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Introduction to Strategy
Dr Elif Bascavusoglu-Moreau Assistant Professor of Innovation and Entrepreneurship
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Why do some industries make so much more money than others?
What is strategy? Why do some industries make so much more money than others? Tobacco, Pharmaceuticals, PSF’s Why do some firms make windfall profits year after year? Microsoft, Wal-Mart, IKEA, Wachtel Lipton
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Not operational efficiency!
What is strategy? Not operational efficiency! Good strategies create competitive advantage: Doing something others do but better Examples? Doing something that no one else does Must be difficult to imitate Must have value for clients Firm level strategy is often a portfolio
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Strategy is a consciously intended plan
Strategy as a plan Strategy is a consciously intended plan Made in advance Conscious and purposeful Can be a ploy Market signaling Announcements
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Strategy as a Plan - Airbus
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Strategy as position Strategy is understand as a position in an environment Firms look for a niche When there is a match between the firms positioning and the environment then the firm is successful Can be the result of evolution or planning Position can be to beat the competition or to avoid direct competition
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Strategy as a Position - Louis Vuitton
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Strategy as perspective
Strategy as a way of looking at the world The “personality” of the organisation Shared throughout the organisation Often difficult to express
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Strategy as perspective - Apple
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Strategy as revolution
Strategy is not about beating the competition, it is about making them irrelevant. Focus on creating value Focus on mass of customers even if some current customers are lost Focus on total experience of customer Ignore traditional industry boundaries and product definitions
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Strategy as Revolution - easyJet
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A Value Curve
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Strategy as pattern Strategy can be thought of as a pattern in a stream of actions Not necessarily intended Evolve over time and grow out of experience Honda in the US “Gradually the successful approaches merged into a pattern of action that becomes our strategy. We certainly don’t have an overall strategy on this.”
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Strategy as an emergent process
Strategy making in an unpredictable world Creates the necessity for flexible strategic approaches. Strategy making by lower-level managers Strategy evolves through autonomous action. 29 14
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Strategy as an emergent process
Serendipity and strategy Accidental discoveries and happenstances can have dramatic effects on strategic direction. Intended and emergent strategies Realised strategies are combinations of intended and emergent strategies. 29 15
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Intended and emergent strategies
Source: Reprinted from “Strategy Formation in an Adhocracy,” by Henry Mintzberg and Alexandra McGugh, published in Administrative Science Quarterly, Vol. 30, No. 2, June 1985, by permission of Administrative Science Quarterly.
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Intended and emergent strategies
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Customer Orientation and Business Definition
Abell’s Framework for Defining the Business Consumer-oriented versus Product-oriented business definition Source: Derek F. Abell, Defining the Business: The Starting Point of Strategic Planning (Englewood Cliffs, N.J.: Prentice-Hall, 1980), p. 17.
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Vision, or Mission A statement of purpose (strategic intent) committing the organization to ambitious overarching (stretch) goals. Provides a sense of direction and purpose. Drives strategic decision making and resource allocations. Forces the seeking of significant performance improvements to attain goals.
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Mission and Goals Mission Major goals Secondary goals
Sets out why the organization exists and what it should be doing. Major goals Specify what the organization hopes to fulfill in the medium to long term. Secondary goals Are objectives to be attained that lead to superior performance.
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AndFound Read the “Is a Startup’s Strength Becoming its Weakness” case. Answer the following questions in small groups. What are the main problems facing AndFound? What are their strategic options? What are the pros and cons of each? What should they do?
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