Formulation of Strategy

Transcription

1 1 Formulation of Strategy (Article 6, III Tasks) 1 Basic Agenda A logical approach would ensure that work on formulation of strategy was not sidetracked so waste of time and effort was avoided. (1) Start by defining Mission, Vision and Values especially values, "Basic Beliefs, that have direct influence on the choice of strategy. (2) The choice of future products respective services and market segments will be guided by a "Driving Force (Kepner-Tregoe). Driving Force is the primary determiner of the scope of future products and markets. Selection of a given driving force has a decisive influence as well on products and markets as on capabilities depending of the chosen driving force. Formulate Mission, Vision and Values - Basic Beliefs Chose Driving Force Select Product/Market Mix in the light of Opportunities and Threads Identify requirements to Key Capabilities in relation to actuel situation and Strengths and Weakness Define and break down Goals to operational Objectives Go on to Strategic Planning and Budgeting in desired depth and specification

2 2 You may choose between the following Driving Forces, which then will have determining influence on other aspects as shown in the following table: Driving Force Influence on 1 Influence on 2 Market Needs Products/Services Capabilities Product/Services Offered Capability Markets Products Capabilities Markets/ Other Capabilities Capabilities may be divided into: Technology, Production Methods, Sale/Distribution Methods and Natural Resources. Various measures for return on investments may also be chosen as Driving Force. (3) Select Product respective Service/ Market Mix in the light of Opportunities and Threads. (4) Identify requirements to Key Capabilities seen in relation to the actual situation and Strengths and Weaknesses. The desired depth and degree of specification will be decisive for the subsequent items in the agenda, which can range from (5) Goals being broken down to Operational Objectives to (6) Specific Strategic Planning / Budgeting within a given time frame. This is an iterative process depending on the circumstances, there could be a return to earlier points in the agenda.

3 3 2 Further aspects The above shown is a basis agenda. Due to individual circumstances, as far as the organization in question is concerned further aspects may be relevant. The following table indicates aspects of various situations and kind of analyses or methods that should be taken into consideration: Organization/ Environment Dynamic (Turbulent) Static (Stable) Simpel Adaption Learning Historical Complex Futuristic, Creative Methods Expert advice The table below ads a little to the characteristic of the four steps. Environment / Organisation Causes and effects Actions Static/ Simple Fully known Repeatable Predictable Standard procedures Best practice Static/ Complex Known but unrealized Repeatable Predictable Analyse and Expert advice Dynamic/ Simple Not fully known May be repeatable predictable Adaptive and Learning methods Dynamic/ Complex Unknown Don t know repeatable predictable Futuristic and Creative methods Decision process Observe Categorize Observe Analyse Try Observe Act Observe Analyses relevant for organizations on the first step Static/Simple may also be relevant for organizations on following steps. It goes for analyses from the second and third step - respectively Static/Complex and Dynamic/Simple Especially for

4 4 organizations on the Dynamic/Complex step it may be relevant to use analyses drawing on methods known from creative and futuristic fields. Possible methods include such things as: a) Bbrainstorming, b) Future workshops, c) Thinking hats, d) Scenarios, e) Analogies, f) Delphi Methods, g) Back castings These methods may be used beforehand to prepare for or even better avoid possible crises via a stability focused invention. Crisis Management is actual, when the crisis runs.

5 5 3 Complex and Dynamic Conditions Lawrence, Lorsch, and others have documented, it is not the organization as such, but one or more functions in the organization may show more or less complex and/or dynamic characters. It might be a function with specialized capabilities like sales and marketing, product development, production, purchase of products to be further processed and/or raw materials, equipment etc. In addition, the influence of the dynamic/character might spread to some support functions. Whereas influences on remaining parts of the main- and support functions might be relatively small. It is rather obvious, that the more advanced methods known from creative, futuristic and learning fields mostly are relevant for those specialized functions with strongly influenced capabilities. 3 Organizational Adapting to Complex and Dynamic Conditions Lawrence and Lorsch also have documented, that best performing organizations have acted by implementing a specific organizational structure in response to the complex and dynamic conditions, this include integrative devices like integrators and cross functional units. Complex and dynamic character tent to influence the pattern of management towards, what is known as an organic pattern - a pattern being less formal and structured? This goes especially for influenced units. 4 Different Approaches to Strategy

6 6 Organizations may choose different approaches to strategy going from neutral (neglecting action) via reactive (taking up action) to proactive (acting beforehand). In my view, examples on success are found as well among frontrunners as organizations waiting a bit to see which way to go before taking action. 5 Formulation of strategy under complex and dynamic conditions

7 7 Debate has been - and I take it is still to some degree - going on whether or not it is worthwhile to have a more or less traditional normative formulated strategy or something else should take the place. So far, I do not see any realistic alternative to the up till now normally used normative strategy formulation. Quite other matters are that so far: Use of methods from creative, futuristic and other disciplines have not widely been taken under consideration although they very well could be tools in the strategist toolbox. Attention to special demands for special organizational adaption in case of complex and dynamic conditions has not been widely met. 6 Specified Agenda Strategy Process

8 8 The following table shows the basic agenda with suggestions on how to deal with each issue in the agenda. Should these proposals be insufficient some further not mandatory activities are suggested. The table also show if there is a guide to the suggested analyzes or other activities, and whether they are pointing back or forth in time, and if they are internal or external.

9 9 Specified Agenda Strategy Process Step Action Name Guide Action 1 Action 2 Ex post/ante Internal/ External 1 Define a Mission x Analyze Formulate Both Both b Vision x Analyze Formulate Ex ante Both c Values x Analyze Formulate Ex post(/ante) Internal d Basic Beliefs x Analyze Formulate Ex post (/ante) Internal Not mandatory: Environment Model x Analyze Go to 1 Ex post External Stakeholder x Analyze Go to 1 Ex post Both PEST or PESTEL x Analyze Go to 1 Ex post External 2 Chose a Driving Force x Analyze Chose Ex post Both 3 Select a Product/Market Mix x Analyze Chose Ex post (/ante) Both b Opportunities/ Threats x Analyze Go to 3a Ex post (/ante) External Not mandatory: Porter: a) Generic Strategies x Analyze Chose Ex post (/ante) Both b) Five Forces x Analyze Go to 3a Ex post External c) Boston x Method Go to 3a Ex post Both d) Value Chain x Analyze Go to 3a Ex post Internal GE/McKinsey x Analyze Go to 3a Ex post Both Force and Dependence x Analyze Go to 3a Ex post Both VRIO x Analyze Go to 3a Ex post Internal Customer Segmentation x Analyze Go to 3a Ex post External 4 Identify requirements to key a Capabilities x Analyze Chose Ex post (/ante) Internal b Strengths Weakness x Analyze Go to 4a Ex post (/ante) Internal Not mandatory: Possibility Matrix: a) Opportunities x Analyze Go to3a Ex ante External b) Threads x Analyze Go to3a Ex ante External Tows Matrix x Analyze Go to3a/4a Ex ante Both

10 10 Specified Agenda Strategy Process Step Action Name Guide Action 1 Action 2 Ex post/ante Internal/ External 5 Chose a Goals (x) Analyze Chose Ex ante Both and break down to b Objectives (x) Analyze Chose Ex ante Both 6 Strategic Planning and Budgeting Long term Plan and Budget Planning Chose Ex ante Both Not mandatory: Special Analysis/Methods a Brainstorming Method Go back Ex ante Both b Open space Method Go back Ex ante Both c Future Workshop x Method Go back Ex ante Both d Delphi x Method Go back Ex ante Both e Thinking Hats x Method Go back Ex ante Both f Scenario Method Go back Ex ante Both g Analogy Method Go back Ex ante Both h Back Casting Method Go back Ex ante Both