Mastering Strategic
Management
Chapter 1
Mastering Strategy: Art and Science
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Mastering Strategic Management
Chapter 1: Mastering Strategy: Art and Science
Welcome to Strategy [ABCXXX]
•
•
•
•
•
Welcome
Introduction to Business Policy – course outline
Administrative Details
Expectations (mine and yours)
Student Success (advice)
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Mastering Strategic Management
Chapter 1: Mastering Strategy: Art and Science
Learning Objectives
• Insert from Course Outline
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Mastering Strategic Management
Chapter 1: Mastering Strategy: Art and Science
Managing in the Real World
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Mastering Strategic Management
Chapter 1: Mastering Strategy: Art and Science
(IMHO) there are only 2 key
Leadership Tasks
• 1 - Manage the People (Up, Down, Sideways)
• ‘People’ skills
• Listening is #1
• Thank you is #2
• 2 - Set the long-term strategic direction
• Where do you want to be in 5 years
Hint, this course focuses on the latter!!
Many other skills are required of course, but “when push
comes to shove”, for everything else you can hire off the
street, delegate, contract for…
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Mastering Strategic Management
Chapter 1: Mastering Strategy: Art and Science
What is Strategic
Management?
Examines how actions and events involving top
executives (such as Steve Jobs), firms (Apple), and
industries (the tablet market) influence a firm’s success
or failure
• Formal tools that exist for
understanding these
relationships are not enough
• Creativity is just as important to
strategic management
http://www.whatmakesagoodleader.com
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Mastering Strategic Management
Chapter 1: Mastering Strategy: Art and Science
Choices
http://commons.wikimedia.org/wiki/File:Train_Track_Changing_System.JPG
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Mastering Strategic Management
Chapter 1: Mastering Strategy: Art and Science
Why some Firms and not
Others?
Not Luck!!
• Lots of Studies looking for Answer…
• Part of the answer linked to Strategic Choices and
execution!
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Mastering Strategic Management
Chapter 1: Mastering Strategy: Art and Science
A Gallery of Disruptive
Technologies (2014-2025, http://www.mckinsey.com)
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Mastering Strategic Management
Chapter 1: Mastering Strategy: Art and Science
On the Horizon…
•
•
•
•
•
Climate Change
Economic Booms & Busts
Demographic Changes
Energy
Potable (drinkable) water shortage
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Mastering Strategic Management
Chapter 1: Mastering Strategy: Art and Science
What do all these potential things
have in common? CHANGE…
Disruptive technologies can & will change the game for businesses,
creating entirely new opportunities, costs & value propositions.
Business leaders must:
• maintain a competitive strategy
• continuously scan for new opportunities / challenges to existing
profits centers
• adopt use technologies to improve internal performance
• keep employees’ skills up-to-date, right people on bus!
• Balance potential benefits with
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Mastering Strategic Management
Chapter 1: Mastering Strategy: Art and Science
It’s not all strategy…
But strategy (or lack of) explains a lot
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Mastering Strategic Management
Chapter 1: Mastering Strategy: Art and Science
For teaching in two 90minute classes/wk,
possible break point
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Mastering Strategic Management
Chapter 1: Mastering Strategy: Art and Science
14
Tic-Tac-Toe – What’s Your
Strategy?
You Go First! Make your Mark
OK, my turn. Now you go
X
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Mastering Strategic Management
Chapter 1: Mastering Strategy: Art and Science
Strategy
• Strategic management helps answer the key
question: “why do some firms outperform other firms?”
• Examines how actions and events involving top
executives, firms, and industries influence a firm’s
success or failure
• Various tools exist to analyse and understanding these
relationships
• But, creativity is central to strategic management;
mastering strategy is therefore part art and part
science.
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Mastering Strategic Management
Chapter 1: Mastering Strategy: Art and Science
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Mastering Strategic Management
Chapter 1: Mastering Strategy: Art and Science
Strategy as Plan
• A strategic plan is a carefully crafted set of steps that a
firm intends to follow to be successful.
• Virtually every organization creates a strategic plan to
guide its future
• So should you….
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Mastering Strategic Management
Chapter 1: Mastering Strategy: Art and Science
If you’re not going to have a
strategy, the only interesting
question is…
18
Will we be
going in circles
to the LEFT?
X
‘Cause real
process is
pretty
unlikely!!
Or to the
RIGHT?
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Mastering Strategic Management
Chapter 1: Mastering Strategy: Art and Science
Business Model – Profit Plan!
• Economies of Scale (lower costs)
• Specialized Equipment (hotter ovens)
• Expert pizza cooks (specilization)
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Mastering Strategic Management
Chapter 1: Mastering Strategy: Art and Science
Strategy as Ploy
• A strategic ploy is a specific move designed to outwit or
trick competitors.
• Ploys often involve using creativity to enhance success
• Ploys can be especially beneficial in the face of much
stronger opponents.
• Military history offers quite a few illustrative examples
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Mastering Strategic Management
Chapter 1: Mastering Strategy: Art and Science
Strategy as Pattern
• Consistency of strategy over time
• Kmart began straying from its established strategic
pattern, from discount retailing and toward
diversification including sporting goods (Sports
Authority), building supplies (Builders Square), office
supplies (OfficeMax), and books (Borders)
• In the 1990s, Kmart’s strategy was again adjusted to
emphasize information technology and supply chain
management
• Then Kmart’s strategy was to compete directly with its
much-larger rival, Walmart. The resulting price war left
Kmart crippled and eventually bankrupt
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Mastering Strategic Management
Chapter 1: Mastering Strategy: Art and Science
Strategy as Position
• Strategy as position—considers a firm and its
competitors
• Refers to a firm’s place in the industry relative to its
competitors, leader, brand levels
• Very hard to change position….
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Mastering Strategic Management
Chapter 1: Mastering Strategy: Art and Science
Strategy as Perspective
• Strategy as perspective refers to how executives
interpret the competitive landscape around them
• Because each person is unique, 2 different executives
could look at the same event—such as a new
competitor emerging—and attach different meanings to
it
• One might just see a new threat to his or her firm’s
sales; the other sees newcomer as potential ally
• An old cliché “make lemons into lemonade”
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Mastering Strategic Management
Chapter 1: Mastering Strategy: Art and Science
1.2 Intended, Emergent &
Realized Strategies
• Intended strategies: Strategy that an organization hopes to
execute
• Emergent strategies: Unplanned strategy that arises in response
to unexpected opportunities and challenges
• Realized strategies: The strategy that an organization actually
follows. They are a product of both intended and realized
strategies
• Deliberate strategy: The parts of the intended strategy that an
organization continues to pursue over time
• Non-realized strategy: The parts of the intended strategy that are
abandoned
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Mastering Strategic Management
Chapter 1: Mastering Strategy: Art and Science
Strategies - Examples
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Mastering Strategic Management
Chapter 1: Mastering Strategy: Art and Science
Strategies - Examples
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Mastering Strategic Management
Chapter 1: Mastering Strategy: Art and Science
Strategies - Examples
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Mastering Strategic Management
Chapter 1: Mastering Strategy: Art and Science
A Model of Intended, Deliberate,
and Realized Strategy (Figure 1.3)
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Mastering Strategic Management
Chapter 1: Mastering Strategy: Art and Science
FED EX
• Part Intended strategies: Packages sent through
central hubs (like passengers)
• Part Emergent strategies: ZapMail (Fax service that
failed)
• Realized strategies: The strategy that an organization
actually follows, combo of both intended & realized
strategies
• Deliberate strategy: The parts of the intended
strategy that an organization continues to pursue over
time
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Mastering Strategic Management
Chapter 1: Mastering Strategy: Art and Science
Regional Hub Model
https://flic.kr/p/6mHALH
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Mastering Strategic Management
Chapter 1: Mastering Strategy: Art and Science
1.3 History of Strategic
Management
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Mastering Strategic Management
Chapter 1: Mastering Strategy: Art and Science
History of Strategic
Management
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Mastering Strategic Management
Chapter 1: Mastering Strategy: Art and Science
History of Strategic
Management
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Mastering Strategic Management
Chapter 1: Mastering Strategy: Art and Science
History of Strategic
Management
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Mastering Strategic Management
Chapter 1: Mastering Strategy: Art and Science
History of Strategic
Management
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Mastering Strategic Management
Chapter 1: Mastering Strategy: Art and Science
The Modern History of
Strategic Management
Frederick Taylor, father of 'scientific management', testifying before Congress a hundred
years ago:
'I can say, without the slightest hesitation, that the science of handling pig-iron is so great
that the man who is ... physically able to handle pig-iron and is sufficiently phlegmatic and
stupid to choose this for his occupation is rarely able to comprehend the science of
handling pig-iron.'
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Mastering Strategic Management
Chapter 1: Mastering Strategy: Art and Science
Frederick W Taylor
Taylor was a mechanical engineer & 1st person to systemically
study work. ‘Scientific management’ is responsible for tremendous
surge of affluence in the last 75 years, lifting working masses in
developed countries well above any level recorded before, even for
the well-to-do.
Taylor's scientific management consisted of four principles:
• Replace rule-of-thumb work methods with methods based on a scientific
study of the tasks
• Scientifically select, train, and develop each employee rather than
passively leaving them to train themselves
• Provide "Detailed instruction & supervision of each worker in the
performance of that worker's discrete task”
• Divide work - managers apply scientific management principles to
planning work & workers actually perform tasks
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Mastering Strategic Management
Chapter 1: Mastering Strategy: Art and Science
Frank & Lillian Gilbreth
Time & Motion Study in Bricklaying
http://youtu.be/lDg9REgkCQk (1:30min)
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Mastering Strategic Management
Chapter 1: Mastering Strategy: Art and Science
The Modern History of
Strategic Management
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Mastering Strategic Management
Chapter 1: Mastering Strategy: Art and Science
The Modern History of
Strategic Management
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Mastering Strategic Management
Chapter 1: Mastering Strategy: Art and Science
1.4 Understanding the Strategic
Management Process
BOTH AN ART & SCIENCE!
Strategic management process: Building a careful
understanding of how the world is changing &
knowledge of how changes might affect a particular firm
• Understanding strategy and performance
• Environmental and Internal scanning
• Strategy formulation
• Strategy implementation
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Mastering Strategic Management
Chapter 1: Mastering Strategy: Art and Science
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Mastering Strategic Management
Chapter 1: Mastering Strategy: Art and Science
Key Takeaways
• Strategic management focuses on firms & different
strategies used to become & remain successful
• Multiple views of strategy exist, and the 5 Ps
(Mintzberg) enhance understanding of the various
ways in which firms conceptualize strategy
• Most org create intended strategies they hope will lead
to success
• Over time, however, new opportunities & challenges emergent strategies
• Realized strategies are a product of both intended and
realized strategies
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Mastering Strategic Management
Chapter 1: Mastering Strategy: Art and Science
Key Takeaways
• Although strategic management as a field of study has
developed mostly over the last century, the concept of
strategy is much older
• Understanding strategic management can benefit
greatly by learning the lessons that ancient history and
military strategy provide
• Sometimes reducing size of firms maximize chances of
success or survival, from modest steps such as
retrenchment or more profound restructuring strategies
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Mastering Strategic Management
Chapter 1: Mastering Strategy: Art and Science