Competitive

positioning

Generic
strategies
Business Level

Building CA

Internal
STRATEGY analysis
Sustaining CA

Vertical
integration
Corporate
Level
Diversification
Industry
analysis

Comp. Ind.
Dynamics Evolution

RESOURCES
Ex.
S.F.
Analysis

Strategy is an answer to four key questions faced by a B. Ex.

Where do we compete; What unique value we do bring; What resources
and capabilities do we utilize; How unique value delivery sustained.
 BAD STRATEGY FORMULATION +
GOOD IMPLEMENTATION

Doing wrong
thing perfectly
GOOD STRATEGY FORMULATION + BAD
IMPLEMENTATION

Doing right thing

poorly

GOOD STRATEGY FORMULATION + GOOD

IMPLEMENTATION

Doing right thing

well
WHY STRATEGIES FAIL
 WHY

• Lippitt, 2007; 80% Of management decisions are made without ever

considering an alternative.
• Kaplan & Norton, 2005; 95% Of a company’s employees are unaware of, or
do not understand, its strategy.
• Zook & Allen, 2001; 90% Of all companies fail to realize their strategic
ambitions.
• Axson, 1999; 73% Of employees do not have access to the organization’s
strategic plans. Furthermore, only 42% of managers have access to the
organization’s strategic plans.
• Kaplan & Norton, 2005; 60% Of organizations do not link their budgets to
strategic priorities.
 RMS TITANIC
A pinnacle of Made history on her
human achievement maiden voyage

What the owner

The belief that did??
Titanic was indeed What the
unsinkable???? passengers
neglected???
WHY
STRATEGIES FAIL
Answer the following questions
Population of Myanmar
Revenues of RIL
How may days for pepsi T 20

Tools for performance analysis

What does a financial spread sheet tell

How we judge performance of Infosys and Wipro

OVER CONFIDENCE, TOOLS IGNORING

COMPETITORS AND CUSTOMERS AND EXPLAINING
COMPLEX EFFECTS WITH SIMPLE CAUSES
 THE MOST COMMON STRATEGY
MISTAKES
• One of the biggest mistakes a manager can make is to
assume the best results come from competing to be the
best. Competing to be unique is a much more effective
strategy.
• Other common mistakes include confusing marketing with
strategy, overestimating strengths, and misunderstanding
the definition of business.
• The worst mistake—but the most common one—is not to
have a strategy at all.

Source: Understanding Michael Porter: The Essential Guide to Competition and Strategy, Joan Magretta
 SM-The Rosy Picture
According to Bob de Wit and Ron Meyer
(2004):
“Traditionally, most textbooks have
portrayed the strategy process as a
basically linear progression through a
number of distinct steps. Usually a split is
made between the strategy analysis stage,
the strategy formulation stage and the
strategy implementation stage”.
Only 13 pages out of 640 pages of his
book are earmarked for implementation
Larry Bossidy former head of
Honeywell as quoted by Phil Rosenzweig (2007) in
his book, “The Halo Effect”,
“Execution is the great unaddressed
issue in the business world today. Its
absence is the single biggest obstacle to
success and the cause of the
disappointments that are mistakenly
attributed to other causes. No strategy
can deliver result unless it’s converted
into specific actions – and those actions
are the stuff of execution”.
 Reasons why strategy implementation falls short
Failure to translate the strategy•
Strategic ambition—while understood tacitly by senior leadership—is
poorly translated into design principles and downstream implementation
choices
The translation: – Is not clear, specific, or concrete
Disaggregates the ambition so that elements of the strategy, when built,
no longer fit
Defaults to best (or average) practice rather than call for next practice

Failure to sustain the strategy

Failure to adapt the strategy Implementation efforts “run out of steam” or
Real-world conditions change at an accelerated pace. eg. do not take off at all:–
External: Macro-economic volatility; rapid shifts in the Initiative fatigue
competitive landscape Organizational resistance
Internal: Key talent is mobile; pivot toward emerging markets Lack of ownership or clear accountability
Implementation efforts insufficiently account for changing
conditions:– Change fails to take root after
“Implementers” are expected and incentivized to stay on plan implementation:–
Key elements of the change (for example, organizational People revert to old ways
structures, new processes and programs, technology Organizations do not build the capabilities to
architecture) are “locked in” before key learning's can occur sustain the new way of working
 Strategy execution collapse
The execution syndromes
“Like diseases, they slowly consume almost any chance of successful
strategy execution, leaving the organization paralyzed and unable to
leverage more than only incremental results”.
• The Resistance Syndrome, Employees are always resistant to change.
• Motivation Syndrome, When employees don’t have ownership in the
strategy, they are not motivated to execute it
• Development Hell Syndrome, Inability, lack of consensus among key
managers and risk aversion or error avoidance keeps the strategy in a
permanent planning process.
• Groupthink Syndrome Overemphasis on speed in decision making and
overconfidence in the company’s success leads to hasty decision
making, which blinds the organization and leads to poor decision
outcomes.
• the Underperformance Syndrome, Continuous failure to execute
strategy and an emphasis on avoiding error fosters a culture of
underperformance
TWO WAYS
TO LOOK AT
STRATEGY
FAILURE
 The dynamics of failure: Leading companies can become stuck in
the modes of thinking and working that bought them their initial success.
When business conditions change, their once winning formulas instead
brings failure

Blinders
• Strategic frames
• The set of assumptions that determine how managers view
their business

• Processes
• The way things are done Routines

Shackles
• Relationships
• The ties to employees, customers, suppliers, distributors and
Shareholders

• Values
• The set of shared beliefs that determine corporate culture Dogmas
 FIRESTONE TIRE & RUBBER
– In 1970, it was enjoying seven decades of
uninterrupted growth
– Very clear vision of company's positioning and
strategy
• Big three Detroit car makers as their key customers, Saw
Goodyear and the other U.S Tire makers as their key
competitors and the challenge they saw was simply
keeping up with the steadily increasing demand for tires.
• French company Michelin introduced radial tires.
• Firestone had anticipated it, invested $400 M (1972) in
radial production.
• Ultimately acquired by Bridgestone (Japanese) in 1988.
 LAURA ASHLEY
• Started in 1953 as a way to recreant the mood of British country side. By
1970 grew quickly from a single silk-screen press in Laura and Barnard’s
London office to a major retailer with a network of 500 shops and a
powerful brand the world over.
• Vision and Strategy
– The operations were not for maximizing profits but to defend and promote traditional
values, which she felt were under siege from sex, drugs and miniskirts in 1960.
• Laura died in 1985
• The aspects of control and the same business philosophy continued., but
the fashion style dismissed.
• Company quick to recognize major challenges, series of new CEOs
brought to increase sales and cut costs.
• ??????? Was it a brand, a manufacturer, a retailer or an integrated fashion
company.
 STRATEGIC FRAMES AS BLINDERS
• Managerial mental modes-the mind-sets- That shape how
managers see the world.
• These provide answers to key strategic questions; Which business
are we in? How do we create value? Who are our competitors?
Which customers are crucial and which we can ignore?
• Xerox in 1970s when surveyed its battlefield in the 1970s, it saw
IBM and Kodak as its enemies, Its 40,000 sales and service reps as
its troops and patented technology as its insurmountable defense
rebuffed repeat attempts by IBM and Kodak.
• This strategic frames blinded xerox to new threat from guerilla
warriors like Cannon and Ricoh.
• It managed to neutralize treat from new entrants, but it distracted
xerox management emerging battle for the PC. Xerox’s Palo Alto
Research center was among the pioneers in several technologies for
PC
 PROCESSES HARDNED INTO ROUTINES
“They cease to be means to end and become end in themselves”

Why Firestone was inefficient in managing the turnaround;

Tweaking its existing processes, which plants to close,
building loyalty and instilling a uniform mindset.

Why in 1990s McDonald was in a rut, Emphasis on the mass

production processes, customers wanted new, results were
Burger King and Taco Bell
 RELATIONSHIPS BECOME SHACKLES
• Laura Ashley: Winning heart of new customers, franchisees
and investors.
• Harvey Firestone, Sr. maintained close friendships with
customers, providing out of pocket loans to struggling tire
dealers during depression and socializing with many of the
cos Top executives.
• When times change Flexibility lost, hindering new products
and new market focus.
• Apple initially attracted the most creative engineers saw a
steam of success, with passage of time realized that cost cuts
and seed up time to market can guarantee success, lead to
restlessness.
• Why Dell has surged over other PC manufacturers, what is
there with south west airlines.
 VALUES HARDENED INTO DOGMAS
• Firestone man & rallying of Laura Ashley franchisees around
the banner of company's traditional values.
• Values get hardened into rigid rules and regulations having
legitimacy only because they’re enshrined in a precedent.
• Polaroid’s decline illustrate how once-vibrant values can
ossify. Pride in company R&D leadership with loss of focus on
customers response.
• Royal Dutch/Shell in 1930s was dominated by Henri
Deterding, a strong leader and a nazi sympathizer. Was
shown his way out leading to decentralized control. Shell
witnessed good growth due to decentralization however
when oil prices fell in 1990s, quick rationalization was
hindered due to decentralization.
 Execution Vs Implementation
Translation The process of converting the ideas, visions and aspirations of the
strategy into workable plans and metrics.

Communication Ensuring that all key employees are aware of and understand the “what”,
“why”, “how”, “when” and “who” of the strategy.

Coordination Passing on both responsibility and accountability to key personnel for a

specific action or goal in the process.

Adaptation Monitoring the process of strategy implementation and making

adjustments to the strategy, in order to create a better fit to the real world.

Resource Allocation Linking the strategy to the resources required to execute it.

Implementation The actual process of carrying out the specific actions defined by the
strategy execution process.
 Brilliant strategy, But can you execute?

• Why to have “second-best” strategy?

• Difference between Transformational and
operational strategy in terms of;
– Context
– Skills for execution
• Aligning strategy and company’s real strength
 Energy Sector-Duke & Enron
• No arguments about the business context of Enron
• Both at a point generated top-quartile share holder’s
returns
• Enron: Skilled in risk management, deal making & Finance
• Duke: Ability to build and run power plants efficiently
 DUKE
• The cost of power generation was bought down by 15%
• Has world record for replacing steam generator: 25 days.
• Has entered in Generation-related design, engineering,
operational, and maintenance business.
• Focus on supplying (through generation or trading) to avoid
missing out retail opportunities in future.
• THREE LEADERSHIP REGIMES
• Bill Lee (1989), 50-50 p/s with Fluor Daniel (Largest
construction co. in US.
• Bill Grigg (1995) focus on building and operating efficient
generation plants; PanEnergy merger (gas pipe line
business) securing imp. Complementary capabilities.
• Rick Priory (1997) Buying and developing generating
developing generating plants in US.
 ENRON
• Started as gas pipe line company
• Anticipated, strategized and enjoyed benefits of deregulation in
wholesale gas trading markets and deregulated electric-trading
market (1990)
• 1998 envisioned unmet need for water and sewer systems in
developing world acquired Wessex Water PLC, a British water
and water treatment company.
• Enablers for its visionary, first-mover strategies
• Poaching talents from Investment banks, commercial banks,
consulting firms and top-tier B Schools.
• Developed innovative concept of Gas-Bank, This enabled
fixed –price contracts to independent power developers.
Pharmaceutical Sector-Pfizer & Elli Lilly
• Dominant business model was the Block-Buster model.
• Managed health care and pharmacy benefits-management
companies threatened the business model
• Pfizer: Traditional strength in R&D and Sales.
• Eli Lilly: Purchased large pharmacy benefit managers.
• PFIZER
• Continued with traditional industry business model
– “Its discovery teams need less than one-third the industry
average of 190 person-years of work to advance a compound
from conception to clinical trials”
– Doubled the sales team in 6 years and this capability, won the
company co-marketing rights for several major drugs
produced by other companies.
• Eli Lilly
• Portfolio reconfiguration decisions
– Divested Non core businesses like Animal health, Cosmetics
and medical devices
– Acquired 13.5% stake in somatogen (alliance to develop and
market a blood substitute product; 100% ownership of Sphinx
and 18% stake in Millennium Therapeutics.
– Acquired PCS health systems, a major pharmacy benefits
manager.
 STRATEGY FORMULATION AND
IMPLEMENTATION AT HP-INSIGHTS
A system for strategy ownership
Strategic objectives are divided into Breakthrough (radical innovation) and Business
fundamental objectives (incremental innovation). Focus always is on few objectives
and those which will have greatest impact on key business issues
The process of management
STRATEGY FORMULATION AND Start/
IMPLEMENTATION PROCESS Trigger
point