Strategic Intent Prof Ashish K Mitra STRATEGIC POSTURE Whether a firm is developing a new business or re-formulating direction for an ongoing business, it must determine the basic purpose, goals & philosophies that will shape its strategic posture Vision & Mission Organizations Vision & Mission act as guideline / direction for strategy formulation (Establishing Vision / mission are therefore key top level direction setting tasks in any organization) Process of strategy formulation involves articulating a vision , translating vision into a Mission that defines the organizations purpose , converting mission into performance objectives, detailing each objective into specific goals, and formulating strategies and tactics for accomplishing the goals. Vision vs Mission : What do we want to become in long run? vs What is our business? (who we are, what we do, what is our management philosophy?) Vision A well-conceived vision comprises of two main components which are complimentary in nature. A Core ideology What we stand for and we exist, the core values that never changes ordinarily even when technology, competition , management style etc change An envisioned future what we aspire to become, to achieve, to create that demands significant change and progress. (BHAGs) Eg: Vision of Tata Steel: we aspire to be the Global Steel Industry benchmark for Value creation and Corporate Citizenship Vision is a powerful motivator and keeps an organization moving in the forward direction, provides a directional path and guides the effort of employees. The organizations mission flows from the vision. Vision. Vision is what insiders of organization create or perceive, however should also reflect concerns of other stake holders like shareholders, customers, employees, the local community, and society in order to be effective. For example, support of shareholders is necessary to bring about any major change in the organization. A well drafted vision should be realistic, credible, attractive, and future oriented. Vision ought to convey a larger sense of purpose ( worth pursuing ) so that the people in the organization see themselves as building a cathedral rather than laying stones. Vision
A well articulated strategic vision creates enthusiasm for
the course management has charted and engages all members of the organization, in which people live the business instead of just coming to work. They help in creating a shared sense of purpose. Compel people to take risks, experiment with ideas, stretch their energies and take others along a relentless pursuit to scale new heights. A vision has far more motivational value if it stresses the payoff for customers and/or the general well being of society, not the payoff for shareholders Vision Statementssome examples
Scotland Yard:To make London the safest major city
in the World Charles Schwab: To provide customers with the most useful and ethical finance services in the World General Electric:We will become number one or number two in every market we serve, and revolutionize this company to have the speed and agility of a small enterprise NIKE:To bring innovation and inspiration to every athlete in the world Microsoft: Empower people through great software any time, any place, and on any device INTEL:Getting to a billion connected computers worldwide, millions of servers, and trillions of dollars of e-commerce. Colgate-Palmolive: To be the company of first choice in oral and personal hygiene by continuously caring for consumers and partners Tata Steel: we aspire to be the Global Steel Industry benchmark for Value creation and Corporate Citizenship Azim Premji Foundation : To significantly contribute to quality universal education as a foundation to a just, humane and equitable society. Reliance Industries Limited :Through sustainable measures, create value for the nation, enhance quality of life across the entire socio-economic spectrum and help spearhead India as a global leader in the domains where we operate BIOCON : To be an integrated biotechnology enterprise of global distinction INFOSYS: We will be a globally respected corporation Naryans Hrudayala ( Dr Devi Shetty) : To provide affordable heart care to the masses. Ford Motor Company: Our vision is to become the worlds leading consumer company for automotive products and services. Mission Statements Mission is defined as the fundamental and enduring purpose of an organization ( reason for being) that sets it apart from others of a similar nature Mission identifies the scope of its operation in terms of product, market ( the customer it seeks to serve) , and technology thrust areas Reflects the values, beliefs and priorities of the firms strategic decision makers business philosophy, image company seeks to project and firms self-concept Mission of a business looks to an endless future as if the firm were immortal Firms must ensure that their mission remains relevant over time. Mission should not become a trap. Though mission is not to be tinkered often, organizations should not be building strategies around a mission that has been robbed of its reality. Mission Statements The mission serves as a proclamation to insiders and outsiders on what corporation stands for. A mission , however, is not a PR document; while it legitimizes the corporations existence and role in the society, its main purpose is to give internal direction for the future of the corporation. One school of thought says that the mission must be stated in precise & concrete terms. Another school feels that a good measure of generality is desirable, after all, they are not designed to express concrete ends; they are intended rather to provide motivation and general direction to everyone and an image , and a guiding philosophy for the enterprise as a whole. A mission does not represent a specific target. At the same time it is not an euphoria either Levitt, in his classic work The Marketing Myopia forcefully brought out tragic flaw in viewing ones business scope from a narrow product oriented perspective instead of broader need-oriented or function oriented perspective ( Failed American Railroad defined business as railroads rather than transportation) Mission Statements. The mission is the reference point and guiding spirit for the growth plan of a firm, its nature and pace. AT&Ts mission stated in initial years to give a telephone to every American. Later AT&T refined its mission to connecting people any time, any where. Changes in Corporate mission and business definition are part and parcel of growth process of a firm. Drucker talks about ensuring mission objective competency fit or congruence for organizations, which should be retested based on changes in external and internal environments. That business mission is so rarely given adequate thought is perhaps the most important single cause of business frustration Peter Drucker Mission Statements.. A mission statement usually attempts to answer few of the following questions: Why it is in business? What is our basic purpose ( and long term objectives)? What is unique or distinctive about our organization? Core competencies & competitive advantages? Who are, or should be, our principle customers, clients? What are our enduring economic goals?, or should be our principal economic concerns? What are our principal products at present and what will they be in future? What are the basic beliefs, values, aspirations and philosophical ( company image, self-concept) priorities of the firm? How do we view our responsibilities to shareholders, employees, communities, social issues, environment?(profit) Formulating a mission statement The process of formulating a mission for a specific business is best understood by considering the business at its inception. A typical business organization begins with the aspirations and beliefs of a single entrepreneur. As the business takes root and grows or is forced by competitive pressures to alter its product , market or technology , the company may redefine its mission statement with more assertion viz; who we are and what we do Basic products, primary market and principal technology used in production or delivery The three indispensable components of a mission statement are the basic product, the primary market and the principal technology / special resources used in production or delivery. The above three components describe the business activity of the company. Company Philosophy Statement of Companys philosophy ( often called the company creed) usually accompanies or appears within the mission statement. It reflects the Company philosophy and values give a framework / boundary for individual actions aimed at achieving corporate goals. It reflects the basic beliefs, values, aspirations and philosophical priorities to which strategic decision makers are committed in managing the company
Example : Co philosophy of Sun Microsystems We
believe human development to be the worthiest of the goals of civilization for nurturing growth in the capabilities of people Values By Values, we mean the beliefs, business principles, and practices that are incorporated into the way the company operates and the behavior of company personnel. Value relate to such things as treatment of employees and sensitivity to customer wants, integrity, ethics, innovativeness, emphasis on quality or service, social responsibility, and community citizenship. Value statements reinforce the companys vision, strategy and operating practices. Home Depot ( a large chain in US) has embraced values entrepreneurial spirit, excellent customer service, giving back to the community, respect for all people, taking care of people, building strong relationships, and creating shareholder value. Sonys vision rests on the values of encouraging individual creativity and its determination to be a pioneer Intels corporate values consist of discipline, risk taking, quality, customer orientation, a result oriented atmosphere, and being a great place to work DuPont, which calls itself a science company and makes a wide array of products, stresses four values safety, ethics, respect for people, and environmental stewardship. Public Image
The issue of public Image is increasingly
becoming important, more so for a growing firm that is redefining markets, products, and its markets. Companys mission statement should take into account public image that company wants to create. For example Johnson & Johnson products are regarded as safe and Sonys as quality products. Examples of mission statements Cadbury India : To attain leadership position in the confectionary market and achieve a strong national presence in the food drinks sector Reliance Industries: To become a major player in the global chemicals business and simultaneously grow in other growth industries like infrastructure Mckinsey & Co: To help business corporations and governments to be more successful Merck: : To provide society with superior products and services innovations and solutions that satisfy customer needs and improve quality of life. Eastman Kodak we are in the picture business ONGC To stimulate, continue and accelerate efforts to develop & maximize the contribution of the energy sector to the economy of the country Pfizer Inc: Pfizer is a research-based , global pharmaceutical company. We discover and develop help them enjoy longer, innovative, value added products that improve quality of life of people around the world and help them enjoy, healthier, and more productive lives. The company has three business segments: health care, animal health and consumer health care. Our products are available in more than 150 countries Ritz-Carlton Hotels : The Rtz-Carlton Hotel is a place where genuine care and comfort of our guests is our highest mission. We pledge to provide the finest personal service and facilities for our guests, who will always enjoy a warm, relaxed yet refined ambience. The Ritz-Carlton experience enlivens the senses, instills well- being, and fulfills even the unexpressed wishes and needs of our guests. The Gillette Company: Our mission is to achieve or enhance clear leadership, worldwide, in the existing or new core consumer product categories in which we choose to compete. Current categories are: Male grooming products, including blades and razors, electric shavers, shaving preparations . Female grooming products, including . Alkaline and special batteries and cells. .. Values: In pursuing our mission, we will live by following values - People - Customer Focus - Good Citizenship Microsoft For years mission that drove Microsoft was a computer on every desk & every home using great software as empowering tool. Its new mission for 2013 and beyond is "to create a family of devices and services for individuals and businesses that empower people around the globe at home, at work and on the go, for the activities they value most." In 1999 broadened its vision- Empower people through great software any time, any place, and on any device OTIS Our mission is to provide any customer a means of moving people and things up, down, sideways over short distances with higher reliability than any similar enterprise in the world Bristol-Meyers Sqib our mission is to extend and enhance human life by providing the highest quality health and personal care products. We intend to be preeminent global diversified health and personal care Mission Statement of Azim Premji Foundation.. Catalyze a national movement for Universalization of Elementary Education in India. Achieve significant improvement in the quality of education as a sustained method for attracting and retaining children in the school Work with existing government initiatives and create new ones to improve access, content and delivery of education. Build active, sustainable partnerships with individuals, community at large, government and other organizations committed to the field of education to leverage the effort for optimum results. Enable schools to guarantee learning Develop world class human resources in the field of education Mission statement of TCS is : To help customers achieve their business objectives by providing innovative, best-in- class consulting, IT solutions and services. Make it a joy for all stakeholders to work with us. The values guiding the organization are specified as : Integrity, Leading Change, Excellence, Respect for the individual, and Learning and sharing. David Nine components of a mission statement Customers Products or services Markets Technology Concern for survival, growth and profitability Philosophy Self-concept Concern for Public Image Concern for employees Process of developing a mission statement Process of development of mission statement should create an emotional bond & sense of mission between organization & employees. Emotional bond comes when an individual identifies with the underlying values & behavior of a firm. Involve as many managers & employees in process , brings commitment. An approach often used is to select several articles about mission statement, ask people to read as background information. Set up discussion groups, hire consultants / facilitators to manage process / draft language, get unbiased view Decide how best to communicate to all stakeholders Strategic Intent C K Prahalad & Gary Hamel highlighted the concepts of Strategic intent based on deep study of success of smaller Japanese rivals over giant established American corporations in 1980s in their book Competing for Future. Strategic Intent is defined as the ability of the firm to think beyond its resources at a given point of time and define its purpose in terms- such as achieving something very laudable over a long horizon, challenging the market leader or industry leader. Since Strategic intent envisages the companys position in the long term - it conveys a sense of direction. Strategic Intent is described as a way of creating an obsession with winning, amongst all levels of employees and across all functions of the organisation. It is a shared competitive agenda for . Employees will be inspired / excited about the feeling of exploring something new i.e, discovery Strategic intent also generates an emotional connection. Employees feel passionate that the pursuit of the companys goals is a worthwhile experience. In this way it gives rise to a shared destiny. Examples : Success stories of Komatsu vis--vis Caterpiller Komatsu set out to encircle Caterpillar. Cannon sought to Beat Xerox .. And Honda strove to become a second Ford am automotive pioneer .. John F Kennedy in 1960 USA will put the first man o the moon by end of the decade Strategic Intent : is the dream that energizes a company. The strategic intent that provides the emotional and intellectual energy necessary for the long journey. It gives employees at all levels of a corporation: A sense of direction A sense of discovery every individual enjoys exploring some thing new A sense of Destiny Conventionally , strategy attempts to ensure a fit between existing resources and emerging opportunities. In contrast, the concept of strategic intent involves the deliberate creation of a situation of misfit between resources and aspirations Competitive Strategy as Leverage Leverage comes into picture when a resource- scare firm is facing a resource rich rival like one who may have high financial resources and / or high market share and revenue. Leverage is to do more with less North Vietnam in its conflict with US a good example of resource leverage. Resource scarcity gave rise to creativity. GM was rich, had invested billions in automating manufacture. But did not adequately rejuvenated management processes and work flows, supplier relationships . It lacked the skill & will to leverage resources. Smaller Japanese challengers changed the rules of the game. Looked for gaps in bigger firms defenses. Focused its investments on relatively fewer competencies where the firm saw chances of becoming a leader. Created Lean manufacturing methods to do more with less. As they had fewer designers, they were constrained to reduce product development times and subsequently the cost of introducing new product lines The need for shorter product development period encouraged cross-functional communication. Resource limitation made them develop capable supplier base, which shared a substantial burden of innovation. Japanese firms could not think of corporate overheads or excess management layers. It would choose only a few goals , which will have full top management support. Japanese managerial ingenuity is credited for perceiving competition as encirclement rather than confrontation, an inclination to reduce the time taken for product development, tightly knit cross functional teams, a focus on core competencies, close links with suppliers, and a program for employee involvement. Some of the premises on Which Leveraging Operates A firm is a portfolio of resources (as well it is a portfolio of products or businesses) Resource constraints not necessarily prevent a firm to achieve global leadership Leverage-based efficiency gains come primarily from raising the numerator in productivity ratios rather than from reducing the denominator. The resource allocation task of management has received too much attention as compared to the task of resource leverage. The capacity for resource leverage often separates winners in prolonged battles for industry leadership Strategic intent involves significant stretch for the organization.. Existing skills, capabilities , and resources are not considered sufficient for the task. ORGANIZATIONAL DIRECTION
VISION Founder / Stakeholders
MISSION Top Management OBJECTIVES (long term) Business Unit with Top Management Unit Manager with approval of Plans superior Each Organizational Level, in conformity Policies With other unit policy Individual Managers, in conformity Goals With unit policies Strategies Individual Managers, in conformity & Tactics With individual Goals