creating advantage

creating advantage - Transcript

Creating Advantage Synergy and Strategic Philosophies

Vision is the art of seeing things invisible Jonathan Swift

Do not quench your inspiration and your imagination do not become the slave of your model Vincent van Gogh Painter

Sustainable Competitive Advantage
SCA is an element or combination of elements of the business strategy that provides a meaningful advantage over both existing and future competitors An SCA needs to be meaningful sustainable and substantial An SCA needs to be supported and enhanced over time The assets and competencies of an organization represent the most sustainable element of a business strategy because these are usually difficult to copy or counter

Sustainable Competitive Advantage
An SCA should be visible to customers and provide or enhance a value proposition The key is to link an SCA with the positioning of a business A solid value proposition can fail if a key ingredient is missing e g Pringles

The Sustainable Competitive Advantage
The Way You Compete The Way You Compete Product strategy Product strategy Positioning strategy Positioning strategy Manufacturing strategy Manufacturing strategy Distribution strategy etc Distribution strategy etc Basis of Competition Basis of Competition Assets and competencies Assets and competencies What You Offer What You Offer Value Proposition Value Proposition Where You Compete Where You Compete Product market served Product market served Competitor faced Competitor faced

SCA

SCAs SCAs KSFs KSFs
A KSF is an asset or competence needed to compete An SCA is an asset or competence that is the basis for a continuing advantage It is in a way a point of differentiation A KSF for a value priced economy cars is the ability to control the costs But it is practiced by lets say Hyundai motors and therefore it becomes a SCA for Hyundai because it is the way of winning over the competition

versus versus

Sustainable Competitive Advantages vs Key Success Factors A KSF is an asset or competence needed to compete whereas an SCA is an asset or competence that is the basis for a continuing advantage An SCA is analogous to a Point of Differentiation POD whereas a KSF can be analogous to either a Point of Parity POP or a POD

SCA Study
248 businesses asked for SCA Top named of 30 Quality reputation 105 Customer service product support 78 Name visibility name recognition 71 Retain good Management staff 65 Low cost production 53 Financial Resources 51 Customer Orientation feedback 45 Product line breadth 47 Technical Superiority 45



Installed base of satisfied customer 45 Segmentation Focus 45 Product characteristics differentiation 37 Continuing product innovation 35 Market Share 35 Size location of Distribution 34 Low price high value offering 32 Knowledge of business 31 Effective sales force 28

The Role of Synergy
Synergy means that the whole is more than the sum of the parts Synergy between business units can provide an SCA that is truly sustainable because it is based on the characteristics of a firm that are probably unique Synergy leads to 1 Increased customer value 2 Lower operating costs 3 Reduced Investment



The Role of Synergy
Synergy will generally be achieved by exploiting some commonality in the two operations such as Customers Sales Force Distribution Channel Manufacturing Facilities Offices or Warehouses R D Efforts Staff and Operating Systems Marketing and Marketing Research Core Asset or Competency An asset or competency that is capable of being the competitive basis of many of a firm s business units Core Assets and Competencies should not be outsourced

Synergy
Two or more businesses in combination will generate Increased customer value and thus loyalty and or sales Lower operating costs Reduced investment Challenge Finding it Overcoming organizational issues Especially when an alliance is involved

Strategic Options
Assets competencies that underlie a large set of businesses Quality Product Attributes Product Design Product line breadth Corporate social responsibility Brand familiarity Customer Intimacy Value Focus Innovation Being Global

Strategic Options
Being Being Global Global Innovation Innovation Quality Quality Product Product Attribute Attribute Product Product Design Design

Focus Focus

Strategic Options

Product Product Line Line Breadth Breadth Corporate Corporate Social Social Responsibility Responsibility

Value Value Customer Customer Intimacy Intimacy Brand Brand Familiarity Familiarity

Strategic Vision
Four Characteristics a Firm Needs to Manage a Strategic Vision 1 A clear future strategy 2 Buy in throughout the organization 3 Assets competencies and resources 4 Patience

Strategic Vision
Is forward looking with long term perspective Provides a sense of purpose Provides the rationale for investment that may require years to payoff Requires a top down centralized structure Needs strong charismatic leader

Strategic Philosophies
Strategic commitment Strategic opportunism Strategic adaptability

Strategic Commitment
Assumes that the current strategy will work into the future Tunnel vision avoid distractions Buy in throughout the organization Improve the offering the costs the customer relationships Patience

Strategic Opportunism
Assumes a fast changing market and that it is not possible to predict the future so that the best strategy is to be sensitive to current opportunities and exploit them Short term oriented Decentralized entrepreneurial risk taking organization

Strategic Opportunism
Driven by a focus on the present Premise that environment is so dynamic and uncertain that it is not feasible to aim at a future target Strategic flexibility and willingness to respond to opportunities is necessary Change is the norm Minimizes risk of missing emerging opportunities Reduces risk of strategic stubbornness Requires decentralized structure Needs entrepreneurial personnel

Strategic Adaptability
Assumes a changing market and that the organization can predict and manage responses to those changes A medium term perspective Organization is flexible and supports investments behind trends

Commitment vs Opportunism vs Adaptability
Strategic Approach Strategic Risk

Focus on future

Strategic Commitment

Strategic Stubbornness Strategic Drift

Focus on present

Strategic Opportunism

Strategic
Strategic Drift Blunders Misreading Trends

Strategic Adaptability

Strategic Stubbornness
Danger of Strategic Vision Pitfalls that can prevent a vision from being realized 1 Implementation Barriers 2 Faulty Assumptions of the Future 3 A Paradigm Shift Causes of Strategic Stubbornness 1 Ironic Penalty for Success 2 The new paradigm will probably require a different culture which is difficult to change 3 New paradigm may cannibalize the old vision 4 Commitment to the Vision



Strategic Drift
Danger of Strategic Opportunism Investment decisions are made incrementally instead of as part of a vision Can be an excuse to delay investment or divert resources from a core vision Causes of Strategic Drift 1 A short lived transitory force may be mistaken for one with enough staying power to make a strategic move worthwhile 2 Opportunities to create immediate profits may be rationalized as strategic when they are not 3 Synergies across business units may fail to materialize

Strategic Intent
Captures the essence of winning Is stable over time Sets a target that deserves personal effort and commitment Implies sizeable stretch

Strategic Flexibility
The ability to adjust or develop strategies to respond to external or internal changes Ways it can be achieved Participating in multiple product markets and technologies Having resource slack Creating an organizational system and culture that supports change





To create an SCA a strategy needs to be valued by the market and supported by assets and competencies that are not easily copied or neutralized by competitors The most common SCAs are quality reputation customer support and brand name Synergy is often sustainable because it is based on the unique characteristics of an organization Strategic commitment involving a stick to your knitting focus on a clearly articulated strategy is based on an assumption that the business model needs to be refined and improved and not changed







Strategic opportunism assumes that the environment is so dynamic and uncertain that it is futile to predict the future and invest behind those predictions The more prudent and profitable route is to detect and capture opportunities when they present themselves with a goal of achieving immediate profits Strategic adaptability based on the assumption that is possible to understand predict and manage responses to market dynamics that emerge and even create or influence them is about managing relevance Strategic intent couples a clear strategic vision with a sustained obsession with winning at all levels of the organization

All men can see the tactics whereby I conquer but what none can see is the strategy out of which great victory is evolved Sun Tzu Chinese military strategist

Don t manage lead Jack Welch GE

Where absolute superiority is not attainable you must produce a relative one at the decisive point by making skillful use of what you have Karl von Clusewitz On War 1832

Business more than any other occupation is a continual dealing with the future it is a continual calculation an instinctive exercise in foresight Henry R Luce

The rewards in business go to the man who does something with an idea William Benton

No one can possibly achieve any real and lasting success or get rich in business by being a conformist J Paul Getty

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