Winning Strategy Overview of presentation John Viljoen (PhD) 27 - PDF document

Winning Strategy Overview of presentation John Viljoen (PhD) 27 September, 2012 Summary The presenta tj on will focus on how to develop and implement a Winning Strategy and will stress: � The a tu ributes of a winning strategy – how you can tell when you have one � The strategy development processes that are most likely to lead to a Winning Strategy � How to performance manage a Winning Strategy � The leadership requirements for a Winning Strategy. The presenta tj on will o ff er delegates with the opportunity to benchmark themselves against demonstrated best prac tj ce in strategy and will provide examples from a variety of industries to reinforce the concepts and tools. Developing a Winning Strategy Theme 1: What is a winning strategy? There is no such thing as “a” winning strategy, only “your” winning strategy. Every strategy is di ff erent, in fact di ff erence is a key to winning. Despite the fact that di ff eren tj a tj on can be created in a myriad of ways, many businesses put li tu le e ff ort into this aspect of their strategy. Yet almost any product or service can be di ff eren tj ated for example, some countries have even managed to di ff eren tj ate commod itj es like raw sugar. “Winning” is rela tj ve concept. Like in the Olympics, the winner does not have to beat the world record, they just have to beat the other compe tj tors. You can get a good idea of how “Winning” your current strategy is by your company’s rela tj ve posi tj on in the following areas: � Is my brand rela tj vely stronger than my compe tj tors? � Is my market share growing faster than my compe tj tors? � Are my customers rela tj vely more sa tj s fied than my compe tj tors and do I get greater repeat purchases? � How fast is my EBITDA increasing rela tj ve to my compe tj tors? One of the great bene fi ts of “Winning” is it culminates in e ff ec tj ve barriers to entry for other compe tj tors because you dominate your chosen area of the market. This gives you the tj me you need to extract value from the investment you have made in that strategy. Theme 2: The basics of successful strategy One of the reasons why businesses struggle to produce a winning strategy is because they fail to grasp some strategy fundamentals, such as: � Many execu tj ve teams over-engineer strategy. Keep it simple. Too many strategic plans contain spreadsheets! On the con tj nuum of running the business, enhancing the business and transforming the business, strategy focuses on “transforma tj on”. Of course transforma tj on u ltj mately has implica tj ons for how a business is “run” and “enhanced”, but these are essen tj ally opera tj onal roles, not strategic ones. Page 1

Question : Is your strategy crystal clear on how i t will transform your business? � Failing to integrate all aspects of strategy, aligning all of its key elements (see model): Vision What we aspire to be Values Purpose The approach we will What we will do take to running our achieve our Vision business Goals What we want to achieve – the specific targets Strategies Actions we will take to achieve our Goals � Failure to understand d iff erent levels of strategy and to act on corporate strategy before business strategy: o Corporate level strategy – deciding the scope of your product or service por tg olio – what will be kept in the por tg olio, what will be added to the por tg olio and what will be dropped from the por tg olio? (For example in “tourism” the por tg olio could include any one or all of resorts, travel agency, tours, etc, each with a local / regional / interna tj onal op tj on) o Business level strategy – for each product or service in the por tg olio, deciding “how can we be as successful as we can possibly be?” Theme 3: The keys to a Win ning Strategy There are 4 keys to developing a Winning Strategy: Think / Analyse Act Manage the present from KEY 1 Run strategic projects the future Challenge conventional Create points of difference KEY 2 wisdom & targeted innovation Effectiveness not KEY 3 Find the “ elephants ” efficiency Who can help me, who Build partnerships & KEY 4 can I help? alliances Key 1 : The fundamental skill of the strategist is to be able to “manage the present from the future”. They stand in the future, use best available evidence to map its a tu ributes and iden tj fy what their business needs to do to “Win” under these a ntj cipated future cond itj ons. In doing this, the vola tj lity of most markets requires businesses to be more adept at “opportunis tj c strategy” than they have been in the past. Gone are the days of big, pres tj gious, well resourced strategy teams located on the same fl oor as Page 2

the CEO. Instead, recognising and capitalising on opportuni tj es quickly is essen tj al – not teams of PhDs analysing data to death. Test your strategy: Every execu tj ve team should have a common view on the 4 or 5 major di ff erences between their industry today versus in 3 years tj me. Collec tj vely they should agree on what this means for their business and they should be tes tj ng the new strategies that they think will be required. Key 2 : This is based on the obvious point that posi tj ve di ff eren tj al advantage leads to a Winning Strategy. Conversely, being completely “conven tj onal” doesn’t because there is no reason why a consumer should choose your product or service over any other one. Di ff eren tjatj on can improve sales volumes as well as pro fi t margins (Example: Apple and Samsung in cell phones). Winning strategies are either highly di ff eren tj ated or very low cost. (see model). Strong Stuck in the middle (No added value & no low cost) Performance “ Gravity Strategy : pull ” Strategy : Cut costs Add value Weak Differentiation Strategy Low cost : Question Is your business “ stuck in the middle ” ? Test your strategy: Does your business have a clear plan to prevent it becoming stuck in the middle? What are the cost and di ff eren tj a tj on components of this strategy? Key 3 : It is no use doing something e ffi ciently if you are doing the wrong thing in the fi rst place! Execu tj ves are too frequently focused on “urgent” opera tj onal crises that deal with e ffi ciency and fail to pay adequate a tu en tj on to the “important” strategic issues for their business (Example: Kodak was s tj ll commissioning low cost, completely automated dark-room factories for camera fi lm when the digital revolu tj on in cameras was well underway). Winning strategies are effective strategies. Test your strategy: Where does your execu tj ve team prefer to focus, on urgent opera tj onal ma tu ers (e ffi ciency) or important strategic issues (e ff ec tj veness)? How disciplined is your execu tj ve team in removing itself from “e ffi ciency-type” decisions and a tu ending to “e ff ec tj veness”? What tools do you use to gather evidence and avoid making purely intu itj ve or gut-feel strategy decisions? Page 3

Key 4 : Strategic alliances are becoming increasingly important in developing “Winning Strategy”. For example, EdEx is an alliance between Harvard University and Massachuse tu s Ins tj tute of Technology (MIT) that places their degree courses online. They s tj ll vigorously compete with each other for students, research funds and brand equity, but not in the course content space, because they both believe content is a commodity not worth the expense of compe tjtj ve ba tu les. This is a good example of “co-ope tjtj on” (ie. coopera tj ng with a compe tj tor in one aspect of your business but compe tj ng in another aspect). Test your strategy: What strategic alliances do you currently operate? How successful are they? What other op tj ons exist? Is “co-ope tjtj on” an op tj on for you? Implementing Win ning Strategies Developing strategy is only one aspect of Winning Strategy. Implemen tj ng it through strong performance management and e ff ec tj ve leadership is also essen tj al. Strategy development AND A N D You are only as strong as your weakest link Performance Leadership management A Winning Strategy will fail if it is poorly managed Page 4