Competitive
Outcomes
Firm A’s
Actions
Rivalry
Organizational
Characteristics
Firm B’s
Actions
Industry
Characteristics
What Is Strategy?
• Plan/course of action...to achieve
favorable position
• Alignment of course of action with longrun goals
• A plan that integrates the goal, action
pattern/sequence, and resources into a
cohesive whole
• Steps taken to achieve competitive
advantage…sustainable edge over
competitors
Why Strategy? …Action that Creates Value
Lynagh’s
Two
Keys
Tavern
Two
Keys
Tavern
Is Strategy Important?
• Execs, consultants, and B-school professors:
“...strategy is the single most important
management issue and will remain so for many
years.” Business Week, Aug. 1996
• Companies that now rely on “strategy groups”:
•
•
•
•
UPS
Applied Materials
H-P
Smucker’s
• Sears
• Nokia
• EDS
Beyond SWOT
Environment:
Outside-in (I/O)
Firm:
Inside-out
(RBV)
Destroying Strategic Management Myths
Fortune, June 1997
• Life is easy as “king of the hill”
 Hypercompetition erodes advantages
• Industry analysis is the key to strategy
 Difficult to define “industry”
• Focus on your direct competitors
 Potential competitors greater threat
• For CEOs, it’s you against the world
 Savvy CEO involve more people
What Makes Shareholders Rich?
...Create New Wealth
•
•
•
•
•
Vision looks beyond current boundaries
Strategy as continuous process
New perspectives, voices, conversations
Change rules of game
Experimentation, surprise
New Strategy Glossary
• value migration: movement of growth and profit
opportunities from one industry player to another
• co-evolution: by working with direct competitors,
customers, and suppliers, a company can create new
businesses, markets, and industries
• white-space opportunity: overlooked areas of growth
possibilities that don't exactly match existing skills
• strategic intent: corporate goal or destiny that represents
a stretch for the organization, a point of view about the
competitive position a company hopes to build over the
coming decade
Breaking the Rules...
SOUTHWEST
Dynamic Strategy Reborn...
August 1996
June 1997
Where Does Strategy Occur?
Top Management
Functional
Management
What do strategists do?
• Strive for competitiveness / above-average
returns
• Assess external factors causing change
• Develop internal factors that create
advantage
• Navigate stakeholder landscape
• Strategic management process… Five
Stages
What else…..?
External Stuff
Internal Stuff
• Globalization
• Technological change
• Diverse and increasingly
vociferous stakeholders
• Wall Street
• Environment
• Building capabilities &
core competence
• Organizational culture
• Leadership
• Strategic HR
• Board of Directors
1. Articulate Mission / Intent
•
•
•
•
•
Sense of purpose, direction…
In which industries does firm compete?
How does firm compete?
Who are customers?
Who are competitors?
2. Set Objectives & Performance Targets
• Financial: 10% ROI and $1.55 EPS by YE99
• Strategic: Achieve lowest prices and enter 5
new country markets by 2001
3. Craft Strategy
• How to compete:
– Differentiated innovator
– Multinational markets
– Market-push
4. Implement Strategy
• Delegate responsibility to functional mgt.
• Develop action plan:
– Establish European distribution center
– Create new ad campaign for 2004 Olympics
– Launch new version of product
– Cut prices on older version by 33%
5. Evaluation and Adjustment
• Assess results relative to goals
• Identify new opportunities / constraints
• Change strategy / implementation (as
needed)
Planning vs. Strategy “Process”:
What’s the Difference?
Intended
Strategy
Strategy
Carried Out
Dropped
Strategic
Actions
Emergent
Strategic
Actions
Competitive Interaction in Chess
8
This Sequence:
Black: Knight b4
White: Pawn c3
Black: Bishop g4
White: Queen b5
Black: Pawn c5
7
6
5
4
3
2
1
a
b
c
d
e
f
g
h
Named Sequences:
Epaulette’s Mate
Sicilian Defense
Different Approaches to Strategy
•
•
•
•
•
•
•
Blueprint
Structural Equation
Drama
Journey
Conversation
Stimuli-Responses
Conversation
Competitive
Outcomes
Firm A’s
Actions
Rivalry
Organizational
Characteristics
Firm B’s
Actions
Industry
Characteristics