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©© © Strategic Management Leveraging Individual Strategic Thinking to Produce Superior Organizational Performance by Alan W. Kennedy February 2015 © 2015.

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Presentation on theme: "©© © Strategic Management Leveraging Individual Strategic Thinking to Produce Superior Organizational Performance by Alan W. Kennedy February 2015 © 2015."— Presentation transcript:

1 ©© © Strategic Management Leveraging Individual Strategic Thinking to Produce Superior Organizational Performance by Alan W. Kennedy February 2015 © 2015 Alan W. Kennedy on behalf of Schulich Executive Education Centre (SEEC). All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, recording, photocopying or otherwise, without written permission of the copyright holder.

2 ©© © Module 1 Course Introduction

3 ©© © About the Presenter Alan has been teaching Strategic Management for the Schulich Executive Education Centre since Alan is a member of the faculty for Management I, a one week course for new managers, and the Insurance Industry Leadership Program. Alan is a frequent speaker on matters of strategy, risk, and project management of major capital projects. Alan’s book, The Alpha Strategies – Understanding Strategy, Risk, and Values in Any Organization, listed as a Kirkus Best Books of 2013, is available at online retailers everywhere and at Alan is a Honor Roll CMC member of the Canadian Association of Management Consultants. Alan received his degrees from Dalhousie University and served as Senior Vice President & General Counsel for both Oxford Development Group and Campeau Corporation and as a member of the Board of Directors for both companies. Alan Kennedy B.A. LLB. CMC Alan is a founding partner of Gibson Kennedy & Company, a Toronto consulting firm offering Canadian clients strategy counsel and competitive research services since Gibson Kennedy is the authorized correspondent in Canada for Kaiser Associates Inc., a Washington-based consultancy offering global competitive research services to North American based clients. Alan’s practice focuses exclusively on matters of strategy and capital projects planning and communication. Alan has extensive governance experience developed from attendance at more than 500 board meetings.

4 ©© © Table of Contents Day One: Situation Analysis Module 1: Course Introduction1 – 1 – 27 Module 2: Getting Ready to Plan1 – 28 – 39 Module 3: Internal Assessment1 – 40 – 50 Module 4: External Assessment1 – 51 – 60 Day Two: Strategic Planning Module 1: Course Introduction2 – 1 – 27 Module 2: Getting Ready to Plan2 – 28 – 39 Module 3: Internal Assessment2 – 40 – 53 Module 4: External Assessment2 – 54 – 71 Day Three: Business Planning Module 1: Strategic Plan Review3 – 3 – 19 Module 2: Expectations of the Strategic Plan3 – 20 – 35 Module 3: Impact of the Strategic Plan3 – 36 – 46 Module 4: Business Plan Strategy Development3 – 47 – 55 Schedules English Bay Situation AnalysisSchedule “A” Tarion Strategic PlanSchedule “B” Goldstone Branch Business PlanSchedule “C” BibliographySchedule “D”

5 ©© © Your Expectations

6 ©© © Course Objectives 1.How to prepare and to evaluate a situation analysis 2.How to prepare and to evaluate a strategic plan 3.How to prepare and to evaluate a business plan

7 ©© © Module 1 Course Introduction Topics 1.An overview of the course and content for each day Deliverables The 12 modules 2.The strategy model The 8 strategies 3 types of strategy Origins of the strategy system model 3.Overview of strategy development process The 4 types of expectations driving strategy development The 3 steps in strategy development 4.Definition of major terms to be used in the course

8 ©© © Course Deliverables Day 1 Day 2 Day 3 Produce a Situation Analysis Produce a Strategic Plan Produce a Business Plan 1. Course Overview

9 ©© © Definitions The knowledge base to support strategy decisions Situation Analysis A review of the 8 strategies common to all organizations Strategic Plan An alignment of functional activities with expectations created by the strategic plan Business Plan 1. Course Overview

10 ©© © Strategy Planning in 12 Steps 2. Scoping Expectations: Have we assessed the expectations for strategic planning? 3. Internal Assessment: Do we truly understand the what’s, how’s and why’s of our current strategy? 4. External Assessment: What factors in the external environment must we truly understand? 1. Choice of Planning Process: Should we be doing strategic planning or business planning? Situation Analysis Strategic Planning Business Planning 5. The Situation Analysis Review: Do we have enough understanding to support informed decisions? 7. Strategic Issue Identification: Are we able to develop scenarios to identify possible strategic issues? 6. Issue Development: Are we able to connect external factors to the strategy framework? 8. Strategic Plan Communication: Have we described the likely “what” and “when” impact of change? 9. Strategic Plan Review: Do we understand the strategic plan and how it is likely to impact us? 10. Expectations Impact: Can we identify the impact of strategic plan expectations on functional activities? 11. Expectations Testing: Are the strategic plan expectations consistent with competitive reality ? 12. Strategy Implementation: How are new expectations (if any) to be integrated with ongoing responsibilities? 1. Course Overview

11 ©© © The 4 Steps of Situation Analysis Identify What Management Knows Separate Need to Know from Nice to Know Study Factors for Actionable Information Convert 8 Strategies to Org Design Evaluate Activity Strengths/Weaknesses Use Evaluation to Identify External Factors Confirm Responsibility for all 8 Strategies Identify Type of Planning Required Identify CEO / Board Expectations Conduct Internal Assessment Conduct External Assessment Identify Authority Group Assess Appetite for Change Prepare Scope for Planning Project If less than 8, Go to Business Planning Step 1Step 2Step 3Step 4

12 ©© © Step Objective Confirm Authority for all 8 Strategies Identify Type of Planning Required Identify CEO / Board Expectations Conduct Internal Assessment Conduct External Assessment Identify Authority Group Assess Appetite for Change Prepare Scope for Planning Project 1. Choice of Planning Process: Should we be doing strategic planning or business planning? 1. Course Overview

13 ©© © 8 Strategies are Common to all Organizations 2. The Strategy Model

14 ©© © The starting point for all strategy The 8 Strategy Model StrategyGeneral Description Business Definition / Mandate Focus on positioning the business / interpreting mandate parameters RiskFocus on the unacceptable and ways to manage it GrowthFocus on type and rate of growth Financial ManagementFocus on sourcing, allocation, and management of capital & revenues R&D / TechnologyFocus on the creation and/or use of intellectual capital / technology Organization MgmtFocus on sourcing, allocation, and management of human resources Marketing & Sales / Communications Focus on identifying and capturing customers / clients Service Delivery / Production / Manufacturing Focus on fulfilling the marketing / communication promise of value / relevance 2: The Strategy Model

15 ©© © The Generic Sub-Strategies Business Definition / Mandate Business Positioning: Niche, Specialty, Commodity Mandate: Narrow Interpretation; Middle-of-the-Road; Broad Interpretation Risk Focus: Internal; External; Both Management: Accept, Avoid, Transfer, Reduce Growth Type: Internal, External (acquisitions, partnerships, alliances, joint ventures) Rate: Bigger, Smaller, No Change Financial Management Sourcing: Debt, equity, self-funding Allocation: Stars, Cash Cows, Question Marks, Dogs Management: Performance; Control, Both R&D / Technology Purpose: To enable productivity; to create competitive advantage Type: Follower, Leader, Adapter Organization Mgmt Sourcing: Internal; External Allocation: (Org Design) Centralized, Decentralized, Functional, Lines of Business, Geographical Management: Rigid Expectations, Flexible, Laissez-faire Marketing / Sales Communications Identifying: (Marketing 4Ps): Product / Service; Price; Place; Promotion Capturing: (Sales): Targeting; Approaching; Pitching; Converting; Closing; Follow-Up Service Delivery / Production / Manufacturing Needs / Requirements; Inputs Production Delivery Follow-up 2. The Strategy Model

16 ©© © Source of The 8 Strategies 2. The Strategy Model

17 ©© © 3 Types of Strategy are Common to all Organizations 2. The Strategy Model

18 ©© © Source of the 3 Types of Strategy 2. The Strategy Model

19 ©© © Acquisitions Internal Growth Avoid Transfer Specialty Equity Debt Control Services Place Use Production Centralized Lines of Business 2. The Strategy Model

20 ©© © The Dynamic Strategy System 2. The Strategy Model

21 ©© © 4 Types of Expectations Driving Strategy Development 2. The Strategy Model

22 ©© © Strategy Development in 3 Steps Name Focus on Process Focus on Results Comments Scoring 1 = Not Very Important 4 = Neutral 7 = Very Important 1. Getting the Facts / Becoming Informed 3. Strategy Development

23 ©© © 2. Conducting Analysis Results (Metrics) Very Important Results (Metrics) Not Important Process (Strategy) Very Important Process (Strategy) Not Important Strategy Development

24 ©© © Step 3: Strategy Selection Results (Metrics) Very Important Results (Metrics) Not Important Process (Strategy) Very Important Process (Strategy) Not Important 3. Strategy Development

25 ©© © Strategy Development Characteristics 1.Strategy development is driven by imposed expectations 2.Strategy development is fueled by timely & relevant facts 3.The time required to become informed is usually underestimated 4.The strategy development process should provide insight - possible choices of action - on current chosen strategy - on what is required to move from current strategy 5.“Selling” a recommended strategy for approval is a different process 3. Strategy Development

26 ©© © Definitions of Major Terms Strategy A description of chosen action Strategic Planning A review of the 8 strategies common to all for-profit and nonprofit organizations Business Planning Any subsequent strategy planning to implement the expectations of the organization’s Strategic Plan Strategic Issue A Strategic Issue is a question whether to replace or to improve existing strategy Strategic Management Strategic management is the leveraging of strategic thinking of individuals Strategic Thinking Strategic thinking is thinking about how imposed expectations and the realities of the external environment should impact the management of assigned responsibilities Expectations: Guidance on the hoped-for outcome Metrics: Anything expressed as a number Vision: A description of the successful outcome from long term pursuit of dominant strategy 4. Definitions

27 ©© © Module 1 Course Introduction Topics 1.An overview of the course and content for each day Deliverables The 12 modules 2.The strategy model The 8 strategies 3 types of strategy Origins of the strategy system model 3.Overview of strategy development process The 4 types of expectations driving strategy development The 3 steps in strategy development 4.Definition of major terms to be used in the course

28 ©© © Module 2 Getting Ready for Planning It isn’t the unkown that gives us trouble. It what we know that ain’t so. Will Rogers

29 ©© © Module 2: Getting Ready for Planning 1.Overview of output and process for situation analysis 2.SWOT Analysis and how to make it more powerful 3.Stakeholder Analysis - Identification of Stakeholders - Appetite / Expectations / Strategy Understanding Analysis 4.Planning as a project

30 ©© © Day One Output: Situation Analysis Report -The Planning Scope The Scope of Acceptable Change Internal Assessment External Assessment - Stakeholder Analysis & Appetite for Change - Current Strategy Analysis and Configuration - Customers & Markets - Industry Analysis - Competitors - Trends - Best Practices - A listing of factors most likely to impact the Firm - Preliminary insights on questions of strategy Conclusions 2. Overview

31 ©© © Step 2 Objectives Confirm Responsibility for all 8 Strategies Identify Type of Planning Required Identify CEO / Board Expectations Conduct Internal Assessment Conduct External Assessment Identify Authority Group Assess Appetite for Change Prepare Scope for Planning Project 2. Scoping Expectations: Have we assessed the expectations for strategic planning? 2. Overview

32 ©© © Traditional SWOT The TOWS Matrix, A Tool for Situational Analysis Heinz Weihrich, SWOT

33 ©© © 8 Strategy SWOT Analysis on English Bay Under Norcross Control – Strategy Strengths & Weaknesses Not Under Norcross Control – External Factors (Opportunities / Threats) 2. SWOT

34 ©© © The Alpha Strategies StrengthsWeaknesses Opportunitie s Threats Business Def / Mandate Risk Growth Financial Management R&D /Technology Organization Mgmt Marketing/Sales /Comm Service Delivery / Production / Manufacturing A Framework for SWOT 2. SWOT

35 ©© © Stakeholder Identification Who are the major stakeholders? Stakeholder CategoriesActual Stakeholders     The Authority Group Those Stakeholders who approve the plan and authorize implementation The Involve Group Stakeholders who should be involved because of the role they will play in implementation The Inform Group Stakeholders who need to be told what to do so that their actions are consistent with implementation The Consider Group Any Stakeholders not falling in any of the above categories and who could have a response to implementation 2. Stakeholders

36 ©© © Stakeholder Expectations Now we know “Who” they are, what do they want? Stakeholder Categories Actual Stakeholders Expectations The Authority Group  The Involve Group  The Inform Group  The Consider Group  2. Stakeholders

37 ©© © Scoping Appetite / Expectations / Understanding Business DefinitionRiskGrowth Organization Management Financial Management Marketing / Sales Store Operations R&D / Technology Manufacturing (Outsourced) X X X X X X X X ● ● ● ● ● ● ● ● Circle the symbol that is Norcross’ likely answer X means change is acceptable ● means change is not acceptable Question: What does it mean if not all 8 strategies can be candidates for change? 2. Stakeholders

38 ©© © Strategic Planning as a Project Project ElementDescription Objective Scope Methodology Schedule Major Mile Stones Deliverables 2. Stakeholders

39 ©© © Module 2: Getting Ready to Plan 1.Overview of output and process for situation analysis 2.SWOT Analysis and how to make it more powerful 3.Stakeholder Analysis - Identification of Stakeholders - Appetite / Expectations / Strategy Understanding Analysis 4.Planning as a project

40 ©© © Module 3 Internal Assessment

41 ©© © Module 3: Internal Assessment 1.Overview of process 2.Configuring the strategy system 2.Moving from strategy to organization design 4.Current Strategy Performance Assessment - Strengths & Weakness Identification - External Factors Impacting Strategy 5.Initial English Bay Strategy Conclusions

42 ©© © Step 3 Objectives Convert 8 Strategies to Org Design Evaluate Activity Strengths/Weaknesses Use Evaluation to Identify External Factors Confirm Responsibility for all 8 Strategies Identify Type of Planning Required Identify CEO / Board Expectations Conduct Internal Assessment Conduct External Assessment Identify Authority Group Assess Appetite for Change Prepare Scope for Planning Project 3. Internal Assessment: Do we truly understand the how’s and why’s of our current strategy? 3. Overview

43 ©© © Configuring the Strategy System Source: Seeingstrategy.com 3. Strategy System

44 ©© © From 8 Strategy Model to Organization Design 3. Org Design

45 ©© © From 8 Strategies to Organization Design EB Organization Design EB Organization Service Delivery / Productivity Marketing Growth Risk 8 Strategy Framework Financial Management Technology Organization Management Norcross - Oversight Lyons - Financial Mgmt - I.T. Mayweather - Buying - Operations - Marketing - Store Operations Taglietalla - H.R. Business Definition 3. Org Design

46 ©© © From 8 Strategies to Org Design EB OrganizationEnglish Bay Organization DesignSpecific Activities Norcross - business definition - risk - growth - Oversight - Borrowing - Sale of EB / Joint Ventures - New Store Openings - Expenditures approval Lyons - financial management - technology - Financial Mgmt - Payroll - Receivables - Internal Accting - I.T.- Systems Admin Taglietalla - organizational management - H.R. - Compensation - Policy Admin Mayweather - marketing - service delivery / production - Buying - Competitor surveys - Hindsight analysis - Operations - Receiving - Sorting - Reshipping - Marketing -Product: Private Label -Pricing: Value -Promotion: In-store promos and direct mail - Store Operations - Hiring -Training - Sales 3. Org Design

47 ©© © What are the EB functional strategies? EB Org DesignSpecific ActivitiesFunctional Strategy -Oversight - Borrowing - Sale / J.V. - New store openings - Expenditure approval - Financial Mgmt - Payroll - Receivables - Internal Accounting - I.T. - Systems Admin - H.R. - Compensation - Policy Admin - Buying - Competitor surveys - Prior Year Sales analysis - Operations - Receiving - Sorting - Reshipping - Marketing - Product: Private Label - Pricing: Value - Promotion: In-store promos / direct mail campaigns - Store Operations - Hiring -Training - Customer Sales 1. Within each function, which specific activity has become the functional strategy over time? 2. What makes functional strategy so hard to identify? 3. Strategy Performance

48 ©© © Internal Assessment StrengthsWeaknesses Likely External Factors Impacting Performance Oversight - new store openings capability- micro-management style- markets, customers, competitors Financial - real estate equity - budgeting process - discounts - dividends - financing terms - financial ratios - performance measures - landlords -bankers – real estate markets - tax law - corporate law - market for selling business I.T. - no use of technology-Technology H.R. - Good people - no policies - communications - customer/product training - turnover – org mgmt - industry turnover rates -competitive compensation -competitor employment practices Buying - private label - 3 month cycle - quality issues -Industry Change / Evolution -fashion trends - customers - supplier performance Operations - warehouse real estate value - shrinkage - inventory control - winter delivery - real estate market - Industry practices (e.g. EDI) Marketing - brand / image - private label success - customer lists - community focus - research - advertising - customer data - competitor data - product selections - customers - competitors - market trends - local markets Store Operations - below market rent - 22 stores upgraded - varying performance - low leases turning over - store hours set by HO - HO communications - lack of store mgr autonomy - parking - customers - competitors - local store markets Step 3 3. Strategy Performance

49 ©© © Eight StrategiesStrategy Business Definition High-end casual and related accessories in B.C. and Alberta RiskOwner-centric. Norcross involvement in all significant decisions GrowthInternal growth through store openings Financial Mgmtdebt Technology / R&DTo support and enable productivity Organization MgmtHead Office / Owner control Marketing / Store Operations If you build a store, they will come… ManufacturingOutsourced Initial English Bay Strategy Summary 3. Strategy Conclusions

50 ©© © Module 3: Internal Assessment 1.Overview of process 2.Configuring the strategy system 2.Moving from strategy to organization design 4.Current Strategy Performance Assessment - Strengths & Weakness Identification - External Factors Impacting Strategy 5.Initial English Bay Strategy Conclusions

51 ©© © Module 4 External Assessment

52 ©© © Module 4: External Factors Assessment 1.Overview of process 2.The Major Categories of External Factors 2.Issues in Customer Identification 4.Overview of Market, Industry, & Competitor and Trends and Best Practices 5.Initial English Bay Strategy Conclusions & Situation Analysis Report

53 ©© © Step 4 Objectives 4. External Assessment: What factors in the external environment must we truly understand? Identify What Management Knows Separate Need to Know from Nice to Know Study Factors for Actionable Information Convert 8 Strategies to Org Design Evaluate Activity Strengths/Weaknesses Use Evaluation to Identify External Factors Confirm Responsibility for all 8 Strategies Identify Type of Planning Required Identify CEO / Board Expectations Conduct Internal Assessment Conduct External Assessment Identify Authority Group Assess Appetite for Change Prepare Scope for Planning Project If less than 8, Go to Business Planning 4. Overview

54 ©© © The Major Categories of External Factors Customers & Markets Industry Dynamics Competitors Trends Best Practices Stakeholder Expectations 4. Major Factors

55 ©© © Customer Analysis 1. Who are our most important customers? 2. What criteria drive the customer’s purchase decision? 3. How do we compare, in the customer’s view, to the competition? 4. Which of our products and services are truly valuable to them? 5. What are the steps and who influences the purchase decision? 6. How are customer criteria and behavior likely to change? 7. What products and services are our customers going to need? 4. Customer Identification

56 ©© © Need / Risk Segmentation Analysis 1. Who represents the greatest need / greatest risk that our services are intended to address? 2. What drives them to use / come into contact with us? 3. How do we compare to alternatives to address the need / risk? 4. Which of our programs / services are truly valuable to them / address the problem effectively? 5. What are the steps and who influences their decision to use us / encourages their behaviour? 6. How is user need / risk behavior likely to change? 7. What services are users going to need / will be required to manage evolving risk? Customer Analysis Restated for Public Sector Organizations See also: Banishing Bureaucracy 1998, David Osborne 4. Customer Identification

57 ©© © Markets – Clusters of Customers Growth 1 – shrinking market and/or market share 4 – only able to maintain existing business 7 – significant growth in market and/or market share Profitable 1 – not profitable 4 – break-even 7 – very profitable Competition 1 – significant competition 4 – competition is manageable 7 – no competition 4. External Factors

58 ©© © Demand Analysis Methodology Market Analysis Restated for Public Sector Purpose To identify specific opportunities for priorities over the planning period Grid Design Horizontal Axis – specific products or services Vertical Axis – specific clusters for those services Scores For each cell, assign a score from 1 to 7 for each of the following variables. Growth of Need / Risk Assess the potential for growth of the need / risk programs / services 1 – shrinking overall need / risk 4 – no change from today 7 – significant growth in need / risk Sustainability Assess the likely financial sustainability of delivering services to meet the need / risk 1 – sustainability is a great risk 4 – no change from today 7 – sustainability not a risk Alternatives Assess the attractiveness of emerging alternatives to address the need / risk 1 – significant attractive alternatives are becoming apparent 4 – no change in alternatives apparent 7 – no attractive alternatives emerging or apparent Cell Scoring Each cell score is the total of the variables scoring for that cell Highest score: 21, representing a need / risk on which we should focus Lowest score: 3, representing limited perceived value to addressing need / risk 4. External Factors

59 ©© © Demand Analysis in the Public Sector Services Need / Risk Segments G= S= A= Total G= S= A= Total G= S= A= Total G=Growth S=Sustainability A = Alternatives 4. External Factors

60 ©© © Industry Dynamics Segment What is my chosen market called? Segment Size / Growth How big is it and is it growing? Segment Dynamics What dynamics are most shaping the segment? (e.g. competitive rivalry, customers, suppliers, entry barriers, alternatives) Critical Success Factors What must a competitor do to succeed given the dominant industry dynamics? Segment Evolution How is this segment likely to change over time? 4. External Factors

61 ©© © Competitor Analysis Industry Positioning Critical Success Factors Industry Evolution - Who are my future competitors? - What functional areas are likely to become the most important in the future? - What must I truly understand about my competitors? (e.g. strategies, strengths, weaknesses and areas of relative performance) - Who do I compete with in my market segments? - What segments are my competitors focusing on? - What segments should I focus on? 4. External Factors

62 ©© © Competitor / Alternatives Analysis Restated for Public Sector Service Sustainability Critical Success Factors Service Evolution - Who / What are the future competitors / alternatives? - What functional strengths are likely to become the most important in the future? - What must we understand about alternatives / competitors? (e.g. strategies, strengths, weaknesses and areas of relative performance) - Who is offering / can offer alternatives to our services? - What segments are they focusing on? - What segments should we focus on? 4. External Factors

63 ©© © Trend Analysis in 3 Steps 1. Source of Trends- The Family 2. What is the Emerging Trend? - “Kids” not moving out 3. What’s the impact on us? - “Kids” influencing parents’ buying decisions? 4. External Factors

64 ©© © Benchmarking Analysis Benchmarking Is a process for comparing organizational performance and processes to “Best-in-Class” performance and using insight from the comparison to improve ways and improve performance Determine what to Benchmark Identify Key Performance Variables / Measures Identify the “Best-in-Class” Organizations Research Performance of “Best-in-Class” Organizations Make Performance Comparisons Recommend Improvements Obtain Commitment to Implement 4. External Factors

65 ©© © External Factors Conclusions 4. Conclusions ResearchOverall Conclusions Customer AnalysisEB customer needs research Market AnalysisMarkets don’t support seem to support most EB stores. Industry Analysis Entry of more and more well-financed competitors using technology and multi, cross, and omni-channels Competitor AnalysisEB is a very small specialty retailer Trend AnalysisTechnology is changing the nature of retailing Benchmarking Analysis EB is not competitive when benchmarked against the lowest of benchmarks: the industry average.

66 ©© © Which one strategy is being most impacted? Customers & Markets Industry Dynamics Competitors Trends Best Practices 4. Conclusions

67 ©© © Module 4: External Factors 1.Overview of process 2.The Major Categories of External Factors 2.Issues in Customer Identification 4.Overview of Market, Industry, & Competitor and Trends and Best Practices 5.Initial English Bay Strategy Conclusions & Situation Analysis Report

68 ©© © Day One Deliverable: The Situation Analysis Day 1 Day 2 Day 3 Produce a Situation Analysis Produce a Strategic Plan Produce a Business Plan

69 ©© © Day Two – Preparation - Read the Tarion Case - Review the Day 2 Binder Materials - Identify the top 3 external factors you believe Tarion must address because those factors will significantly impact Tarion over the next 3 to 5 years


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