2Organizational Strategy IT Strategy TriangleBusiness StrategyOrganizational StrategyIT StrategyAll 3 Strategies Need to be in HarmonyMultiple Ways to Create Harmony
3Business Strategy Frameworks High level strategic business conceptsEfficiency ( low cost) vs. InnovationValue disciplines (Tracy & Wiersema)Operational ExcellenceProduct LeadershipCustomer intimacyMore specific strategic business conceptsPorter’s Generic Strategies Framework (and its variants)Co-opetition (Brandenburg and Nalebuff)Hypercompetition and the New 7-S’s framework (D’Aveni)
5Porter’s Value Chain Enterprise Value Chain Joined-up Business CustomersSuppliersEnterpriseJoined-up BusinessIntermediariesVertical Process Integration3 Ways to DifferentiateLow CostDifferentiation as Viewed by CustomerNarrow Segment Focus
6Hypercompetition and the New 7-S’s framework (D’Aveni) Sustained competitive advantage is not possibleOnly temporary advantages exist, created by a company’s speed and aggressiveness.Assumes:Every advantage becomes erodedSustaining an advantage uses too much time and resources.Instead, companies must seek to stay ahead of its competitors by creating temporary advantagesThese are done in small steps over short competitive cycles. Focus on creating the next temp. advantage.
7Co-opetition – The Value Net EnterpriseCustomersSuppliersIntermediaries/ComplementorsCompetitors/SubstitutorsNew Joined-up BusinessValue NetVirtual integrationDifferentiationFocus on Customer NeedsCo-source ProcessesCoordinate Partners to Assemble Strategic Advantage
8Attributes of the different Value Capturing Strategies Focus on Core Processes of invention, product development, and market exploitationLoosely knit, ad hoc business structureMetrics are on product success and don’t punish experimentationOperations culture is individualistic, out of the box, futuristic, Team basedFocus on core processes of solution development, results management, relationship managementOperations culture delegates decision making to employees closest to customerMetrics are based on results from carefully selected and nurtured clients. Intent is to create deep and lasting relationships with clientsSpecific (custom) solutions preferred over general solutionsProduct LeadershipCustomer IntimacyOperational ExcellenceLeadership requires a primary strategyProcesses optimized for end to end supplyOperations culture is standardized, simplified, tightly controlled, centrally plannedMetrics are cost basedIntegrated, Reliable, High speed transaction systemsStandardization “When it absolutely, positively has to be there overnight
9Traditional IT Investment Portfolio MISDecision SupportKnowledge Mgn’tProcessing Business ActivitiesOrdersSalesShipmentCommunicationsData BaseOffice AutomationGroupware
10The Value Chain Information Flows CustomersSuppliersEnterpriseJoined-up BusinessIntermediariesProduct to CustomerVertical integrationProcesses are internally focusedProduct/Service FlowInformation Flows
11Future State : The Value Net EnterpriseCustomersSuppliersIntermediaries/ComplementorsCompetitors/SubstitutorsNew Joined-up BusinessDrive from customer need – not productsAssemble the solution from the value net to match the needVirtual integrationProcesses are externally focused & executed by the members of the value net that can best execute them
12The Business Organization (Hammer and Champy) ProcessesValues andBeliefsJobs andStructuresManagementand Measurement systems
13Hierarchical, flat and matrix organizational structures RegionIndustryRegion 1Region 2Region 3Ind. 1Position for Ind. 1 in region 1Pos. for Ind.1 in region 2Pos. for Ind.1 in region 3Ind. 2Pos. for Ind.2 in region 1Pos. for Ind.2 in region 2Pos. for Ind.2 in region 3Ind. 3Pos. for Ind.3 in region 1Pos. for Ind.3 in region 2Pos. for Ind.3 in region 3HierarchicalOrganizationalStructureMatrixOrganizationalStructureFlatOrganizationalStructure
14The networked organization The networked organization is a new form, made possible by IS.Instead of rigid hierarchies, all parts of the company are connected by formal and informal communications.
15IT Impact on Organization ( Structure, Processes, Culture)? ComputerTransaction systemsDatabasesPCTelecommunicationsInternet
16How do You Get the 3 in Sync? Business StrategyOrganizational StrategyIT StrategyChange EnablerOne-way?Two-way?Improvisation?
17What Happens When my Business Strategy is Value-Net Based?