Strategy
“Making strategy work is more
difficult than the task of
strategy making”
Lawrence Hrebiniak
Today’s Topics
Strategy Effectiveness
– Maximizing Impact and Avoiding Pitfalls
A little background….
Three Reasons why Good
Strategies Fail
Execution
Execution
Execution
Hallmark of a good strategy is a firm’s ability to translate it
into action
Execution ≠ Tactics
Execution ≠ Tactics
Execution =
Getting Things Done
Why aren’t strategies
executed well?
Fuzzy frame of reference
Dysfunctional separation between strategy formulation
and strategy execution
Resistance to change
Structural issues
Poor communication
Conflicting mandates & reward systems
Weak linkage among strategies
Diffusion of resources and energy
Lack of accountability
Common denominator =
People
The lifeblood of an organization, strategies
are vessels that affect and are affected by
living and breathing people.
Levels of Strategy
Corporate strategy
Business-level strategy
Marketing strategy
Market Orientation
Consistent and synchronized focus on
customer needs and competitive
advantage.
But who is the customer?
Manufacturer
Wholesaler/Distributor
Retailer
Consumer
But who is the customer?
Manufacturer
Wholesaler/Distributor
Retailer
Consumer
And are functional areas
really aligned?
Operations
Marketing / Sales
Levels of Strategy
Corporate strategy
Business-level strategy
Marketing strategy
Brand
Field
Distributors
Retailers
Consumers
Brand
Field
Distributors
Retailers
Consumers
As the pendulum swings…..
CORPORATE
FIELD
Brand Positioning/Strategy
(Multiple Brands)
Brand Promotions
Media Services
Field Marketing
(Planning & Integration)
Field Sales
Distributors
Event Marketing
Brand Positioning/Strategy
(Multiple Brands)
Brand Promotions
Media Services
Field Marketing
(Planning & Integration)
Ntl
Retail
Sales
Field Sales
Distributors
Retailers
Event Marketing
Investment Model Excerpt
Five Basic Criteria Were Used For
Determining “Investment” Markets
Brand Volume
MC/bbl
Industry Volume
Brand Share
Brand Trend
12 MMT 7.5%
YTD 7.5%
30%
25%
15%
15%
15%
Tier Breaks Were Established For
Varying Levels Of Investment
Brand A example:
Tier 1 = 12 markets representing 35% of volume
Tier 2 = 26 markets representing 25% of volume
Tier 3 = 24 markets representing 15% of volume
60
75%
For Each Tier, An Investment
Model Was Established
For each Tier 1 Brand A market:
1. Estimate the cost of a XXXX TRP radio plan.
2. Assume that XX% of the local marketing investment is spent
against radio.
3. Derive a local marketing spending target, i.e., divide Step 1 by
Step 2.
4. Adjust spending targets upward if market indexes highly on
Hispanic population, LDAC-24 population growth, or is a
designated competitive target attack/defend market.
Fixed Commitments and Shortfalls
were Identified and Accommodated
Brand B Example:
Contract spending in 4 markets exceeds the total
recommended local marketing investment:
City A
City B
City C
Covered cost of contracts plus
equivalent of XXXX radio TRPS X X%
City D
Covered cost of contracts plus normal
Tier 1 spending
Brand A LOCAL MARKETING
INVESTMENT STRATEGY
General Overview
–
Investment recommendation was based on a weighted average derived from the
investment model plus added emphasis for the following brand imperatives.
Criteria
Rationale
 Core Market for Brand
 M LDAC-34 population growth
 Hispanic population growth
 Competitive Target priority market
–
 Minimum index of 200 vs. the national
average
 Minimum index of 150 vs. the national
average
 Task team recommended markets
The template identified XX investment markets that account for XX% of the brand’s
volume.
Six additional markets were added based on brand imperatives.
–
The Brand A investment for 2001 is $XX million or XX% of the local marketing budget.
–
Contracts account for XX% ($XX MM) of the investment.
–
$XX mm was removed from the optimum model to cover contract overages in certain
markets.
Brand A LOCAL MARKETING
INVESTMENT STRATEGY
Tier 1 Spending Path
Allocate resources against complete array of local investment opportunities.
Local radio
OOH
Marquis sports/music/event sponsorships.
–
Activation funding budget.
Hispanic programming/sponsorships.
National promotion localization funding.
Local fairs/festivals/sponsorship funding.
Local ground-up promotions budget.
Key channel initiative fund.
–
–
–
On-premise
C-store
Supers/liquors
Levels of Strategy
Corporate strategy
Business-level strategy
Marketing strategy
Multidimensionality
Strategy begets strategies begets
strategies begets tactics…..
Linkage?
Destination, objectives, strategies, measures
(DOSM)
Company:
Division:
Region:
Area:
D
O
S
M
D
O
S
M
D
O
S
D
O
M
S
M
Destination, objectives, strategies, measures
(DOSM)
Company:
Division:
Region:
Area:
2
4
6
12
4
6
12
20
6
12
20
12
20
30
30
50
Two problems
– Fuzziness and slippage along the line
– Somebody has to execute this stuff
An Illustration
It all comes down to choices
“The essence of strategy is what not to do.”
Michael Porter, “What is Strategy”, HBR
“Not choosing means creating managerial
complexity that results in doing business with
yourself, rather than with your customers”
Michael Treacy & Fred Wiersema
Discipline of Market Leaders
Strategy is a means, not an end
Mediocre strategy well executed trumps a
great strategy poorly executed
What are you willing to drop to get what
you want?
– Have to be able to say NO
Do a few, unique, things really well
Define what success looks like
Align the air war and ground war
Mobilize troops
Measure & reward results
Share accountability
Impact =
3
I
Innovation X Integration X Intensity