B36C3 and C4 STRATEGY

Course Outline : Strategic Management

18 session course by Prof S K Palekar for Batch 36 over 4 contacts C3-C6

This batch consists of  high potential middle level  executives of  large companies like BPCL, L&T and  Tata Motors. These companies already employ significant practices of  strategic management in their own companies and the executive participants are aware of many of these practices.  The course is designed to simultaneously give a conceptual understanding to the uninitiated - as well as practical insights to the participants who are already exposed to strategic management so that they can contribute to the existing strategic process in their companies. This course runs parallel with – and two contacts behind – the 24-session core marketing course (which includes marketing strategy) which familiarizes with the basic concepts of strategy – the process by which an organization “aligns” its “resources” with  the customer as a “stakeholder”. It is assumed that the participants already know how marketing strategy is a fit between environment (5 C’s) and what the organization does (Marketing Mix).

CONTACT 3
( 4 Class Sessions + 1 Group Work Session )

·         What is Strategy ; An overview
What will happen if you have no strategy?
Key concepts : "Right Industry", "Right position", "Right Competencies", “Right fit”

·         Strategy in a practical context
Stages of strategic readiness of a company
Is strategic planning specialized or for everyone?
How companies develop strategies and link them to practice

CONTACT 4 

( 6 class sessions + 1 Group work session)

·         Strategic performance goals
Scale, profitability, share, competitiveness, 3Ps, stakeholder perspective

·         How the industry determines strategic outcomes
5 Forces model
how competitors behave and the drivers of their behavior

·         Competitive advantage - develop and sustain 
Generic strategies : Paradigms, Value chains, Internal structures

CONTACT 5

( 4 class sessions + 1 Group Work )

·         Strategic Implementation
7 S Model and Change Management

·         Portfolio Management
GE Matrix, Ansoff Model
Centralization and decentralization between HO and SBUs

·         Capabilities Development
Way to go : In-house, acquire, merge, outsource
M&A,  restructuring, downsizing, internationalization

CONTACT 6

( 4 class sessions + 1 Group Work )

·         Business Excellence Models
Malcolm Baldridge framework
Balanced Score card framework

·         Performance Improvement
PMS systems linking s top, middle and front line
Role of organization structures in strategic outcomes

Contact 3 : Strategic Management

Note : For the sake of saving paper and also to offer up to date readings, the  participants are advised to refer to the blog specially created for them and the URL is http://tchingu.blogspot.in/2012/11/b36-strategy-till-dec-1-2012-4-sessions.html which gives some of the material shown in the class and also refers you to other material available on the net; in addition to the readings included in this handbook.

CONTACT 3 PLAN
( 4 Class Sessions + 1 Group Work Session )

·         What is Strategy ; An overview
What will happen if you have no strategy?
Key concepts : "Right Industry", "Right position", "Right Competencies", “Right fit”

·         Strategy in a practical context
Stages of strategic readiness of a company
Is strategic planning specialized or for everyone?
How companies develop strategies and link them to practice

SPECIFIC LEARNING OBJECTIVES

1.      How strategy formulation helps the managers manage the business better

2.      Why strategy is particularly useful in large org and fast changing world

3.      What benefits accrue to businesses who use strategy as a tool of managing

4.      Definition(s) of strategy

5.      Various stages of strategic readiness in organizations : where are you on these?

6.      A glimpse : how marketing / business / corporate strategies differ from each other

7.      Understand intended (Planned) vs emergent (What actually happened) strategy

8.      Stakeholders and their role in strategy formulation and implementation

9.      External and internal aspects integral to any strategy. They are interdependent 

10.  Tools to identify areas that may warrent strategic action from you

11.  Tools to minimize bias when analysising external opportunities

12.  In practice - how much change - minor, evolutionary, revolutionary

Group Work

Preparation for the course : Study the annual report of L&T for 11-12 and answer what activities will L&T never pursue, what are the key tasks it has chosen for itself and why, what are the stakeholders the company wants to actively satisfy.

SESSIONS 1 - 2

Giving not only the coverage but even  summary notes too

5 TASKS OF A WELL MANAGED BUSINESS

1. Plan ( Examine the future and draw up a plan of action)
2. Organize (Build assets and collect people the plan happen)
3. Command (Maintain the desired activity among the people)
4. Coordinate (Bind, unify and harmonize)
5. Control (Ensure that things happen as per policy / plan / command)

STRATEGY HELPS YOU IN PERFORMING THESE 5 TASKS.

THESE TASKS BECOMING INCREASINGLY DIFFICULT BECAUSE ...

1. Organizations are becoming large
2. Environment is changing rapidly ( some make quarterly plans) 
3. Operations spread over multiple businesses / geographies 
4. People do not get to see what purpose they are serving in external world
5. People do not get feedback on how stakeholders are seeing their performance
6. People are organized and guided by departmental agendas and rules

HOW ORGANIZATIONAL  STRATEGY FORMULATION HELP

1. Strategy becomes a binding and unifying agent 
2. Gives a strong sense of common identity / purpose
3. Tells people collectively “what are we here for”
4. Enables people judge how they / department / company is doing
5. Helps people work towards right things
6. Helps people avoid effort in doing unwanted things
7. Provides a common language for performance conversations
8. Enables long term decisions : capacity, investments, locations, people, systems

WHAT MAY HAPPEN IF YOU HAVE NO STRATEGY

1. Self-starter employees / vendors will not know what direction to go in
2. Unwanted proposals will come up,  get rejected, and reduce morale
3. Cost of supervision high to keep people off going in wrong direction.
4. Resources will get used up unproductively; waste of resources.
5. Long term decisions will get taken without the benefit of long term view
6. Energies will go in "trivial many" directions (rather than "vital few")
7. The support of stakeholders may not be consistent in absence of clear policy
8. Uncordinated work and friction
9. More shocks due to lack of anticipation of future

DEFINITION OF STRATEGY

Since we shall address how to perform various tasks, we will use a task oriented definition of strategy in the course : "Analysis, Planning and Managing of major initiatives taken by your company's top management - on behalf of its various stakeholders - regarding how it develops and deploys resources and competencies - to selected issues in its chosen environments - to improve the performance of the company. This includes (a) how it chooses the organization's mission, vision (b) how it sets the objectives (c) how it developes policies and plans -  often in terms of projects and programs designed to achieve these objectives (d) how it allocates resources to implement these policies and plans, projects and programs (e) how it tracks the strategic performance of the company (in terms of balanced scorecard model)”

HOWEVER THERE ARE OTHER PERSPECTIVES

AND DEFINITIONS OF STRATEGY

The "strategy" word is used with multiple meanings  

1. Strategy as a plan : collective and documented intention : direction, course of action
2. Strategy as a ploy : a maneuver intended to outwit a competitor/s
3. Strategy as a consistent pattern : of past behavior / intended future behaviour  
4. Strategy as a position : within conceptual frame of stakeholders /environment
5. Strategy as perspective : determined by a master strategist / team

Other definitions of strategy

1. "Managing business with deep awareness of underlying purpose"
2. "An underlying pattern in a stream of decisions".
3. "Determining of basic long-term goals and objectives of an enterprise, examining various possible courses of action, selecting them, using the selected ones to decide allocation of resources, so that the goals are met"
4. "A long term direction set by the management - to satisfy the stakeholders sustainably - by choosing which aspects of external environment it will respond - in what way - and how it will develop and deploy its internal resources and competencies to do so". 
5. "Strategy provides clear guidance for taking long term decisions regarding capabilities, medium term projects and short term operations".
6. "strategy is about gaining competitive advantage or best exploiting emerging opportunities. As there is always an element of uncertainty about the future, strategy is more about a set of options ("strategic choices") than a fixed plan".
7. "Giving clarity of direction to the troops so as to focus their effort towards the right goals and yet give them enough empowerment regarding how they want to do it without straightjacketing them into a plan". 

SESSIONS 3 -4

Giving not only the coverage but even  summary notes too

DOES FORMULATION OF A STRATEGY ENABLE SUCCESS?

Nothing in life “guarantees” success. But strategy formulation does help greatly in

• creating organization wise debate and conversations on the right topics
• bringing all people on the same page
• creating a consensual agreement on broad directions for future
• having communication and involvement of all who matter
• and this makes implementation easier. Strategy formulation enables that the “emergent strategy” is as close to “intended strategy”.

DO NOT CONSIDER STRATEGY AS A PIECE OF PAPER

Changing srategy is not as easy as typing a new strategy because a strategy reflects the commitment of your company's resources to progress in a specific direction and is reflected in 6S (Staff, Structure, Systems, Skills, Shared values and Style). And changing all this is not easy : it needs commitment and persistence by the top leadership.

HOW MARKETING STRATEGY (WHICH YOU ALREADY KNOW) DIFFERES FROM THE BUSINESS STRATEGY : The class seemed to know it well and drew the process view of marketing on the board sequentially as follows

• Starting with situation analysis (technique : 5C analysis)
• Followed by strategy formulation consisting of 3 components
• selecting the target market (technique : market attractiveness index)
• developing a value proposition (technique : positioning)
• developing route- to-market (technique : selection of sales channel & process)
• Arriving at marketing mix based on the strategy ( template : 7Ps)
• Acquiring and retaining customers
• Result (Outcome) of marketing : (Profit and Customer satisfaction (simultaneously))

 THE HIERARCHY OF STRATEGIES

1.      The major preoccupation of the marketing strategy is to how to allocate company resources to front-end activities to generate value for the chosen customers and how to capture a part of it through value capture. The basic unit of discussions regarding marketing strategy is a "PxM" ( Product x Market ) combination at the front end of the business. 

2.      The major preoccupation of the business strategy is how to allocate company resources to both front-end and back-end activities so that both the front-end and back-end work together in a mutually reinforcing and efficient way to make the company sustainably competitive. The basic unit of discussions regarding business strategy is a complete combination of front end (PxM) and associated back end.

3.      The major preoccupation of the corporate strategy is how to allocate company resources to the multiple businesses that may exist under the company banner. Which of these businesses to invest in, which to maintain and which ones to downsize, re-scope or exit. Corporate strategy is also about which tasks to consolidate centrally and which ones to decentralize. 

WHAT MAKES A COMPANY STRATEGICALLY SUCCESSFUL ?

The answers seem to come from two sides 

External side : Key assumption being that you will succeed if you are in the right competitive position (not to be in a highly competitive industry where revenue or margins will be under threat and hence your resources will produce less result) in the right industry (a large and growing industry where your internal resources and competence can make a difference).   

Internal side : Key assumption being that you will succeed if you have the right resources (physical, financial, intangible) which are (a) of value when operating in the competitive position you are in your chosen industry (b) not easy for your competitors to imitate (c) available to you on a sustainable basis.  

The truth, of course, is that both are required to succeed : you need to choose the right industries to operate in, get into the right positions in these industries and finally you need to build the right capabilities within your company. 

APPLICATION ASSIGNMENT

Setting strategic agenda : take up the case of your whole company - or any one of the business divisions (not departments) - and using the techniques taught in the class identify 5 areas of action and prioritize them. You may refer (click here) or you may refer to the simple method of CONICS

• Capitalizing on which opportunities should not be missed by us
• What obstacles need to be overcome
• Neutralizing important threats
• Scaling up and improving the areas where positive performance already exists
• Correction of those weaknesses that are coming in our way
• What  problems must be solved