MANAGING CHANGE STRATEGICALLY Strategic Thinking & the Strategic Management of Change J. Michael (Mike) Geringer, Ph.D. O’Bleness Professor of International

MANAGING CHANGE STRATEGICALLYStrategic Thinking & the

Strategic Management of Change

J. Michael (Mike) Geringer, Ph.D.O’Bleness Professor of International Strategy

Director, Center for International Business – College of BusinessOhio University, Athens Ohio, USA

email: [email protected]

Materials in this packet copyright © by Geringer & Associates, Inc. Do not quote, cite, reproduce or otherwise infringe without written permission.

WHAT IS STRATEGY?

How would YOU define strategy?

© Geringer & Associates, Inc.

WHAT IS STRATEGY? Strategy is the pattern evident in

the fundamental choices a firm makes about developing & deploying scarce resources to achieve & maintain a unique & valuable position involves a set of activities different from competitors, yet consistent among the activities … the pieces form a coherent whole


WHAT IS STRATEGY?

Strategy is about being different in ways that add value & are clearly better

V ValuableR Rare

I Hard to imitate or substitute for O Organizationally

able to develop, sustain, & capture benefits© Geringer & Associates, Inc.

WHAT IS STRATEGY?Strategy deals withconfigurations of activities how activities fit with & reinforce

each other how to constantly upgrade &

leverage capabilities to sustain competitive advantage

Deciding what not to do is as important as deciding what to do © Geringer & Associates, Inc.

PERSPECTIVE ON STRATEGY FROM THE CEO OF A LITTLE $150 BILLION COMPANY…

“Look, what is strategy but resource allocation? When you strip away all the noise, that’s what it comes down to. Strategy means making clear-cut choices about how to compete. You cannot be everything to everybody, no matter what the size your business or how deep its pockets. You have to figure out what to say “NO” to.”

Jeffrey Immelt, CEO, General Electric

IMPORTANCE OF CLEAR STATEMENTS OF STRATEGY• Clear strategy statements leave no room for

misinterpretation – facilitates communication, empowerment & resource allocation

• Strategy statement of Edward Jones:“To grow to 17,000 financial advisors by offering trusted and convenient face-to-face financial advice to conservative individual investors who delegate their financial decisions, through a national network of one-financial-advisor offices.”

© by Geringer & Associates, Inc.

A CLEAR PROCESS PROVIDES STRUCTURE

Evaluate CurrentPerformance• Mission, Values,Vision• Goals & Objectives• Strategies

Macro EnvironmentalAnalysis (O&Ts)• PESTE

Company Analysis (S&Ws)• Structure• Resources• Processes• Staffing• Culture

Industry Analysis (O&Ts)• Structure• Evolution• CompetitionAnalysis & Position

Evaluation• Resource Requirements• Risk/return

Implementation• Making it happen

StrategyOptions• Business Unit• Corporate

Where are we now?

Where should we go?

How do we get there?


KSFs: Those skills or resources that a firm must master

• To compete in a particular market or segment

• By delivering what customers value & are willing to pay for

ACHIEVING SUCCESS: IMPORTANCE OF KEY SUCCESS

FACTORS (KSFs)


KSF analysis provides a framework to build shared understanding of:

– What players in our industry have to be good at

– How this is changing– What our current competitive position

is– How to develop our competitive

advantage– How to allocate our resources

WHAT IS THE PURPOSE OF KEY SUCCESS FACTOR ANALYSIS?


INDUSTRY LIFE CYCLE INFLUENCES

KEY SUCCESS FACTORS

Dis

tinct

ive C

om

pete

nce

or

Ski

ll N

eed

ed

Time

Emerging Growth Maturity Decline

Life Cycle Dynamics & Sources of Competitive Advantage

Manufacturing SkillsProcess TechnologyProcess RefinementsCost-Based Drivers(favors larger firms over time)Segmentation & Differentiation (finding & serving attractive niches)

Product ConceptsCreativityDesign CapabilitiesNew Technologies or Methods(favors smaller firms early on)


Describes overall competition & differentiation strategyDescribes customer value proposition

Operational Excellence• Low costs• Good standard quality & service• Process synchronization

Product leadership• State-of-the-art

products / offerings• Speed to market

Customer focus • Customization• Deep, long-term

relationships

Note: Try to indicate both current & desired future position

YOUR CURRENT & FUTURE BUSINESS MODEL DETERMINES KSFs


• Competitive strategies are generally mutually exclusive

• A clear competitive position is critical to successful implementation

• A strategic change must be total: all operations must be realigned across your company’s chain of activities in order to support the new strategy

GETTING “STUCK IN THE MIDDLE”:

NO CLEAR COMPETITIVE POSITION


Key Point:

Strategy is INTERNALas well as EXTERNAL


ACHIEVING STRATEGIC SUCCESS: DISTINCTIVE COMPETENCIES

Competencies should define strategy• Company-specific effects account for ~30%

- 45% of variation in performance among firms, vs. ~20% for industry effects

• Should define business around distinctive skills, not end products/markets

A distinctive competence: what a company does better than anyone else, distinguishing your company competitively


COMPETENCE GAPS & STRATEGIC ALTERNATIVES

Strategy Environment

Key Success Factors




Key Success FactorsCompetencies





Competency Gap





Competency Gap

Internal Development Acquisition Strategic Alliance


Exit

THE STRATEGIC MANAGEMENT PROCESS IS NOT JUST TOP-DOWN

Objective

Strategy

Operational Plans

Tactics

Com

munication

Direction

Initiative

Com

mun

icat

ion

Dir

ectio

n

Initi

ativ

e


BENEFITS OF STRATEGIC MANAGEMENT

Use of systematic process, vs. decision or document, is primary contribution

•aim of process: improved understanding & commitment from all managers & employees through involvement in process• helps people develop strategic mindset

Process provides opportunity to empower people


CHALLENGE ASSUMPTIONS ABOUT HOW TO COMPETE

• Understand how you filter information to create meaning

• Challenge your filters so you don’t miss anything important

• Understand your filters & those for whom you are doing the scanning

• And…try & understand worldviews of the people you are scanning – which ones have blind spots, and about what activities or events?

WORLDVIEWS


CRITERIA FOR EVALUATING STRATEGY

Does your strategy exploit your key resources & capabilities?With your particular mix of resources, does this strategy give you a good head start on competitors? Can you pursue this strategy more economically than competitors?

Does your strategy exploit your key resources & capabilities?With your particular mix of resources, does this strategy give you a good head start on competitors? Can you pursue this strategy more economically than competitors?

Will your envisioned differentiation be sustainable?Will competitors have difficulty matching you? If not, does your strategy explicitly include a ceaseless regimen of innovation & opportunity creation?

Are the elements of your strategy internally consistent?Have you made the necessary choices & do they all fit & mutually reinforce each other?

Are the elements of your strategy internally consistent?Have you made the necessary choices & do they all fit & mutually reinforce each other?

Is your strategy implementable?Will your key constituencies allow you to pursue this strategy? Can your organization make it through the transition? Are you & your management team able & willing to lead the changes?

Do you have enough resources to pursue this strategy?Do you have the money, managerial time & talent, & other capabilities to do all you envision? Are you sure you’re not spreading your resources too thinly?

Do you have enough resources to pursue this strategy?Do you have the money, managerial time & talent, & other capabilities to do all you envision? Are you sure you’re not spreading your resources too thinly?


Does your strategy fit what is going on in the environment?Does your strategy recognize key trends, opportunities & threats in the market? Does it create value for customers, now & over time? Will it be distinctive?

The strategic management of change is about being ready for the future rather than waiting for it to bite you…


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MANAGING CHANGE STRATEGICALLY Strategic Thinking & the Strategic Management of Change J. Michael (Mike) Geringer, Ph.D. O’Bleness Professor of International