Session 6
STRATEGY
Looking back, looking
forwards
• Porter and the other tools help us to understand the
position of the business in the marketplace. From
that you can determine a strategy for growth.
• You look in at the business and look out at the
marketplace, considering the social, political,
competitor, legal and so on...issues that might impact
on the business.
• From this you might develop a strategy – but what is
strategy?
Wickham, P. (2006: 349-368)
Strategy – do you need one?
• Broadly speaking - ‘its the action an organisation
takes to pursue its objectives’.
• Strategy drives performance and hopefully good
strategy drives good performance (Wickham, 2006:
349)
• We are looking at strategies for growth, but strategy
is multi-faceted and multi-dimensional depending on
what objectives you are pursuing.
Wickham, P. (2006: 349-368)
Strategic components
• We should distinguish between the content of the
strategy, the strategic process (how it is achieved)
and the environmental context in which the business
operates.
• The strategic content – what the business does.
• The strategic process – how the business decides
what its doing.
• The content has three components or decision areas:
– Products to be offered
– Markets to be targeted
– Approach to be taken to competing
Wickham, P. (2006: 349-368)
Strategy content
• Relates to three issues:
1. The final product range
2. The customers it serves
3. The advantage it seeks in the marketplace
Wickham, P. (2006: 349-368)
The product (including
services)
• What types of product will be offered?
• With what features?
• What benefits will they offer to meet customers
needs?
• Will there be a mix of physical and service elements?
• How will it overcome competitors offer?
• What unit cost will be acceptable and how will this
relate to price?
• What will the product range be?
Wickham, P. (2006: 349-368)
Market scope
• What customer group or market segment will be
addressed?
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Who are the key target groups?
How is the total market defined?
Can a sector be identified?
Concentrated sector or disbursed?
Why will this group be attracted to your products?
Geographical area (national, international, local,
regional)?
Wickham, P. (2006: 349-368)
Competitive approach
• How will you persuade people to buy from you?
– Will you discount price, or charge a premium?
– What will your route to market be?
– Will you offer financial incentives to distributors or
intermediaries?
– What must your distributors do for you?
– How will you market the product: key messages;
promotional tools; incentives
– Is the innovation sufficient enough?
Wickham, P. (2006: 349-368)
Internal and external
consistency
• You must match the external conditions with the
internal vision and the mission you have defined for
the venture.
Competitive
approach
•
Market Scope
Investment
Wickham, P. (2006: 349-368)
Goals and strategies
• The strategy process reflects the decisions made
about strategy content – the goals chosen and the
resources allocated to achieve them.
• The strategy process should be embedded in
structure, systems, process, culture and leadership
style of the business.
• Approaches may be deliberate (planned) or
emergent.
Wickham, P. (2006: 349-368)
Deliberate and emergent
• Deliberate - the entrepreneur sets the strategy –
defining the goals and the competitive approach and
passes this down the organisation. An explicit
approach for implementation is determined – with
budgets and objectives.
• Emergent – this approach is more fluid and
ambiguous. Less concern with where the business is
going, just that it is going somewhere interesting.
Wickham, P. (2006: 349-368)
To plan or not to plan?
• To plan is the traditional way, but you cant plan for all
eventualities;
• Bounded rationality – you cannot know or control
every detail;
• Entrepreneurs need to be able to respond to
changing circumstances in a dynamic and
unpredictable environment.
• Planned approaches have their limitations, as do
emergent.
Wickham, P. (2006: 349-368)
A compromise?
• Entrepreneurs can make strategy happen through
good leadership.
• Give people to latitude to make decisions and
respond to the environment.
• Being flexible and responsive does not mean having
no ideas.
• The aim is to have an open strategy, one which has a
vision – a strategy which identifies option which can
evolve – these are flexible open positions.
Wickham, P. (2006: 349-368)
The learning organisation
Opportunity
Focus
Fit
Entrepreneur
Resources
Configuration
Organisation
Wickham, 2006: 227
The strategy process
•Desired strategy
content
The way decisions
about what the
business wishes to
achieve are taken
Control over delivering the
defined strategy content
Entrepreneur
Existing strategy
content
Achieved strategy
content
Ongoing processes, routine
and decision making.
Wickham, 2006: 354
Journey
• Eden and Ackerman (1998) define this approach as a
JOURNEY –
– Jointly, Understanding, Reflecting and Negotiating.
• Entrepreneurs still have to be managers, but its the
way they manage that’s important.
• The strategy evolves as the business grows.
Wickham, P. (2006: 349-368)
Process of evolution
• Products will change, competitors will change,
markets will change even if we don’t plan.
• Changes may be incremental as a result of short-term
pragmatic decision, but does this means they are not
controlled?
• Read the articles:
• Strategic Change: Logical Incrementalism
• Managing innovation, controlled chaos.
Wickham, P. (2006: 349-368)