A Brief History Of Strategic Thought Corporate Reputation and Competitiveness Gary Davies: Session 1

Course Aims and Outcomes Course Aims For students to understand the role of corporate reputation as a strategic framework. Learning Outcomes Students will understand how to define and measure the reputation of an organisation, how to manage a corporate reputation and what linkages there are between reputation and company performance

Lecture Aims To review the development of Strategic Thinking and to locate Reputation within this To make the case for Reputation as a Strategic Framework

What is Strategy? Strategy is about matching the competencies of the organization to its environment. A Strategy describes how an organization aims to meet its objectives. A successful Strategy is one that achieves an above average profitability in its sector.

Early Tools Anecdotal comment (war stories) from ‘captains of industry’ Simple frameworks: SWOT, PEST Early proscriptive models, eg gap analysis

The Two Planning Flows VISION STRATEGY TACTICS STRATEGIC FINANCIAL OBJECTIVE GOAL BUDGET MODEL

The Five Forces Model SUPPLIERSCUSTOMERS CONSUMERS SUBSTITUTES NEW ENTRANTS RIVALRY Adapted from Porter 1988

Generic Strategies The idea that strategic frameworks and options can be defined that fit all companies/organisations in all circumstances Porter’s 3 generic strategies: Cost leadership, Focus, Differentiation

The PIMS Paradigm Market Structure Competitive Position Relative perceived quality Relative market share Relative capital intensity Relative cost Strategy and Tactics Performance Market Differentiation Market Growth Rate Purchase Quantity Adapted from Buzzel & Gale (1987)

The New Economy Growing emphasis on the service sector and manufacturers adding value by adding services e.g. ‘IBM selling solutions’ Need to define new models to guide the management of service business

The Serqual Gaps Model Expected Service Perceived Service External Communications to Customers Service Delivery Service Quality Specification Management Perceptions of Customer Expectations CUSTOMER PROVIDER

Dimensions of Service Quality Access (can the customer obtain the service easily) Credibility (can you trust the company?) Knowledge (does the supplier understand the customer’s needs?) Reliability (is the service dependable and consistent?) Security (is the service free from risk?) Competence (how knowledgeable and skilled are staff?)

Dimensions of Service Quality Communication (is the service well explained?) Courtesy ( are staff considerate and polite) Responsiveness (are staff quick to respond?) Tangibles associated with the service (buildings, uniforms).

The Service Profit Chain Source: Adapted from Heskett et al (1994) Internal Service Quality Employee Satisfaction Employee Retention Employee Productivity External Service Value Customer Satisfaction Customer Loyalty Revenue Growth Profitability

The Business Excellence Model Leadership People Management Policy & Strategy Resources Processes People Satisfaction Customer Satisfaction Impact on Society Business Results Enablers Results

Concern about Strategic Models Can you plan a modern, complex company from the top even using a strategic planning team as advisors? Why do strategic models conflict (PIMS and stuck in the middle)? Should strategy start from the market place not from the strategy team? Isn’t it time we distinguished between strategic analysis and strategy itself?

Emergent Strategy Henry Mintzberg’s thinking that few strategies come from the top and that most emerge changes our view of ‘strategising’. The role of senior manager changes from ‘deciding what to do and finding someone else to do it’ to ‘coach, filter, enabler’.

Top down v Bottom up ? The Customer Management Staff

MARKET-FOCUSSED COMPANIES Understanding the Customer Direct customer contact at many levels Widely disseminated and understood research on who the core customer is and on the market structure, e.g. on market segmentation Responsiveness of the organisation to customer needs Regularly receive and act upon customer satisfaction surveys Responsive to customer complaints and suggestions Track key customer data on company image

MARKET-FOCUSSED COMPANIES Provision of real value for money Monitor aspects of quality relevant to the marketplace Conduct comparative surveys of competitive prices and services Reward inside the organisation based on performance with customers Source: Corporate Strategy, Richard Lynch, Pitman 1997, p.198

CUSTOMER FOCUS Customer focus goes beyond market focus. The company is managed totally from the customers’ point of view. Key features of customer focused companies are: The business is led by someone who is a fanatic about the customer and able to model the desired behaviours Customer facing employees are empowered to react to what the customer wants.

Employees have a stake in the business (usually share or other form of ownership) Employees feel trusted to run the business. Customers are regularly asked for ideas as to how the business should be run. Achieving a customer focus is a cultural issue (not an organisational issue). Changing to a customer focus is neither easy nor comfortable. CUSTOMER FOCUS [cont …]

Mission and Vision PURPOSE ( Why the Company Exists) COMPANY VALUES (What senior management believe in) STRATEGY (The commercial rationale) STANDARDS and BEHAVIOUR (Policies and behaviour patterns that guide how the company operates) The Ashridge model from Campbell &Tawaday (1990 )

Analysis and Implementation Model One: Two discrete stages Time Analysis Implementation Model Two: Two overlapping stages Analysis Implementation

A New Approach? Should meet the basics of strategy: link to profit, clear direction etc Should be generic (applicable to any organisation) Should reflect the trend towards service business Should be bottom up/emergent in focus Should be implementable

Aims and Objectives To present the case for Reputation as a paradigm for managing the strategic direction of an organisation To explore how reputation management has emerged from PR and Communications To demonstrate how Reputation can meet the criteria for being a strategic tool

What is Strategy? Strategy is about matching the competencies of the organization to its environment. A Strategy describes how an organization aims to meet its objectives. A successful Strategy is one that achieves an above average profitability in its sector.

What Is Reputation? The net result of the interaction of all the experiences, impressions, beliefs, feelings and knowledge that people have about an organisation

The Corporate Reputation Chain Customer View Employee View Satisfaction Loyalty Revenue Satisfaction Retention Image Identity Reputation Other External Stakeholders: Suppliers, Investors Recruitment

Corporate Personality Agreeableness Enterprise Competence Chic Ruthlessness Machismo Informality The 7 Dimensions of Corporate Personality

Summary Reputation can be considered as a useful strategic framework It is particularly useful for service companies It can be used to direct the strategy for no for profit as well as for profit seeking organisations