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Strategic
management
Dr Stuart Wilkinson
Hostplus Head of Strategy, BI and IT
What is strategic
management?
What is strategic management
Strategic management is about making choices
Strategic management is about increasing the odds of success
Successful strategic management combines rigour and
creativity
Hostplus Pty Ltd
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What is strategic management
Strategic management is about making choices
To win an organisation must chose to do some things and not
others
Strategic management is about increasing the odds of success
There is no such thing as a perfect strategy
Successful strategic management combines rigour and
creativity
Strategy should be both creative and scientific
Source: Adapted from Lafley and Martin & Reil, 2014, Playing to win, Harvard Business Press, Boston.
Hostplus Pty Ltd
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Agenda
Overview of the closed loop management system
A hierarchy of company statements
Mission, vision and values
Key forces impacting your organisation?
Can you say what your strategy is?
How to visually articulate your strategy
Strategic planning vs operational planning
Hostplus Pty Ltd
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The closed loop management system for strategy development
and execution
Develop the Strategy
Plan the Strategy
Strategic plan
Test and Adapt
Align the
Organisation
Business plan
Plan Operations
Monitor and
Learn
Execute strategic
projects
Source: Adapted from Kaplan, R & Norton D, 2008, The Execution Premium: Linking Strategy to Operations for Competitive Advantage, Harvard Business Press, Boston.
Hostplus Pty Ltd
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A hierarchy of company statements
Mission
Why we exist
Vision
What we want to be (long term)
Values
What’s important to us
Strategy (OAS) statement
Our game plan
Strategy map (mid-term)
Translate the strategy into objectives
Balanced scorecard
Measures performance relative to strategic objectives
Initiatives
What we need to do
Business plan
Detailed divisional plan for executing the strategy
Personal objectives
What I need to do
Source: Adapted from Kaplan, R & Norton, D 2004, Strategy maps: converting intangible assets into tangible outcomes, Harvard Business Press, Boston, MA.
Hostplus Pty Ltd
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A hierarchy of company statements
Mission
Why we exist
Vision
What we want to be (long term)
Values
What’s important to us
Strategy (OAS) statement
Our game plan
Strategy map (mid-term)
Translate the strategy into objectives
Balanced scorecard
Measures performance relative to strategic objectives
Initiatives
What we need to do
Business plan
Detailed divisional plan for executing the strategy
Personal objectives
What I need to do
Source: Adapted from Kaplan, R & Norton, D 2004, Strategy maps: converting intangible assets into tangible outcomes, Harvard Business Press, Boston, MA.
Hostplus Pty Ltd
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Mission and vision
•
Our mission – Why we exist
•
•
Our Vision – What we want to be
•
•
We work hard to contribute to the financial wellbeing and security of
our members throughout their working lives and into retirement
To be the lifetime superannuation fund of choice for Australians who
live and love the Hospitality, Tourism, Recreation and Sport industries
Our Values – What’s important to us
•
Hostplus Pty Ltd
Teamwork, Respect, Innovation and Passion
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What are the key
forces impacting
your
organisation?
Is
there
anything
coming Hostplus
that we haven’t considered?
Key
forces
impacting
The Macro Economy
Demographics

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


Ongoing market volatility in global markets
China slowdown
Lower AU$ exchange rate and oil price promote domestic
tourism
Limited growth capacity in global economy
Direct investment opportunities are becoming harder to find
Substantial downturn in market performance – GFC II
Insert Key forces slide
HTRS sector
Tourism sector continues to
demonstrate solid growth from
domestic and international visitors
(3.5% & 5.9%) supporting the
hospitality industry via job growth
and infrastructure investment
(TRA, 2014)
 Transient employment in the
HTRS sector results in lower
average balances and greater
likelihood of defection due to:
 ATO inactive account
threshold increases
 Change of job outside
of sector
The macro
economy



Youthful demographic of the HTRS sector benefit Hostplus
Investment opportunities / liquidity
Healthy future growth
Aging population: Increased proportion of Hostplus retirees
Demographics
Competitive landscape

HTRS sector
Political and
superannuation
change & disruption
Competitive
landscape
Technology
Political and superannuation change & disruption
Technology








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Governance – 3:3:3 & majority independent
Choice – expansion of choice in EBAs
Removal of default arrangements from industrial awards
Tax – LISC, concessions, drawdown tax, tax white paper
Increased role of ATO in consolidation
Data Governance and mandatory reporting reforms
Superannuation guarantee paused
Improved member disclosure
Higher standards for financial planners (FoFA)
Hostplus Pty Ltd
Intense competition from banks
Low cost offers, leveraging big
brands with integrated
distribution and supported by
technology & data capability
 Rise of the individual consumer:
Ongoing SMSF popularity
 Increasing competition from large
industry funds
 Insourcing key functions to
improve net benefit position
 Fight for infrastructure
opportunities
 Competition for key staff



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
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Changing consumer preferences – swipe, touch and
ease as the new currency
New capabilities (incl. predictive analytics) improving
business intelligence
Cyber threats demand security improvements
Enabling better and more efficient product, service and
delivery (for us and for our competitors)
Substantial technology investments by retail funds
Potential entry of new, low cost digital offers (perhaps
from known competitor)
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A hierarchy of company statements
Mission
Why we exist
Vision
What we want to be (long term)
Values
What’s important to us
Strategy (OAS) statement
Our game plan
Strategy map (mid-term)
Translate the strategy into objectives
Balanced scorecard
Measures performance relative to strategic objectives
Initiatives
What we need to do
Business plan
Detailed divisional plan for executing the strategy
Personal objectives
What I need to do
Source: Adapted from Kaplan, R & Norton, D 2004, Strategy maps: converting intangible assets into tangible outcomes, Harvard Business Press, Boston, MA.
Hostplus Pty Ltd
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Can you say what your strategy is?
What is a strategy statement?
A strategy statement is simple, clear and easy to
internalise. To be used as a guiding light for making
difficult choices, it aligns behaviour within the
organisation and allows people to make individual
choices that reinforce one another.
Hostplus Pty Ltd
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The three critical components of a good strategy statement
Objective
• Defines the ‘ends’ which you are striving to
achieve
• Sets a timeframe for achievement
Advantage
Scope
• Defines what you do better or differently
than others to achieve the objective
• Defines the landscape in which you operate
• Identifies the boundaries beyond which
you will not venture
Source: Collis, D & Rukstad, M 2008, ‘Can you say what your strategy is?’, Harvard Business Review, April, pp. 39-44.
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4
A hierarchy of company statements
Mission
Why we exist
Vision
What we want to be (long term)
Values
What’s important to us
Strategy (OAS) statement
Our game plan
Strategy map (mid-term)
Translate the strategy into objectives
Balanced scorecard
Measures performance relative to strategic objectives
Initiatives
What we need to do
Business plan
Detailed divisional plan for executing the strategy
Personal objectives
What I need to do
Source: Adapted from Kaplan, R & Norton, D 2004, Strategy maps: converting intangible assets into tangible outcomes, Harvard Business Press, Boston, MA.
Hostplus Pty Ltd
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Why companies use strategy maps
•
Means of elaborating and testing the strategy
•
Basis for explaining the strategy to staff and stakeholders
•
Straightforward alignment framework
•
Used to populate the balanced scorecard – framework
lends itself to measurement
Hostplus Pty Ltd
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Strategy mapping
A strategy map is comprised of a set of objectives associated with four
typical perspectives:
• Financial perspective
• Client perspective
• Internal process perspective
• People, learning and growth perspective
Hostplus Pty Ltd
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Strategy mapping
Financial perspective
F1: Financial perspective goal
Revenue growth strategy
F2: Build the
business
Productivity growth strategy
F3: Increase value
to customers
F4: Improve
cost structure
F5: Improve
use of assets
Client perspective
C1: Service attributes (price,
quality, time, selection)
C2: Relationship (service,
customer relations)
C3: Brand image
Internal process perspective
P1: Build the business
through innovations
P2: Increase customer
value through customer
management processes
P3: Achieve operational
excellence through
operations and logistics
processes
L2: Corporate culture
L3: Employee
value proposition
P4: Become a good
corporate citizen
Learning and growth perspective
L1: Employee
competencies
Hostplus Pty Ltd
SOURCE: Kaplan & Norton Having Trouble With Your Strategy, Then Map It, Harvard Business Review
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The difference between strategic planning and
operational planning
Timeframe
Who’s involved?
Objectives vs deliverables
Portfolio vs project focus
Hostplus Pty Ltd
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Why is it
important to
align strategy
and finance
functions?
Why align strategy and finance?
Establish specific metrics to assess and monitor
performance
(include key performance indicators in your budget and then measure these
against actual results)
Increase efficiency in the use of resources and assets
(monitoring project expenditure and FTE to ensure resources are being used in
the most effective manner)
Inform financing decisions and capital structure
(Debt vs equity financing & Reserves management)
Hostplus Pty Ltd
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Thanks