1. What is Strategy? Definition and questions to provoke our strategic thinking
Definition of Strategy
In essence, "Strategy is the direction and scope of our organization over the long-term: which achieves advantage for the organization through our configuration of resources within a challenging environment, to meet the needs of markets and to fulfill stakeholder expectations."
Questions to Provoke Our Strategic Thinking:
How can our business be different from what our competitors do?
What is our unique, key idea(s)? What can we do that others can’t do at all or as well?
How can we increase the distance and difference between us and our competitors?
Why, where and how can we provide something that customers like better than anything else available and yet also earn significant margins?
How can we create extra value?
How can we control more, yet own less?
Who are the best people for us to collaborate with, and how can we make it attractive for them to collaborate with us rather than someone else?
What success have we had that was unplanned and unexpected? How can we multiply this success?

2. Strategic Analytical Tool: Balanced Scorecard (BSC) Framework
The Strategy
Strategy: How we expect to create value; the art is to identify and excel at the critical few processes that are the most important to client value proposition.
The Balanced Scorecard not only is used to improve the measurement of an organization’s intangible assets, but also is a framework for describing and measuring strategies for creating value. It consists of the following elements:
Financial Performance: is a lag indicator, providing the ultimate definition of an organization’s success. Strategy describes how an organization intends to create sustainable growth in shareholder value.
Client Success: with targeted customers provides a principal component for improved financial performance. In addition to measuring the lagging outcome indicators of client/customer success, such as satisfaction, retention and growth, the client perspective defines the value proposition for targeted client segments. Choosing the client value proposition is the central element of strategy.
Internal Processes: create and deliver the value proposition for clients. The performance of internal processes is a leading indicator of subsequent improvements in client and financial outcomes
Learning & Growth: objectives describe how the people, technology & organization climate combine to support the strategy. Improvements in learning and growth measures are lead indicators for internal process, client and financial performance. Intangible assets are a key source of sustainable value creation.
Objectives in the 4 perspectives link together in a chain of cause-&-effect relationships. Enhancing & aligning intangible assets leads to improved internal processes, which in turn, drives success for clients and shareholders.
Financial Perspective
“If we succeed, how will we look to our Shareholders?”
Client Perspective
“To achieve our vision, how must we look to our client?”
Internal Perspective
“To satisfy our customers, which processes much we excel at?”
Learning & Growth Perspective
“To achieve our vision, how must our organization learn & improve?”
Adapted from: Kaplan & Norton

3. So How to We Meets the Needs of Our Shareholders
So How to We Meets the Needs of Our Shareholders? Balanced Scorecard Strategy Map: A Framework for Creating Strategy
Financial Results
Create Shareholder Value: ROCE, EVA, EBIDTA
Revenue Growth Strategy
Productivity Strategy
Our ultimate goal is to deliver value-based metric(s) to our shareholders through financial growth & operational productivity
Close Revenue at New Clients [Prospects]
Increase Revenues at Existing Clients
Optimize Cost Structure
Optimize Utilization
Client Value Proposition
product leadership
customer intimacy
“Client Value Proposition”
operational excellence
Clarifies the conditions that will create value for our clients: defines the specific strategy to compete for new clients & retain existing ones.
Service/Solution Attributes
Relationship
Image
Price
[Innovation
Processes]
Quality
Time
Functionality
Service
Relationships
Brand
Value Creating Processes
Source:
Financial Perspective – Whether companies use return on investment, return on capital employed (ROCE), economic value added (EVA), or some other value-based metric as the high-level financial objective, they have two basic strategies for driving financial performance: growth and productivity.
The revenue growth strategy focuses on developing new sources of revenue and profitability. It generally has two components:
Build the franchise. Develop new sources of revenue from new markets, new products, or new customers. This dimension of the strategy implies the greatest amount of change and requires the longest time to execute.
Increase customer value. Work with existing customers to expand their relationship with the company. This component tends to be intermediate term in duration and focuses on processes that integrate the firm’s systems with the customer’s to make processes more efficient.
The productivity strategy features the efficient execution of operational activities in support of existing customers. Productivity strategies focus on cost reduction and efficiency. Like the revenue growth strategy, the productivity strategy generally has two components:
Improve cost structure. Lower the direct costs of products and services, reduce indirect costs, and share common resources with other business units.
Improve asset utilization. Reduce the working and fixed capital needed to support a given level of business by great utilization, more careful acquisition, or disposal or parts of the current and fixed asset base.
The productivity strategy generally yields results sooner than the growth strategy. Kaplan and Norton stress a balanced approach to ensure that cost and asset reductions do not compromise a company’s growth opportunities.
The Customer Perspective – This is the heart of the strategy and defines how growth will be achieved. The value proposition defines the specific strategy to compete for new customers or increased share of existing customer businesses. A clear definition of this value proposition is the most important single step in the development of a strategy map. This is how a company differentiates itself in the marketplace. There are 3 ways to differentiate:
Product leadership. A product leadership company pushes its products into the realm of the unknown, the untried, or the highly desirable. Sony Corporation and Intel Corporation epitomize this strategy.
Customer intimacy. A customer-intimate company builds bonds with its customers: it knows the people it sells to and the products and services it needs. The Home Depot, Inc has successfully executed this strategy.
Operational excellence. Operationally excellent companies deliver a combination of quality, price and ease of purchase that no one else can match. Good examples of these companies are McDonald’s Corporation, Southwest Airlines, and Dell Computer Corporation.
Successful companies excel at one of these three dimensions of value while maintaining “threshold standards” on the other two. For example, The Home Depot differentiates itself through the knowledge and helpfulness of its sales staff. The company must still have excellent product selection, high-quality inventory management, and reasonable prices, but these are not the primary reasons for its targeted customers to shop there. As a contrast Intel, Sony and many pharmaceutical companies succeed by offering the best product for their customers’ needs. Prices of product leadership companies are generally high and service is adequate but not necessarily exceptional. Companies such as McDonald’s Corporation that stress operational excellence excel at being competitive on prices, customer-perceived quality, and lead-time response.
“Build the Franchise”
“Increase Customer Value”
“Achieve Operational Excellence”
“Be a Good Corporate Citizen”
Defines the business processes that we must master to support our client value proposition.
[Innovation
Processes]
Strategic Job Families
[Customer Management
Processes]
Strategic IT Portfolio
[Operational
Processes]
Organization Change Agenda
[Regulatory & Environmental Processes]
Alignment & Readiness
“Enable a Motivated, Prepared & Aligned Workforce”
“Build & Align Core & Strategic Competencies”
“Build & Align Information Technology Infrastructure”
“Create a Climate for
Action & Continuous Improvement”
Defines the intangible & tangible assets that must be aligned, integrated & mobilized to create value
[Human Capital]
[Information Capital]
[Organizational Capital]
Adapted from: Kaplan & Norton

4. Strategic Analytical Tool: 4 Generic Strategies-Customer Objectives for Different Value Propositions
“offer products & services that are consistent, timely and low-cost” 1
Best Total Cost
Lowest-Cost Supplier
Consistently High Quality
Speedy Purchase
Appropriate Selection
Examples: Southwest Airlines, Dell, Wal-Mart, McDonald’s
“products & services that expand existing performance boundaries into the highly desirable” 2
Product Leader
High-Performance Products
First to Market
Penetrate New Markets
Examples: Sony, Mercedes, Intel
“provide the best total solution to our customers” 3
Complete Customer Solutions
Quality of Solutions Provided
Number of Products/Services per Customer
Quality of Client Relationship
Customization of Solution
The objectives and measures for a particular value proposition define an organization’s strategy.
The 4 major value propositions and customer strategies observed in business: (1) low total cost (2) product leadership (3) complete customer solutions (4) system lock-in. Each of these clearly defines the attributes that must be delivered if the customer is to be satisfied.
Good examples of firms providing ‘complete customer solutions’ is IBM and Goldman Sachs. For this value proposition, customers should feel that the company understands them and is capable of providing them with customized products and services tailored to meet their needs. IBM, when it dominated the computer industry, did not offer the lowest prices and only rarely delivered its new products on time. Nor were IBM’s products the most advanced technologically, the most powerful or the fastest. But IBM offered information technology executives, its targeted customers, complete solutions – hardware, software, installation, field service, training, education and consulting – that were tailored to each organization’s needs. Companies offering such a customer solution value proposition stress objectives relating to the completeness of the solution (selling multiple, bundled products and services), exceptional service, both before and after the sale, and the quality of relationship.
Examples: IBM, Goldman Sachs
“high switching costs to end-use customers”
“add value to complementors” 4
System Lock-In
Offer Broad Selection & Convenient Access
Provide a Widely Used Standard
Provide Innovation on a Stable Platform
Offer Easy-to-Use Platform & Standard
Provide Large Customer Base
Examples: Proprietary Operating system, eBay, Yellow Pages

5. The 4i’s Strategy Example Strategy Map
Financial Perspective
Revenue Growth Strategy [$250M]
[Long-Term Dimension]
Productivity Strategy [20% EBITDA]
[Short-Term Dimension]
Shareholder Value
Deepen Existing Client Relationships
Create New Revenue Sources
Optimize Utilization
Continuously Improve Cost Structure
What we must deliver to our shareholders
Client Perspective
Client Value Proposition
Services & Solutions Attributes
Relationship Management
Image/Brand
Guaranteed Results
Superior Quality
Leading-Edge Functionality
Customizable Solutions
Community Activist
Progressive Firm
What we offer our clients; how we are distinct from our competitors
Responsive, 24/7 Client Service
Trusted , Consistent & Personal Relationship
Industry Experts
EA/SOA Focused
Certified Technologists
Award-Winning Organization
Innovation Processes
Customer Management & Marketing Processes
Operations Management Processes
Regulatory & Social Processes
Internal Perspective
Processes that create new products & services
Processes that enhance client value
Processes that produce & deliver services & solutions
Processes that improve communities and the environment
Rapidly Develop New Solutions
Run Each Solution Like a Business
Acquire Firms That Add Value
Design Compelling Brand
Communicate Value Proposition
Select Targeted Clients
Acquire Targeted Clients
Retain Clients
Focus on Solution Selling
Optimize Demand/Supply
Deliver Quality Engagements
Optimize Solution Infrastructure
Manage Engagement Risk [PMO]
Manage Financial Risk
Manage Pipeline Risk
Be Green
Promote Health of Associates
Invest in Community
Leverage Best Employment Practices
What processes we must excel at
Strategy Map: is a visual representation of the cause-and-effect relationships among components of an organization’s strategy.
A Strategy Map provides a uniform and consistent way to describe strategy, so that objectives and measures can be established and managed.
Strategy is based on a differentiated customer value proposition. Satisfying clients is the source of sustainable value creation. Strategy requires a clear articulation of targeted customer segments and the value proposition required to please them. Clarity of this value proposition is the single most important dimension of strategy.
A strategy should identify specific customer segments that the company is targeting for growth and profitability. For example, Southwest Airlines offers low prices to satisfy and retain price-sensitive customers. Neiman Marcus, on the other hand, targets customers with high disposable incomes who are willing to pay more for high-end merchandise.
The value proposition defines the company’s strategy for the customer by describing the unique mix of product, price, service, relationship, and image that a company offers its targeted group of customers. The value proposition should communicate what the company expects to do for its customers BETTER or DIFFERENTLY that its competitors.
Customer Selection Process: defines a set of customer characteristics that describes an attractive customer segment for the company
Customer Acquisition Processes: relates to generating leads, communicating to new potential clients, choosing entry-level products, pricing the products and closing the sale.
Customer Retention is a result of excellent service & responsiveness to customer requests. Timely, knowledgeable service units are critical for maintaining client loyalty and reducing the likelihood of client defections.
Growing a client’s business with the company involves managing the relationship effectively, cross-selling multiple products and services and becoming known as a trusted advisor.
Creating Alignment & Readiness:
Strategic Job Families
Strategic IT Portfolio
Organization Change Agenda
Learning & Growth Perspective
Human Capital
Information Capital
Organization Capital
Attain Consulting 101 Skills
Attain Technology Certifications
Create Solution Skills
Attract, Grow & Retain the Best People
Establish Intranet
Create Time Entry Reports / BI
Establish Project Work Area
Create Culture of Improvement
Clearly Communicate Expectations
Emphasize Teamwork
How we must develop our organization
Adapted from: Kaplan & Norton

6. Concept: From Mission Statement to Measureable Outcomes
Strategy is not a stand-alone management process. It is one step in a logical continuum that moves an organization from a high-level mission statement to the work performed by its associates.
Strategy is about selecting the set of activities in which an organization will excel to create a sustainable difference in the marketplace.
The sustainable difference can be to deliver greater value to clients than competitors, or to provide comparable value but at lower cost than competitors. “Differentiation arises from both the choice of activities and how they are performed.”
Mission
Why We Exist
Values
What’s Important to Us
Vision
What We Want to Be
Strategy
How We Create Value [Our Game Plan]
Strategy Map
Translate the Strategy
Balanced Scorecard [BSC]
Measure and Focus
Targets & Initiatives
What We Need to Do
Personal Objectives
What I Need to Do
Strategic Outcomes
Satisfied Shareholders
Delighted Clients
Efficient and Effective Processes
Motivated & Prepared Workforce

7. Concept: The Brand & the Brand Spectrum
brand spectrum: attribute hierarchy
One of the foundations for developing a strong & distinctive brand is to understand how clients feel. It is especially helpful to understand not only what motivates choice and behavior by also where a brand resides in the Brand Spectrum.
Understanding what motives consumers to choose one brand over another helps identify which functional & emotional benefits are the “cost of entry” and which can make a brand distinctive in the market.
In today’s highly competitive markets, the attributes which differentiate a brand are emotional rather than functional. In fact, many of the functional attributes are the cost of entry. In contrast, the true differentiators are emotionally based. As a result, the success of genuine brands depends on the emotional link they can make with consumers. Identification of the attribute hierarchy is very helpful in the development of a promise by identifying which attributes are needed for differentiation.
A second key step in developing a distinct & differentiated promise is to understand what type of relationship clients have with your brand and with key competitors. Is it more functionally driven, resulting in little to no differentiation & customer loyalty? The stronger the emotional ties with your brand, the stronger the customer loyalty. Conversely, if few emotional links exist with your brand, clients are more functionally driven and can more easily be persuaded to choose another brand.
Competitors that operate at the functional level have to constantly reinforce their relationship with clients, usually through pricing adjustments and promotions.
EMOTIONAL ATTRIBUTES
WILL DIFFERENTIATE
Emotional attributes such as: trust, interesting, respect, indispensable
MAY DIFFERENTIATE
Specialty areas, trends
MUST-HAVEs TO BE CONSIDERED
Value/price attributes, customer service, variety, strength in basic products
FUNCTIONAL ATTRIBUTES

8. Strategic Analytical Tool: Balanced Scorecard Strategy Map – Explanation of Terms
FINANCIAL PERSPECTIVE:
The BSC retains the financial perspective as the ultimate objective for profit-maximizing firms. Financial performance measures indicate whether the company’s strategy, including its implementation and execution, are contributing to bottom line improvement.
Financial objectives typically relate to profitability – measured by EBITDA.
Basically, financial strategies are simple; firms make more money by [1] selling more, and [2] spending less. Thus, the firm’s financial performance improves through 2 basic ways – revenue growth and productivity.
Revenue growth occurs by deepening relationships with existing customers, selling entirely new products, selling to clients in new segments.
Productivity improvements can occur in 2 ways [1] reduce costs, and [2] utilize assets more efficiently.
CLIENT PERSPECTIVE:
The revenue growth strategy requires a specific value proposition, in the customer perspective, that describes how the organization will create differentiated, sustainable value to targeted segments. Managers identify targeted customer segments in which the business unit competes.
Successful outcomes from a well-formulated & implemented strategy are: client satisfaction, retention, acquisition, profitability, market share and account share.
A strategy should identify specific customer segments
The client value proposition defines the company’s strategy by describing the unique mix of product, price, service, relationship and image that a firm offers its targeted clients.
The client value proposition should communicate what the firm expects to do for its customers better or differently than its competitors.
INTERNAL PERSPECTIVE:
Internal processes accomplish 2 vital components of strategy: [1] produce & deliver the value proposition for clients; [2] improve processes & reduce costs for the productivity component
Operating processes produce & deliver the service/solution to clients
Client management processes expand & deepen relationships with targeted customers.
Customer Selection Process: defines a set of customer characteristics that describes an attractive client
Customer Acquisition Processes: relates to generating leads, communicating to new potential clients, pricing and closing.
Customer Retention is a result of excellent service & responsiveness to customer requests.
Growing a client’s business involves managing the relationship effectively, becoming known as a trusted advisor.
INTERNAL PERSPECTIVE:
Innovation processes develop new products, processes and services, often enabling the firm to penetrate new markets & customer segments. Managing innovation includes 4 sets of processes: [1] identify opportunities for new products and services; [2] manage the research and development portfolio; [3] design & develop new products & services; [4] bring the new products and services to market.
Once ideas for new products & services have been generated, managers must decide which project to fund and which will be developed entirely with internal resources, which done collaboratively in a joint venture and which will be licensed.
Regulatory & Social Processes: help organizations continually earn the right to operate in communities in which they product & sell. Regulations impose standards on firms’ practices.
LEARNING & GROWTH PERSPECTIVE:
Learning & growth describes the organization’s intangible assets and their role in strategy.
Human Capital: the availability of skills, talent and know-how required to support the strategy.
Information Capital: the availability of information systems, networks and infrastructure required to execute the strategy.
Organization Capital: the ability of the organization to mobilize and sustain the process of change required to execute the strategy.
Whereas all organizations attempt to develop their people, technology & culture, most do not align these intangible assets with their strategies.
The key to creating this alignment is granularity – that is, to move beyond generalities and focus on specific capabilities and attributes required by the critical internal processes of strategy
Strategy Map, Balanced Scorecard and Action Plan
The Strategy Map describes the logic of the strategy, showing clearly the objectives for the critical internal processes that create value and the intangible assets required to support them.
The Balanced Scorecard translates the strategy map objectives into measure & targets.
But objectives and targets will not be achieved simply because they have been identified; the organization must launch a set of action programs that will enable the targets for all the measures to be achieved.
The organization must supply scarce resources – people, funding and capacity – for each action program.
These action programs are referred to as Strategic Initiatives.
For each measure on the Balanced Scorecard, managers must identify the strategic initiatives needed to achieve the target.
These initiatives achieve results. Hence, the execution of strategy is managed through the execution of initiatives.
The action plans that define & provide resources for the strategic initiatives must be aligned around the strategic themes, and must be viewed as an integrated bundle of investments instead of as a group of stand-alone projects. Each strategic theme should have a self-contained business case.

9. Strategic Analytical Tool: The process for defining strategy