS IN THE WAY THAT YOU OPERATE

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1. Think about arenas, not industries

2. Set broad themes, and then let people experiment

3. Adopt metrics that support entrepreneurial growth

4. Focus on experiences and solutions to problems

5. Build strong relationships and networks

6. Avoid brutal restructuring; learn healthy disengagement

7. Get systematic about early-stage innovation

8. Experiment, iterate, learn

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STRATEGY DYNAMICS

Source: STRATEGYDYNAMICS; Kim Warren, LBS

WHAT IS STRATEGY DYNAMICS?

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"Strategy Dynamics" is simply a translation of system dynamics into business, in terms business people can understand and exploit.

Strategy dynamics also differs from 'Systems Thinking' approaches [Peter Senge, 1990, The Fifth Discipline] in emphasizing resource-accumulation and the importance of quantifying change-through-time, in contrast to the qualitative, feedback orientation of systems thinking.

Strategy Dynamics explains how business performance has developed up to the current date, and how to develop and implement strategies to improve future performance

The approach emphasizes building and sustaining the resources and capabilities needed to succeed

STRATEGY DYNAMICS FOCUSES ON PERFORMANCE OVER TIME

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The ultimate concern of strategic management is to quantitatively improve performance through time, sustainably. This can apply to the enterprise as a whole, or for a key function of interest [e.g. sales]. This means answering some challenging questions

Why is performance following its current path?

Where will performance go if we continue as we are doing today?

How can we design a robust strategy to radically improve that performance into the future?

HOW IS IT USED?

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Starting from the view of looking at how performance is

changing over time, the method works logically through

three stages

1. Identify the resources that performance depends on

2. Identify the flows that cause these resources to 'fill and drain‗

3. Identify the factors that cause resources to be won and lost

HOW IS IT USED STEP 1. IDENTIFY THE RESOURCES THAT PERFORMANCE DEPENDS ON

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• Rather than seek statistical explanations for performance, the method drills back along a logical causal chain, asking and answering 'what causes what?'. For example:

Revenue = sales volume x price Costs = salaries + sales & marketing + R&D etc.

• Each element is mapped on a diagram, whether on paper, white-board or in software. Any non-constant item, such as the performance outcome itself, is shown with a time-chart of its past values, and estimated into the future.

• After a few steps, this drill-back process reaches one or more 'resources', known technically as 'accumulating asset-stocks'. These resources have a very specific behavior - they fill up and drain away over time. Customers, cash, people, product range, and capacity are the most common examples. The Logical causality rule still applies. Sales volume = customers x sales-per-customer. Total salaries = staff x average salary.

HOW IS IT USED STEP 2. IDENTIFY THE FLOWS THAT CAUSE THESE RESOURCES TO 'FILL AND DRAIN'

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• The next element of the method is critical - the current quantity of any resource is not 'caused' by any other factor, but is mathematically identical to the sum of everything ever added, minus everything ever lost. This is easy to see in the case of cash:

Cash-today is equal to all cash that was ever received, minus all cash that was ever spent

• But this is equally true of every other asset-stock, i.e. resources. The number of customers today is equal to every customer that was ever won, minus every customer that was ever lost. There is no other reliable explanation for that number. It cannot be estimated from marketing spend, price levels, number of competitors or anything else, because it is 100.0% explained by historic gains and losses - and if you can't explain 'customers' with other factors, then you can't explain anything that depends on customers either, e.g. revenues and profits! Following the same logic, today's staff is the sum of every person ever hired, minus every person ever lost. Today's product range is the sum of every product we ever launched, minus every product we ever discontinued. This is why today's performance and future performance are both unavoidably dependent on history.

HOW IS IT USED STEP 3. IDENTIFY THE FACTORS THAT CAUSE RESOURCES TO BE WON AND LOST

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• The final question of causality we need to answer is what has been driving these 'flow-rates' for each resource - how quickly customers have been won, or how quickly staff were lost, for example. These flow-rates turn out to depend upon:

• Management Decisions [e.g. the amount of money spent on marketing drives the customer win-rate. The salaries offered are influencing staff attrition.

• External Factors [e.g. other firms' marketing or salaries, or customers' disposable income], and crucially also upon

• Existing Resource-levels [e.g. customer loss rates depend on service quality, which depends on adequate staff numbers]. All of this is populated with quantitative time-path information.

HOW IS IT USED?

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• When combined, the principles create an integrated diagram that depicts the 'physics' of the system, known as the 'strategic architecture' and how this system determines performance through time. These pictures are very similar to the flow-charts found in chemical process plants or power-transmission systems, for example. These display not only a diagram of the system, but also where material or objects are located, how quickly they are moving and what human controls are acting on to make the system perform as we want.

• Once this core architecture is complete, whether for a business, a part of a business, or any other organization, additional factors can be added by extending the same principles. These include:

• the role of 'potential' resources [e.g. likely customers]

• the various development-states of resources [e.g. junior, middle, senior staff, or products in research, development and launched]

• the impact of intangible factors - how reputation affects customer acquisition, or how morale influences staff turnover.

• competitive rivalry for resources, such as the likely rate at which rivals may win a newly-developing customer segment.

• the impact of organizational capabilities, and how they can be developed.

BENEFITS OF STRATEGY DYNAMICS

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The method works for every kind of enterprise - commercial, public-service, or voluntary - as well as to every function within an enterprise.

It is also applicable to not yet existing enterprises, such as new ventures or voluntary initiatives.

The method is strongly evidence-based and rigorous, offering a solid understanding of what causes current performance and confidence in the future performance.

Being evidence-based, it can solve differences of opinion amongst team-members. It also allows each individual, both amongst the management team and in the wider organization beyond, to see where their activity contributes to the whole, and on whom they depend.

Since it highlights exactly where management actions and decisions exert control, it provides clear and specific strategies and action plans, that can be adapted as the future unfolds.

The method provides a solid foundation for methods such as the Balanced Scorecard and Value Based Management, and is a means of integrating other established strategy frameworks and approaches, such as PEST, Core Competence and Value Chain.

THE BENEFITS DO NOT COME FOR FREE

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• The method takes time and effort, but not excessively so, given the value that can be had from improved strategies and decisions. There are significant limits to the reliable measurement of some items that limit the certainty the method can offer, e.g. measures for reputation or capability, and to some important causal relationships, e.g. to what extent reputation influences the rate of customer acquisition.

• To have the greatest impact, the method needs extensive factual evidence, including history, about many aspects of the enterprise and its performance. Frequently, these key numbers are unknown, in which case the team must be prepared to exercise its judgment in estimating what those missing values might be, and what impact they may have. The approach also depends on management's willingness and ability to be quantitative in their decision-making, which not all cultures find easy.

A new product launch model: https://app.sysdea.com/shared/E3-sLe2R2xIV9k2QZlG6zQ

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STRATEGIC MANAGEMENT PROCESS

Strategic Management

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SOAR

A DIFFERENT APPROACH TO STRATEGIC PLANNING: SOAR: BUILDING STRENGTHS-BASED STRATEGY

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• SOAR- Strengths, Opportunities, Aspirations and Results

• A more strength-based spin than SWOT (Strengths, Weaknesses,

Opportunities and Threats)

• A strategic planning framework that

• Focuses on strengths

• Seeks to understand the whole system by including the voices of the

relevant stakeholders

Source: Stavos, J., M & Hinrichs, G. (2009), The Thin Book of SOAR: Building strengths-bases strategy

A DIFFERENT APPROACH TO STRATEGIC PLANNING: SOAR: BUILDING STRENGTHS-BASED STRATEGY

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• Helps organizations focus on:

• What they are doing well,

• What skills can be improved and

• What is most compelling to stakeholders

• Pushes organizations to develop strategic plans that are more

dynamic, creative and optimistic

WHAT IS S.O.A.R.?

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SWOT VS. SOAR

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STRENGTHS: WHAT CAN WE BUILD ON?

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What are we most proud of as an organization? How does that reflect our greatest strength?

What makes us unique? What can we be best at in our world?

What is our proudest achievement in the last year or two?

How do we use our strengths to get results?

How do our strengths fit with the realities of the marketplace?

What do we do or provide that is world class for out customers, our industry, and other potential stakeholders?

OPPORTUNITIES: WHAT ARE OR STAKEHOLDERS ASKING FOR?

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How do we make sense of opportunities provided by the external forces and trends?

What are the top 3 opportunities on which we should focus our efforts?

How can we best meet the needs of our stakeholders, including customers, employees, shareholders, and community?

How can we reframe challenges to be seen as existing opportunities?

What new skills do we need to move forward?

ASPIRATIONS: WHAT DO WE CARE DEEPLY ABOUT?

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When we explore our values and aspirations, ―what are we deeply passionate about?‖

Reflecting on Strengths and Opportunities conversations, who are we, who should we become and where do we go in the future?

What is our most compelling aspirations?

What strategic initiatives (e.g. projects, programs, processes) would support our aspirations?

RESULTS: HOW DO WE KNOW WE ARE SUCCEEDING?

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Considering our Strengths, Opportunities, and Aspirations, what meaningful measures would indicate that we are on track to achieving our goals?

What are 3 to 5 indicators that would create a scorecard that addresses a triple bottom line of profit, people and planet?

What resources are needed to implement vital projects?

What are the best rewards to support those who achieve our goals?

How to Use

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1. Identify stakeholders who will participate, and determine the format and frequency of meetings (One large summit? A series of shorter meetings?). Participants should represent all levels of the organization and all functional areas.

2. Create an interview questionnaire or guide for gathering information about strengths, perspectives, and aspirations of employees and key stakeholders.

3. Engage employees and other stakeholders—including clients, vendors, and partners, if appropriate—to discover the conditions that created the organization‘s greatest successes. Ask powerful, positive questions to generate images of possibility and potential.

4. Threats, weaknesses, or problems should not be ignored, but rather should be reframed. Discussion should focus on ―what we want‖ rather than ―what we don‘t want.‖

How to Use

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5. Summarize the organization‘s positive core, which is its total of unique strengths,

resources, capabilities, and assets.

6. Identify aspirations and desired results that create a compelling vision of the future using

the best of the past and that also inspire and challenge the status quo.

7. Decide which opportunities have the most potential.

8. Write goal statements for each of these strategic opportunities and identify measures that

will help track the organization‘s success.

9. Plan actions and implement the plan for each identified goal.

THE SOAR PROCESS

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• Can be done quickly or over an extended period of time

• Depends on purpose/goal

• Ex: defining a committee‘s goals for the year vs. agency wide 4 year strategic plan

• Should include ―teams‖ or break out groups to address each set of questions

• This is best opportunity to involve various stakeholders

• Requires reframing of strategic planning process and goal setting

• Plan for resistance to change

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LEVELS OF STRATEGY MAKING

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OFFERING-LEVEL

TODAY’S AGE OF CONTINUOUS DISRUPTION: OFFERING-LEVEL STRATEGY

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• An offering is a product or service offered to a specific

market. You may also call it a product-market combination,

a value proposition, or simply a product or service.

• What is the core of offering-level strategy: acknowledging

that the heart of business is creating offerings for customers

that create unique value for them that is different from the

competition

Why Offering-Level Strategy?

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1. Your organization consists by and because of its offerings. You create value through your products and services. As such, they are your main reason of existence.

2. You sell and compete with offerings. You only have customers and competitors at the level of offerings. That is what they buy and compete for.

3. You make your money through your offerings. Your offerings is what is being paid for, not what your organization looks like or wants to achieve.

4. Different offerings require different strategies. Even though you may have overarching business-level and corporate-level strategies, any offering needs its own particular strategy.

5. Offering-level strategy is flexible. In today‘s fast-changing environment, you need to adapt to changes all the time. Strategy at the offering-level allows you to manage your organization as a fluid portfolio of offerings.

6. Only at the offering-level can you make strategy concrete enough to execute. At any higher-level, strategy is about averages and generic ideas – which are notably hard to execute.

HOW TO DO?

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1. Pick an offering. This is a particular product or service for a particular market, including an

indication of which region. For example, rather than talking about Tesla‘s strategy as a whole,

you focus on the Model 3 for the private market in the US.

2. Map the DNA of the value proposition. Identify which value is created along the four elements

of DNA: price, quality, delivery and flexibility. For example, you might argue that Tesla Model 3

is mainly focused on quality intangible and price and slightly less on delivery.

3. Assess how well the value proposition is aligned with the market. Confront the DNA of what is

offered with what customers need and what competitors are offering. For example, you map the

customer needs and the competition of the Model 3 along the elements of price, quality, etc. and

identify where they are aligned and misaligned.

HOW TO DO?

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4. Assess how well the organization is capable of actually creating and delivering the value

proposition. Assess whether the operational means and financials live up to the DNA from step 2.

For example, you identify Tesla‘s key resources and assess how well they contribute to

delivering quality intangible and price.

5. Assess how well the DNA of the value proposition is aligned with the purpose, climate and

environment of the organization. For example, you look at what Elon Musk aspires and what

goes on inside and outside the organization and assess whether or not these aspirations and

developments improve the Model 3‘s positioning.

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