SM Winter 2012

Review Strategy is:  resolving tension between what a firm SHOULD do & what it CAN do & what it WANTS to do How to get all 3 lined up and pulling in the same direction?

Management preferences preferences are the junction between needs beliefs reality

Management preferences managers drive strategy energy impetus A forward—even a very good forward—will struggle on defence.

Management preferences  “ Many top-level managers do not have an explicit and useful way of thinking about personal values …” This is one place where you may have an advantage.

Management preferences roots  basic needs power achievement security recognition  beliefs Most business-people think they don’t have beliefs—that they will (and can) do what’s necessary for the firm to succeed.

Management preferences roots  basic needs power achievement security recognition  beliefs Preferences come from person’s core In fact, they reveal the core of the person as a manager.

Management preferences beliefs  goals we must  grow in volume and roi  maintain a conservative financial structure  be measured against the best

Management preferences beliefs  product market focus don ’ t diversify  except where our technology can be applied we must not  be dependent on one single product line  run businesses where we not expert we can  manage a range of industries

Management preferences beliefs  value proposition market share come through  technically superior products  a known brand name  product quality  innovation »in processes and basic products  price

Management preferences beliefs  core activities we’re  a production company  a sales company  a profit-making company

Management preferences beliefs  core activities the product is everything no, marketing is everything no, customer happiness is everything we don’t make sales, we build relationships

Management preferences beliefs  core activities we must  lead in keeping costs down and quality up  control every input to our products we are  prepared to pay a price to remain flexible

Management preferences beliefs  job context scope of job how success is measured  how it ’ s rewarded what consequences of failure are

Management preferences beliefs  job definition What are you supposed to do? What am I supposed to do?

Management preferences beliefs  job relations What were people “ promised? ”  Fun?  Hard work?  A fierce fight with competitors?  Stability? Employee expectations are powerful.

Preference Mismatches proposedpreferred reality

Preference Mismatches Your strategist is incompetent proposedpreferred reality

Preference Mismatches A simple problem— not easy to solve, but easy to outline. proposedpreferred reality

Preference Mismatches 1 st cause: Managers stick with old strategy even when conditions change. proposedpreferred reality

Preference Mismatches 2 nd cause: Managers become committed to new strategy that doesn’t fit capabilities or environment. proposedpreferred reality

Preference Mismatches Hardest problem: Managers don’t realize they have preferences proposedpreferred reality

Preference Mismatches 2 nd hardest problem: Frozen preferences proposedpreferred reality

Preferences Strategy 1.identify mismatch What should management prefer? Do they? What needs to change?

Preferences Strategy 2.test the linkages  Can you sell this? Can they? Do they even know what “this” is?

Preferences Strategy 3.close the gap  minimal conflict Really?

Preferences Strategy 3.close the gap  moderate conflict test — flexibility Can the old dog learn new tricks? Can he be enthusiastic about them?

Preferences Strategy close the gap serious conflict  Can organization survive change in leadership?

Preferences Strategy 3.close the gap  the challenge hold to the strategy change the organization Compromise doesn’t work here It will feel good but you’ll come to grief

Preferences Strategy 3.close the gap  middle managers dislike risk probably not consistent

Preferences Strategy 3.close the gap  middle managers minimal conflict  a nice possibility But probably self-deception

Preferences Strategy 3.close the gap  middle managers moderate conflict  a better situation Can be some give and take

Preferences Strategy 3.close the gap  middle managers serious conflict  probably looking at changing people

Mgmt preference analysis purpose  identify mismatches strategic necessities vs beliefs  bring these to surface  find a resolution to discrepancy

A happy note  this will also be true for competitors most managers have limited repertoire enables you to predict Also opens possibility of “fish out of water”

Stakeholder preference  Irrelevant?  Hindrance?  Legitimate?  Essential? To be implemented successfully over time, any strategy must command the creativity, energy and desire of the company’s members. K. R. Andrews

Process 1.Identify stakeholders 2.Define their interests 3.Compare strategy to interests 4.Align strategy & interests

Process 1.Identify stakeholders  Internal  External

Process 1.Identify stakeholders  Internal Owner Shareholders Lenders Management team Employees Unions

Process 1.Identify stakeholders  External Customers Government Interest groups Community Suppliers Competitors?

Process 2.Define stakeholders ’ interests What ’ s “ best ” for each stakeholder  Do they know it? Should you deliver it? Does the strategy drive them  towards their “ best ” interest?  away from their “ best ” interest? Find potential alliances of interest

Process 3.Strategy  ?  Interests Likely consequences of your actions?  What reactions will stakeholders have? Your personal feeling about your actions?  How do you weigh interests of others?  How do you set priorities?  What are the effects? Are you prepared to defend your decision?  Can you justify your action to others?

Process Strategy  =  Interests If likely to object  Can they be brought into alignment? Why not? Don’t stakeholders have the same fundamental interests—to benefit from the success of the company?