Strat Mgmt Slides

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Strategic Management
GM 105
Dr. Lindle Hatton
CANOE THEORY
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Think of your organization as a long canoe
The canoe has a destination
Everyone in the canoe has a seat and paddle
Everyone is expected to paddle
Those who won’t paddle have to get out of the canoe
Those who prevent others from paddling have to readjust or get out of the canoe
There are no passengers in the canoe
There is a Coxswain
No other crewmember has a title
Crewmembers are multi-talented
The canoe theory understands crisis
The canoe theory says you have the right to be happy
CANOE THEORY
BUILT TO LAST
Preserve the Core
Stimulate Progress
Stimulate Progress
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Best Practices
Strategic Leadership
BUILT TO LAST
(Collins, 1994)
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BIG HAIRY AUDACIOUS GOALS
(BHAGs)
CULT-LIKE CULTURE
TRY A LOT OF STUFF AND KEEP
WHAT WORKS
HOME-GROWN MANAGEMENT
GOOD ENOUGH NEVER IS
GOOD TO GREAT
(Collins, 2001)
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Level 5 Leadership
First Who…Then What
Confront the Brutal Facts
The Hedgehog Concept
A Culture of Discipline
Technology Accelerators
The Flywheel and The Doom Loop
Core Ingredients of
Learning Organizations
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Mental Models – everyone sets aside old
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Personal Mastery - everyone becomes
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ways of thinking.
self-aware and open to others.
Systems Thinking – everyone learns
how the whole organization works.
Shared Vision – everyone understands
and agrees to a plan of action.
Team Learning – everyone works
together to accomplish the plan.
The Bananas
Bananas in the
Organization
Exercise
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We tried that and it didn’t
work.
We don’t do it that way here.
Mary is the only one who can
do that so…..
Strategic Leadership
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Ability to anticipate, envision, maintain flexibility, and
empower others to create strategic changes as
necessary
Leadership is the process of transforming an
organization from what it is to what the leader would
it become
Three interdependent activities
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Setting a direction
Designing the organization
Nurturing a culture dedicated to Excellence
Top Management Team (TMT)
Charge
Private versus Public
Organizations
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Purpose
Goals
Financing
Decision-Making
Key Stakeholders
Strategic Management
Versus
Strategic Planning
Features of Successful
Strategic Management
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Has support of organization’s executive
officer.
Is user friendly.
Is participatory, not left to planners.
Is flexible.
Leads to resources decisions.
Engages and motivates all staff.
Is fresh and continuous, not static and stale.
Features (Continued)
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Is Proactive
Not a Quick Fix
Part of Quality Management
Payoffs Increase over Time
Lessons Learned About
Strategic Planning
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Plans must be tailored to organization.
No one size ‘fits’ all.
Time to complete takes longer – expect
50% more than planned.
Process needs a shepherd.
Visionaries needed at beginning and
detail types thereafter.
Why Managers Don’t Plan
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Time Consuming
High Demands
Not Rewarded
Executives Don’t Support It
Too Risky
Strategic Management Model
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Scanning
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Strategy Formulation
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Where do we want to be?
Strategy Implementation
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Where are we now?
How do we get there?
Measurement/Performance
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How do we measure our progress?
Strategic Management Model
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Strategy Formulation
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Where do we want to be?
Vision
Mission
Values
Goals
Objectives
VISION
Vision without Action is a Daydream
Action without Vision is a Nightmare
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Not Optional
Stretch – 30+ Years
8-10 Words in length
Future State
Brief and Memorable
VISION (Continued)
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Inspiring and Challenging
Descriptive of the Ideal
Vision Examples
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“Light the Fire Within”
“A Safer Future for All Communities”
“See the Mountains – Breathe Freely”
To Be the Happiest Place on Earth
To Be the World’s Best Quick Service
Restaurant
Vision Levels of People
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Some people never see it. (Wanderers)
Some people see it but never pursue it on
their own. (Followers)
Some people see it and pursue it. (Achievers)
Some people see it and pursue it and help
others see it. (Leaders)
John Maxwell, Developing The Leader
Within You, 1993.
VISION EXERCISE
Mission Statement
In the absence of a clearly defined
direction one is forced to concentrate
on confusion that will ultimately
consume you.
MISSION
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What is our purpose?
Describes current state
Timeline is 3-5 Years
Builds on our distinctive competencies
Tends to focus on Core Business
30-35 Words in length
Mission Examples
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“To Lead All Communities in Disaster
Preparedness, Mitigation, and Recovery by
Maximizing Assistance and Support.”
“Caltrans Improves Mobility Across
California.”
To produce superior financial returns for our
shareholders as we serve our customers with
the highest quality transportation, logistics,
and e-commerce.
MISSION EXERCISE
Corporate Governance
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What is it?
Codes of Governance
Role of the Board of Directors
Role of Top Management Team
Executive Compensation
Corporate Governance
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System by which a firm’s owners control
its affairs.
Does it work?
Codes of Governance
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The Cadbury Code: 1992
Sarbanes-Oxley Act: 2002
Public Company Accounting Oversight Board
“Triple bottom line”
Four major issues:
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Ownership structure and influence
Fianacial Stakeholder rights and relations
Financial transparency and information disclosure
Board structure and processes (audit)
Role of the Board of Directors
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Monitor
Evaluate and influence
Initiate and determine
Organization of Board
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Insiders versus outsiders
CEO/chair position
Committees’ Effectiveness
Role of Top Management Team
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Who is the TMT?
Executive Leadership and Strategic Vision
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Articulates strategic vision for corporation
Sets the model for others to identify and follow
Communicates high performance standards and
builds confidence in followers’ abilities to meet
standards
Managing strategic planning process
Executive Compensation
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Incentive alignment
Executive Ownership
Incentive compensation
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Salary
Bonus
Stock Options
LT Bonus
VALUES
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Guiding Principles
Help establish Culture
Part of Preserving the Core
Core Ideology
Value Examples
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CHP PRIDE
HP WAY
J & J Credo
“Build the Spirit of the Place”
Ethical Awareness Model
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Organizational Ethics
Individual Ethics
Personal Values
VALUES EXERCISE
Strategic Management Model
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Scanning:
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Where are we now?
Macro Analysis (STEP, PESTEL, ETC.)
Industry Analysis – Competitive
Intelligence
SWOT Analysis
Internal versus
External Elements
Why Scan?
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To
To
To
To
To
To
know your position in the environment
respond effectively to constant change
see the organization as a whole
avoid surprises
survive
lay the foundation for strategic issues
SCANNING:
Key Environmental Variables
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Macro Environment: STEP, PESTEL
Task Environment: Industry
Internal Environment: Focal
Organization
Socio-Cultural Variables
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Lifestyle Changes
Career Expectations
Regional Shifts in Population
Life Expectancies
More women in workforce
Greater concern for fitness
Postponement of family formation
Increase in temporary workers
Technological Variables
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Total Federal Spending for R&D
Total Industry Spending for R&D
Focus of Technological Efforts
Patent Protection
Wireless Communications
Nanotechnology
Productivity Improvements
Genetic engineering
Economic Variables
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GDP Trends
Interest Rates
Money Supply
Inflation Rates
Unemployment Levels
Wage/Price Controls
Energy Availability & Cost
Disposable & Discretionary Income
Political-Legal Variables
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Antitrust Regulations
Tort Reform
Environmental Protection Laws
Taxation at local, state, federal levels
Hiring and Promotion Laws
Americans Disabilities Act of 1990
Sarbanes-Oxley Act of 2002
Demographic Variables
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Aging Population
Rising affluence
Changes in Ethnic Composition
Geographic distribution of population
Disparities in income levels
Global Variables
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Increasing Global Trade
Currency Exchange Rates
Emergence of Indian and Chinese
Economies
Trade agreements (NAFTA, EU, ASEAN)
Creation WTO
STEP EXERCISE
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Socio-Cultural
Technological
Economic
Politico-Legal
Industry Analysis
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6 Forces Analysis
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Industry Competitors
Suppliers/Vendors
Customers/Clients
Potential New Entrants
Substitutes
Other Stakeholders
Role of Complementors
New Entrants and Entry Barriers
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Absolute cost advantages
Access to inputs
Government policy
Economies of scale
Capital requirements
Brand identity
Switching costs
Access to distribution
Proprietary products
Buyer Power (Channel and End
Consumer)
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Buyer volume and information
Brand identity
Price sensitivity
Threat of backward integration
Product differentiation
Substitutes
Supplier Power
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Supplier concentration
Differentiation of inputs
Switching costs
Threat of forward integration
Cost relative to total purchases in
industry
Substitutes
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Switching costs
Buyer inclination to substitute
Variety of substitutes
Price-performance tradeoff of
substitutes
Necessity for product or service
Degree of Rivalry
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Exit barriers
Industry concentration
Fixed costs
Industry growth
Intermittent overcapacity
Switching costs
Brand identity
Diversity of rivals
Corporate stakes
Other Stakeholders
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Employees
Unions
Government
Trade and Professional Associations
Other Direct Influencers
Role of Complementors
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Number of complements
Relative value added
Difficulty of engaging complements
Buyer perception of complements
Complement exclusivity
Tend to increase profits by increasing
demand for an industry’s products
6 FORCES EXERCISE
Competitive Profile Analysis
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Identify Key Competitive Factors
Identify key Competitors
COMPETITIVE PROFILE
EXERCISE
Industry Foresight
Customer
Needs
Unarticulated
Articulated
Customer
Served Unserved Types
Internal Environment
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Internal Profile Analysis
SWOT Analysis
Internal Profile Analysis
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Identify Key Core Functions
Identify Key Measures for Core
Functions
Build Matrix
SWOT Analysis
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Internal Environment
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Strengths
Weaknesses
External Environment
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Opportunities
Threats
SWOT EXERCISE
Strategic Management Model
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Strategy Formulation
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Where do we want to be?
Vision
Mission
Values
Goals
Objectives
GOAL
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Supports the Mission
Deals with One Issue or Item of Focus
Reflects a primary activity or strategic
direction
Describes the “To Be” State
“BHAG”
Encompasses a long period, i.e. at least
3 years
Goal Examples
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Achieve excellence in the delivery of disaster
recovery and mitigation programs.
Professionally develop our employees as a
reflection of DAD’s key attributes and values.
Increase the supply of housing, especially
affordable housing.
Become a model for customer service.
To provide benefits in correct amounts and
issued in a timely manner.
Goal Statements Litmus Test
Goal Exercise
OBJECTIVES
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Add specificity beyond Goals
Answer the questions
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What is to be accomplished?
When?
Should contain the SMART Elements
OBJECTIVES: SMART Model
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Specific
Measurable
Aggressive but Attainable
Results-Oriented
Timeframe
Strategic Objective Examples
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By June 30, 2005 achieve 75% rating on the
DAD service index from all stakeholders.
Increase sales growth 6-8% in the next 5
years. (P&G)
Cut corporate overhead costs by $30 million
per year. (Fortune Brands)
Operate 6,000 stores by 2010 – up from
3,000 in the year 2000. (Walgreen’s)
Reduce greenhouse gases by 10 percent
(from a 1990 bast) by 2010. (BP Amoco)
Objectives Litmus Test
Strategic Objective Exercise
Strategic Management Model
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Strategy Implementation
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Everyone is Responsible
Few Guidelines
No Easy 10-Step Checklist to Follow
Strategic Management Model
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Strategy Implementation
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Most open-ended part of Strategic Mgmt
People implement strategies not
Organizations
Strategic Management Model
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Strategy Implementation
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How do we get there?
Work Action Plans
GOOMs
Strategy Implementation
Considerations
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7-S Framework – Strategic Fit
Human Resources
Patience
7-S Framework
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Shared Values
Strategy
Structure
Systems
Skills
Style
Staff
Human Resource Rule
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Hire Smart
Train Hard
Manage Effectively
Parable of the Bamboo
It takes patience and discipline to develop and
empower people; in fact, it’s like growing
bamboo. Once the seed is planted, you must
water it daily for four years before the tree
breaks ground – then it grows 60 feet in 90
days! Executives who nurture people can get
similar results…How, you ask, can such rapid
growth be possible? It results from the miles
of roots that develop in those first four years.
Preparing people to perform is the task of
leadership.
Implementation Strategies
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GOOMs
Implementation Conference
CEO involvement
Other Strategies?
GOOMs
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Goals
Outcomes
Objectives
Measures
Definitions
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Goal: Broad, General BHAG
Outcome: Desired end result and report
performance
Objective: What and When
Measure: A quantified unit that
assesses progress or achievement
GOOM Example
Goal 1: Achieve excellence in the delivery of
disaster recovery and mitigation.
Outcome: Increased Customer Satisfaction
Objective 1.1: By June 30, 2005, achieve
75% rating on the DAD Service Index from all
stakeholders.
Measure: DAD Service Index (DSI)
GOOM Exercise
Work Action Plan Template
Sponsor:
Organization:
n.n
Completion Date
Goal
Outcome
n.n
Objective
Measure
Task Description
Team Lead
Staff Hours
Completion
Date
Plan- Do-Check-Act
Strategic Management Model
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Measurement / Performance
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Why do we measure our progress?
Why Measure?
Reactive Reasons
 Government Intervention
 Fewer Resources and Smaller Budgets
 Increased Demand for Accountability
 Mandated
Why Measure?
Proactive Reasons
 Makes us more responsive to public needs
 Provides feedback on mission
accomplishment
 Creates blueprint for linking budget to
outcomes
 Good management and good public policy
Measurement / Performance
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How do we measure our progress?
5 Types of Measures
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Input
Output
Outcome
Quality
Efficiency
INPUT Measure
Amount of resources needed to provide a
particular product or service.
Examples:
 Number of FTEs or PYs
 Number of eligible clients
 Number of customers requesting service
 Number of applications received
 Number of sales orders received
OUTPUT Measure
Amount of products or services provided
Examples:
 Percent of highways resurfaced
 Number of police reports filed
 Number of vaccinations given to school-age
children per year
 Number of shafts produced in a single
operating shift
OUTCOME Measure
Reflect the actual results achieved and/or their
impact or benefit.
Examples:
 Reduction in incidence of disease
 Percentage of discharged patients living
independently
 Percent of increase in tourists
 Percent of monthly programmed sales orders
filled on time
QUALITY Measure
Reflect the effectiveness in meeting the
expectations of customers and stakeholders
Examples:
 Number of defect reports compared to
number of reports produced
 Number of course ratings in highest category
related to total number of course ratings
EFFICIENCY Measure
Also known as productivity measures.
Reflect the cost of providing products or
services.
Examples:
 Output/Input
 Output/Time
 Output/Cost
 Outcome/Cost
Keeping Plans Off The Shelf
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All Staff Meeting
Announce Phases
Review and Assess Plans at Quarterly
Sessions
Sponsors and Team Leads for Strategic
Goals and Strategic Objectives
Deming Philosophy – PDCA
Developing Bench Strength
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“Drill Down” Application
Sponsors, Team Leads, and Team
Members
Work Action Plan
“Project” Champion
Leadership Training
Leadership Conference Presentations
Establishing Organizational
Permanence
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Training Emphasis
Certification
Awards & Recognitions
“Caught-Ya”
Celebrations
Walk the Walk
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