Strategic Management GM 105 Dr.

Lindle Hatton

CANOE THEORY
    

  

Think of your organization as a long canoe The canoe has a destination Everyone in the canoe has a seat and paddle Everyone is expected to paddle Those who won t paddle have to get out of the canoe Those who prevent others from paddling have to re-adjust or get out of the canoe There are no passengers in the canoe The canoe theory understands crisis The canoe theory says you have the right to be happy

CANOE THEORY

BUILT TO LAST
Preserve the Core

Stimulate Progress

GOOD TO GREAT
      

Level 5 Leadership First Who Then What Confront the Brutal Facts The Hedgehog Concept A Culture of Discipline Technology Accelerators The Flywheel and The Doom Loop

Private versus Public Organizations

    

Purpose Goals Financing Decision-Making Key Stakeholders

Strategic Management Versus Strategic Planning

Features of Successful Strategic Management



     

Has support of organization s executive officer. Is user friendly. Is participatory, not left to planners. Is flexible. Leads to resources decisions. Engages and motivates all staff. Is fresh and continuous, not static and stale.

Features (Continued)
   

Is Proactive Not a Quick Fix Part of Quality Management Payoffs Increase over Time

Lessons Learned About Strategic Planning

  

 

Plans must be tailored to organization. No one size fits all. Time to complete takes longer expect 50% more than planned. Process needs a shepherd. Visionaries needed at beginning and detail types thereafter.

Why Managers Don t Plan

    

Time Consuming High Demands Not Rewarded Executives Don t Support It Too Risky

Strategic Management Model



Scanning


Where are we now? Where do we want to be? How do we get there? How do we measure our progress?

Strategy Formulation


Strategy Implementation


Measurement/Performance


Strategic Management Model



Strategy Formulation
     

Where do we want to be? Vision Mission Values Goals Objectives

VISION
Vision without Action is a Daydream Action without Vision is a Nightmare
    

Not Optional Stretch 30+ Years 8-10 Words in length Future State Brief and Memorable

VISION (Continued)
 

Inspiring and Challenging Descriptive of the Ideal

Vision Examples
    

Light the Fire Within A Safer Future for All Communities See the Mountains Breathe Freely To Be the Happiest Place on Earth To Be the World s Best Quick Service Restaurant

Vision Levels of People

 

 

Some people never see it. (Wanderers) Some people see it but never pursue it on their own. (Followers) Some people see it and pursue it. (Achievers) Some people see it and pursue it and help others see it. (Leaders) John Maxwell, Developing The Leader Within You, 1993.

VISION EXERCISE

Mission Statement
In the absence of a clearly defined direction one is forced to concentrate on confusion that will ultimately consume you.

MISSION
     

What is our purpose? Describes current state Timeline is 3-5 Years Builds on our distinctive competencies Tends to focus on Core Business 30-35 Words in length

Mission Examples


To Lead All Communities in Disaster Preparedness, Mitigation, and Recovery by Maximizing Assistance and Support. Caltrans Improves Mobility Across California. To produce superior financial returns for our shareholders as we serve our customers with the highest quality transportation, logistics, and e-commerce.

MISSION EXERCISE

Corporate Governance
    

What is it? Codes of Governance Role of the Board of Directors Role of Top Management Team Executive Compensation

Corporate Governance


System by which a firm s owners control its affairs. Does it work?

Codes of Governance
    

The Cadbury Code: 1992 Sarbanes-Oxley Act: 2002 Public Company Accounting Oversight Board Triple bottom line Four major issues:
   

Ownership structure and influence Fianacial Stakeholder rights and relations Financial transparency and information disclosure Board structure and processes (audit)

Role of the Board of Directors

   

Monitor Evaluate and influence Initiate and determine Organization of Board

 

Insiders versus outsiders CEO/chair position

Committees Effectiveness

Role of Top Management Team

 

Who is the TMT? Executive Leadership and Strategic Vision

  

Articulates strategic vision for corporation Sets the model for others to identify and follow Communicates high performance standards and builds confidence in followers abilities to meet standards

Managing strategic planning process

Executive Compensation
  

Incentive alignment Executive Ownership Incentive compensation

   

Salary Bonus Stock Options LT Bonus

VALUES
   

Guiding Principles Help establish Culture Part of Preserving the Core Core Ideology

Value Examples
   

CHP PRIDE HP WAY J & J Credo Build the Spirit of the Place

Ethical Awareness Model

  

Organizational Ethics Individual Ethics Personal Values

VALUES EXERCISE

Strategic Management Model



Scanning:
  

 

Where are we now? Macro Analysis (STEP, PESTEL, ETC.) Industry Analysis Competitive Intelligence SWOT Analysis Internal versus External Elements

Why Scan?
     

To To To To To To

know your position in the environment respond effectively to constant change see the organization as a whole avoid surprises survive lay the foundation for strategic issues

SCANNING: Key Environmental Variables

  

Macro Environment: STEP, PESTEL Task Environment: Industry Internal Environment: Focal Organization

Socio-Cultural Variables
       

Lifestyle Changes Career Expectations Regional Shifts in Population Life Expectancies More women in workforce Greater concern for fitness Postponement of family formation Increase in temporary workers

Technological Variables
       

Total Federal Spending for R&D Total Industry Spending for R&D Focus of Technological Efforts Patent Protection Wireless Communications Nanotechnology Productivity Improvements Genetic engineering

Economic Variables
       

GDP Trends Interest Rates Money Supply Inflation Rates Unemployment Levels Wage/Price Controls Energy Availability & Cost Disposable & Discretionary Income

Political-Legal Variables
      

Antitrust Regulations Tort Reform Environmental Protection Laws Taxation at local, state, federal levels Hiring and Promotion Laws Americans Disabilities Act of 1990 Sarbanes-Oxley Act of 2002

Demographic Variables
    

Aging Population Rising affluence Changes in Ethnic Composition Geographic distribution of population Disparities in income levels

Global Variables
  

 

Increasing Global Trade Currency Exchange Rates Emergence of Indian and Chinese Economies Trade agreements (NAFTA, EU, ASEAN) Creation WTO

STEP EXERCISE
   

Socio-Cultural Technological Economic Politico-Legal

Industry Analysis


6 Forces Analysis
     

Industry Competitors Suppliers/Vendors Customers/Clients Potential New Entrants Substitutes Other Stakeholders

Role of Complementors

New Entrants and Entry Barriers

        

Absolute cost advantages Access to inputs Government policy Economies of scale Capital requirements Brand identity Switching costs Access to distribution Proprietary products

Buyer Power (Channel and End Consumer)

     

Buyer volume and information Brand identity Price sensitivity Threat of backward integration Product differentiation Substitutes

Supplier Power
    

Supplier concentration Differentiation of inputs Switching costs Threat of forward integration Cost relative to total purchases in industry

Substitutes
   

Switching costs Buyer inclination to substitute Variety of substitutes Price-performance tradeoff of substitutes Necessity for product or service

Degree of Rivalry
        

Exit barriers Industry concentration Fixed costs Industry growth Intermittent overcapacity Switching costs Brand identity Diversity of rivals Corporate stakes

Other Stakeholders
    

Employees Unions Government Trade and Professional Associations Other Direct Influencers

Role of Complementors
     

Number of complements Relative value added Difficulty of engaging complements Buyer perception of complements Complement exclusivity Tend to increase profits by increasing demand for an industry s products

6 FORCES EXERCISE

Competitive Profile Analysis

 

Identify Key Competitive Factors Identify key Competitors

COMPETITIVE PROFILE EXERCISE

Industry Foresight
Customer Needs Unarticulated Articulated Customer Served Unserved Types

Internal Environment
 

Internal Profile Analysis SWOT Analysis

Internal Profile Analysis

 

Identify Key Core Functions Identify Key Measures for Core Functions Build Matrix

SWOT Analysis


Internal Environment
 

Strengths Weaknesses Opportunities Threats

External Environment
 

SWOT EXERCISE

Strategic Management Model



Strategy Formulation
     

Where do we want to be? Vision Mission Values Goals Objectives

GOAL
  

  

Supports the Mission Deals with One Issue or Item of Focus Reflects a primary activity or strategic direction Describes the To Be State BHAG Encompasses a long period, i.e. at least 3 years

Goal Examples
 

 

Achieve excellence in the delivery of disaster recovery and mitigation programs. Professionally develop our employees as a reflection of DAD s key attributes and values. Increase the supply of housing, especially affordable housing. Become a model for customer service. To provide benefits in correct amounts and issued in a timely manner.

Goal Statements Litmus Test

Goal Exercise

OBJECTIVES
 

Add specificity beyond Goals Answer the questions

 

What is to be accomplished? When?

Should contain the SMART Elements

OBJECTIVES: SMART Model

    

Specific Measurable Aggressive but Attainable Results-Oriented Timeframe

Strategic Objective Examples

 

By June 30, 2005 achieve 75% rating on the DAD service index from all stakeholders. Increase sales growth 6-8% in the next 5 years. (P&G) Cut corporate overhead costs by $30 million per year. (Fortune Brands) Operate 6,000 stores by 2010 up from 3,000 in the year 2000. (Walgreen s) Reduce greenhouse gases by 10 percent (from a 1990 bast) by 2010. (BP Amoco)

Objectives Litmus Test

Strategic Objective Exercise

Strategic Management Model



Strategy Implementation
  

Everyone is Responsible Few Guidelines No Easy 10-Step Checklist to Follow

Strategic Management Model



Strategy Implementation
 

Most open-ended part of Strategic Mgmt People implement strategies not Organizations

Strategic Management Model



Strategy Implementation
  

How do we get there? Work Action Plans GOOMs

Strategy Implementation Considerations

  

7-S Framework Strategic Fit Human Resources Patience

7-S Framework
      

Shared Values Strategy Structure Systems Skills Style Staff

Human Resource Rule

  

Hire Smart Train Hard Manage Easy

Parable of the Bamboo

It takes patience and discipline to develop and empower people; in fact, it s like growing bamboo. Once the seed is planted, you must water it daily for four years before the tree breaks ground then it grows 60 feet in 90 days! Executives who nurture people can get similar results How, you ask, can such rapid growth be possible? It results from the miles of roots that develop in those first four years. Preparing people to perform is the task of leadership.

Implementation Strategies
   

GOOMs Implementation Conference CEO involvement Other Strategies?

GOOMs
   

Goals Outcomes Objectives Measures

Definitions
 

 

Goal: Broad, General BHAG Outcome: Desired end result and report performance Objective: What and When Measure: A quantified unit that assesses progress or achievement

GOOM Example
Goal 1: Achieve excellence in the delivery of
disaster recovery and mitigation.

Outcome: Increased Customer Satisfaction Objective 1.1: By June 30, 2005, achieve
75% rating on the DAD Service Index from all stakeholders.

Measure: DAD Service Index (DSI)

GOOM Exercise

Work Action Plan Template Sponsor: Organization:

n.n Goal Outcome n.n Objective Measure

Completion Date

Task Description Plan- Do-Check-Act

Team Lead

Staff Hours

Completion Date

Strategic Management Model



Measurement / Performance


Why do we measure our progress?

Why Measure?
Reactive Reasons  Government Intervention  Fewer Resources and Smaller Budgets  Increased Demand for Accountability  Mandated

Why Measure?
Proactive Reasons  Makes us more responsive to public needs  Provides feedback on mission accomplishment  Creates blueprint for linking budget to outcomes  Good management and good public policy

Measurement / Performance
 

How do we measure our progress? 5 Types of Measures

    

Input Output Outcome Quality Efficiency

INPUT Measure
Amount of resources needed to provide a particular product or service. Examples:  Number of FTEs or PYs  Number of eligible clients  Number of customers requesting service  Number of applications received  Number of sales orders received

OUTPUT Measure
Amount of products or services provided Examples:  Percent of highways resurfaced  Number of police reports filed  Number of vaccinations given to school-age children per year  Number of shafts produced in a single operating shift

OUTCOME Measure
Reflect the actual results achieved and/or their impact or benefit. Examples:  Reduction in incidence of disease  Percentage of discharged patients living independently  Percent of increase in tourists  Percent of monthly programmed sales orders filled on time

QUALITY Measure
Reflect the effectiveness in meeting the expectations of customers and stakeholders Examples:  Number of defect reports compared to number of reports produced  Number of course ratings in highest category related to total number of course ratings

EFFICIENCY Measure
Also known as productivity measures. Reflect the cost of providing products or services. Examples:  Output/Input  Output/Time  Output/Cost  Outcome/Cost

Keeping Plans Off The Shelf

  

All Staff Meeting Announce Phases Review and Assess Plans at Quarterly Sessions Sponsors and Team Leads for Strategic Goals and Strategic Objectives Deming Philosophy PDCA

Developing Bench Strength

 

   

Drill Down Application Sponsors, Team Leads, and Team Members Work Action Plan Project Champion Leadership Training Leadership Conference Presentations

Establishing Organizational Permanence

     

Training Emphasis Certification Awards & Recognitions Caught-Ya Celebrations Walk the Walk

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