Strategic Diagnosis: Background
• Evolution of change
• Management confronts
Agenda makes it
two Key Problems
dangerous to base
– Each Organization needs
future plans on
to diagnose its unique
successful responses
future challenges, threat
to historical
and opportunities
challenges
– Each firm must design
• There is no single
and implement its unique
prescription for future
response to these
success which will
challenges
apply to all firms
Strategic Diagnosis: Definition
• A systematic
approach to
determining the
changes that have to
be made to a firm’s
strategy and its
internal capability in
order to assure the
firm’s success in its
future environment
• Environmental
Turbulence is a
combined measure of
the changeability and
predictability of the
firm’s environment
–
–
–
–
Complexity
Novelty
Rate of Change
Visibility
Strategic Diagnosis:
Example
Environmental
Turbulence
Strategic
Aggressiveness
Responsiveness
of Capability
Repetitive
Expanding
Changing
Repetitive
Slow
Incremental
Fast
Incremental
Stable
Custodial
Reactive
Adapts to
Change
Anticipatory
Seeks Familiar
Change
Discontinuous
Predictable
Entrepreneurial
Strategic
Surprising
Unpredictable
Creative
Flexible
Strategic Segmentation
Strategic Information Model
Competitive Positioning
• How can we systematically “divide” our
environment into “workable areas”?
• How do we make sure that the information we
received from the environment involves
legitimate (perceived) information?
• How do we systematically design a
competitive organization?
• How do we interpret qualitative data?
• Perception vs. Reality for Organizational
Leaders
Ansoff and McDonnell, 1990
Created by Robert Moussetis, 2000
SBA:A Strategic Business Area which is a distinct
segment of the environment in which a firm does (or may
want to do) business
•
In which SBAs will the firm
do business in the future?
What competitive position
will the firm occupy in each
SBA
What competitive strategy
will the firm pursue to gain
this position
•
•
SBA Segmentation
•
•
•
SBA1
SBA
SBA
SBU
SBU
Firm
SBA2
Environment
•
Dimensions: Need, Customer
type, Technology and
Geography
Characteristics: Growth,
Performance (Profitability),
Turbulence and Success
factors
Strategic Resource Area: In
the resource based
postindustrial universe,
managers have to balance
what they want to do
against what they can do
Strategic Influence Groups:
Firms increasingly legal and
societal pressures Stakeholder Management
Ansoff and McDonnell, 1990
Created by Robert Moussetis, 2000
CRITICAL MASS
CM: INVESTMENT BELOW WHICH A FIRM
BECOMES UNPROFITABLE IN AN
STRATEGIC BUSINESS AREA
ROI
+
Optimal Mass
INVESTMENT IN AN SBA
-
Critical mass
Ansoff and McDonnell, 1990
Created by Robert Moussetis, 2000
ENTRPENEURIAL PLANNING
ENVIRONMENT
SBA
SBA
STRATEGIC
SEGMENTATION
SBA
STRATEGIC SUCCESS
HYPOTHESIS
FIRM’S OBJECTIVES
STRATEGIC
DIAGNOSIS
Degree of
Preparedness
SBA
PROSPECTS
SBA
ATTRACTIVENESS
TARGET
COMPATITIVE
POSITIONING
COMPETITIVE
POSTURE IN SBA
PORTFOLIO
POSTURE
Ansoff and McDonnell, 1990
Created by Robert Moussetis, 2000
Strategic Information Model
•
•
•
Power Filter: It is nature for
managers and departments,
whose power is threatened by
discontinuities, to minimize or
even refuse to recognize the
impact of discontinuity.
Mentality Filter: Rejection of
novel information and
predisposition on success
models
Strategic and Creative
Mentalities focus on
– Future, Novel and
Unfamiliar change
– Entrepreneurial drive and
tolerance of failure
• Management Information
Environment
Surveillance
Filter
Data
Mentality
Filter
Perception
Power
Filter
Actions
Information
Ansoff and McDonnell, 1990
Created by Robert Moussetis, 2000
Competitive Positioning
•
Boston Consulting Group
matrix
?
High
Volume
Growth
Low
Cash
Cows
High
Dogs
Low
Market Share as a function
of leading competitor
•
Estimating SBA
attractiveness
– Global forecast
– Future Turbulence
– Historical Trends
extrapolated into the
future
– Changes in the historical
demand
– Overall shifts in growth
prospects
– Numerical estimates of
Future growth
– Future shifts in the
profitability
SBA Attractiveness = a G + b P + g O - d T
Ansoff and McDonnell, 1990
Created by Robert Moussetis, 2000
Example: North Central College
•
•
•
•
MBA
• Administrative Services
– Admissions -Registrars -Financial Aid
Educational Leadership
• Academic Services
Biology
– Advising - Technology Needs
History
• Facilities
– Buildings and Services
– Recreational Activities
– Classrooms and Teaching Domains
Identify Future Turbulence
Establish Strategic Aggressiveness
Establish Responsiveness of Capability
Ansoff and McDonnell, 1990
Created by Robert Moussetis, 2000
COMPETITIVE POSTURE
IN AN SBA
• STRATEGY (S)
• CAPABILITY (C)
• STRATEGIC
INVESTMENT (I)
•
•
•
•
•
•
GROWTH THRUST
(Domain) MARKET POSITION
(Domain )MARKET DIFFERENTIATION
SERVICE-PRODUCT DIFFERENTITION
CRITICAL MASS
VERITCAL INTEGRATION
•
•
•
•
•
MANAGEMENT
FINANCE
MARKETING
R&D
PRODUCTION
•
•
•
IN STRATEGY
IN CAPABILITY
IN FACILITIES
POSTURE = SXCX(I-Icr)
Ansoff and McDonnell, 1990
Created by Robert Moussetis, 2000