Defining the Playing Field:
“What is Strategy”
By Michael Porter
“Can You Say What Your Strategy Is?”
By David J. Collis and Michael G. Rukstad
1. A mini-MBA class on strategy
2. Start your projects! We manage in the specific.
What is Strategy?
Why is Strategy critical for Management?
How do we get people to work (hard) for a collective good?
“…a well-understood statement of strategy aligns behavior
within the business. It allows everyone in the organization
to make individual choices (decisions) that reinforce on
another…” (C&R p. 2)
Different Strategies require different types of people…
…different allocation of decision rights, different incentives and
different measures of performance.
Why is
OPERATIONAL EFFECTIVENESS
NOT STRATEGY?
Porter’s “Generic Strategies” (see p. 67)
What is an Objective?
If you don’t know where you’re going any road will get you there.
Avoid vague generalities
“maximize shareholder wealth…”
“provide opportunities for employees to
lead fulfilling lives…”
“provide superior customer service”
Specific, measurable, time bound.
Number – revenues, market cap, new customers,
total customers, new products
Rate – profit margin, growth rate, retention rate,
on-time delivery rate
NOTE: There is more than one path to profit!
The key is consistency: what is the firm going to do?
Focus on profitability or discount to get new clients?
Meet demand with increased fixed capacity or temporary
variable costs (capital/labor mix)?
Scope:
You can’t be everything to all people!
Customer offering – every business solves someone’s problem
What problem are you solving for who?
Geographic scope
Single or multiple locations? Urban or rural? Multi-national?
Vertical integration – make or buy?
Hire expertise or use a consultant? Own supplier or contract?
YOU CAN’T BE EVERYTHING
TO ALL PEOPLE!
Advantage: What do you do better than anyone else?
What do you deliver that your competitors can’t
Where are you located that your competitors aren’t
When can you deliver that your competitors can’t
How can you deliver this and your competitors can’t?
Organizational architecture, management & leadership can
be a sustainable competitive advantage!
HOW do you develop a strategy statement?
Step #1: Evaluate the industry landscape (apply your micro!!)
a) What problem are you solving for who? (consumer theory)
b) What does the market look like? (market models)
c) How can you differentiate and/or set up barriers to entry?
(producer theory)
"It's really hard to design products
by focus groups. A lot of times,
people don't know what they want
until you show it to them."
-- BusinessWeek, May 25 1998
Step #2: Write!
“The value of rhetoric should not be underestimated. A
35 word statement can have a substantial impact on a
company’s success. Words do lead to action.”
Step #3: PRACTICE!
1.NOW!
Write YOUR personal strategy statement on Moodle
and post for Project Speed Dating.
2.Martin Blair Case
3.Medysis Case
4.Semester Projects