Porter’s Five Forces Model INDUSTRY COMPETITORS SUBSTITUTES BUYERSSUPPLIERS NEW ENTRANTS 1

Market- ing & Sales Service TECHNOLOGY DEVELOPMENT FIRM INFRASTRUCTURE HUMAN RESOURCE MANAGEMENT PROCUREMENT Inbound Logistics Oper- ations Out- bound Logistics Porter’s Generic Value Chain Adapted from Michael Porter, Competitive Advantage, Free Press, New York, 1985, p MARGIN

Raw Materials Transport Processing GENERAL VALUE CHAIN Forming Assembly Distribution Sales Service What’s your value chain? What are the margins in each link? Where are your competitive strengths? Where is your strategic intent? 3

Creating Core Capabilities The building blocks of corporate strategy are not products and markets but business processes. Competitive success depends upon transforming a company’s key processes into strategic capabilities that consistently provide superior value to customers Companies create these capabilities by making strategic investments in a support infrastructure that links together and transcends traditional functions. Capability-based strategies, because they cross functions, must be championed by senior leadership. Stalk, Evans, and Shulmand (1992) 4

Success Performance Satisfaction Growth Situation and Stakeholders Economic and Socio-Political Environment Customers and Suppliers Industry Structure Competitive Dynamics Employee Groups and Communities Shareholders and Other Stakeholders Super-ordinate Goals Structure A Leader’s Guide to Understanding Organizations: An Expanded “7-S” Perspective Systems Shared Values Adapted from McKinsey & Co. and other sources © James G. Clawson SELF (Leader) Skills Strategy Staff Style 5

Economic Development Where are the margins? (Pine and Gilmore, The Experience Economy) 5. Transformations (pay for how time with you transforms me) 4. Experiences (pay for time with you) 3. Services supplant goods (what I do for you, and margins are … declining, becoming commoditized) 2. Goods out of commodities (margins?) 1. Commodities out of the earth (margins?) 6 MARGINS © James G. Clawson

Commoditization of Margins 7 Pine and Gilmore, The Experience Economy © James G. Clawson

STRATEGY is the art of creating value. It provides the intellectual frameworks, conceptual models, and governing ideas that allow a company’s managers to identify opportunities for bringing value to customers and for delivering that value at a profit. In this respect, strategy is the way a company defines its business and links together the only resources that really matter in today’s economy: knowledge and relationships or an organization’s competencies and customers. Normann, R. and Ramirez, R., “From Value Chain to Value Constellation: Designing Interactive Strategy,” Harvard Business Review, July-August 1993, p © James G. Clawson

STRATEGIC FIT MODEL Strategic Mindsets STRATEGIC INTENT MODEL Source, Hamel and Prahalad, Strategic Intent, HBR Strategic thinking is driven by the match between current capabilities and existing opportunities Searching for sustainable advantages Finding protected niches Strategic thinking is driven by bridging gap between today’s reality and tomorrow’s vision Finding ways to leverage resources Outpacing competitors in building new advantages Making new industry rules 9 © James G. Clawson

Realized Strategy 10 Intended Strategy Actual Strategy Emergent Strategy Realized Strategy Opportunistic Strategy © James G. Clawson

Realized Strategy 11 Realized strategy is the result of the collision between dreams and economic realities…. © James G. Clawson

STRATEGIC CYCLES 12 CURRENT REALITY VISION INTENT DESIGN, COGNITIVE ACTION, IMPLEMENTATION Core Competencies © James G. Clawson

Christensen’s Innovator’s Dilemma 13 Utilization of Features Overshoot Not good enough, cheap disruptive technology attracts non users Learning high margin culture © James G. Clawson

Motivator’s Dilemma 14 Utilization of Energy Goal Overshoot Not for profit disruptive substitutes attract employees’ energy Learning goal oriented culture Energy Decline © James G. Clawson

The Balanced Scorecard Framework 15 FINANCIAL PERSPECTIVECUSTOMER PERSPECTIVEINTERNAL PROCESS PERSPECTIVE Productivity Revenue Growth Long Term Shareholder Value Price Quality Time FunctionPartnership Brand Image Relationship Product/Service Attributes Manage Operations Manage Customers Manage Regulatory & Social Processes Manage Innovation LEARNING AND GROWTH PERSPECTIVE Human Capital Information Capital Organization Capital + + Strategy Maps, Kaplan & Norton, HBSP, 2004