STRATEGIC
MANAGEMENT
VINAYAKAM

CANOE THEORY
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
re-adjust or get out of the canoe
There are no passengers in the canoe
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

GOOD TO GREAT
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

PRIVATE VERSUS PUBLIC
ORGANIZATIONS
Purpose
Goals
Financing
Decision-Making
Key Stakeholders

Strategic Management
Versus
Strategic Planning

FEATURES OF SUCCESSFUL
STRATEGIC MANAGEMENT
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)
Is Proactive
Not a Quick Fix
Part of Quality Management
Payoffs Increase over Time

LESSONS LEARNED ABOUT
STRATEGIC PLANNING
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
Time Consuming
High Demands
Not Rewarded
Executives Don’t Support It
Too Risky

STRATEGIC MANAGEMENT
MODEL
Scanning
 Where are we now?
Strategy Formulation
 Where do we want to be?
Strategy Implementation
 How do we get there?
Measurement/Performance
 How do we measure our progress?

STRATEGIC MANAGEMENT
MODEL
Strategy Formulation
 Where do we want to be?
 Vision
 Mission
 Values
 Goals
 Objectives

VISION
Vision without Action is a Daydream
Action without Vision is a Nightmare
Not Optional
Stretch – 30+ Years
8-10 Words in length
Future State
Brief and Memorable

VISION (CONTINUED)
Inspiring and Challenging
Descriptive of the Ideal

VISION EXAMPLES
“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
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
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
“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
What is it?
Codes of Governance
Role of the Board of Directors
Role of Top Management Team
Executive Compensation

CORPORATE GOVERNANCE
System by which a firm’s owners control its affairs.
Does it work?

CODES OF GOVERNANCE
The Cadbury Code: 1992
Sarbanes-Oxley Act: 2002
Public Company Accounting Oversight
Board
“Triple bottom line”
Four major issues:
 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
Monitor
Evaluate and influence
Initiate and determine
Organization of Board
 Insiders versus outsiders
 CEO/chair position
Committees’ Effectiveness

ROLE OF TOP MANAGEMENT
TEAM
Who is the TMT?
Executive Leadership and Strategic
Vision
 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
Incentive alignment
Executive Ownership
Incentive compensation
 Salary
 Bonus
 Stock Options
 LT Bonus

VALUES
Guiding Principles
Help establish Culture
Part of Preserving the Core
Core Ideology

VALUE EXAMPLES
CHP PRIDE
HP WAY
J & J Credo
“Build the Spirit of the Place”

ETHICAL AWARENESS MODEL
Organizational Ethics
Individual Ethics
Personal Values

VALUES EXERCISE

STRATEGIC MANAGEMENT
MODEL
Scanning:
 Where are we now?
 Macro Analysis (STEP, PESTEL, ETC.)
 Industry Analysis – Competitive Intelligence
 SWOT Analysis
 Internal versus
External Elements

WHY SCAN?
To know your position in the
environment
To respond effectively to constant
change
To see the organization as a whole
To avoid surprises
To survive
To lay the foundation for strategic
issues

SCANNING:
KEY ENVIRONMENTAL
VARIABLES
Macro Environment: STEP, PESTEL
Task Environment: Industry
Internal Environment: Focal Organization

SOCIO-CULTURAL VARIABLES
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
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
GDP Trends
Interest Rates
Money Supply
Inflation Rates
Unemployment Levels
Wage/Price Controls
Energy Availability & Cost
Disposable & Discretionary Income

POLITICAL-LEGAL VARIABLES
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
Aging Population
Rising affluence
Changes in Ethnic Composition
Geographic distribution of population
Disparities in income levels

GLOBAL VARIABLES
Increasing Global Trade
Currency Exchange Rates
Emergence of Indian and Chinese Economies
Trade agreements (NAFTA, EU, ASEAN)
Creation WTO

STEP EXERCISE
Socio-Cultural
Technological
Economic
Politico-Legal

INDUSTRY ANALYSIS
6 Forces Analysis
 Industry Competitors
 Suppliers/Vendors
 Customers/Clients
 Potential New Entrants
 Substitutes
 Other Stakeholders
Role of Complementors

NEW ENTRANTS AND ENTRY
BARRIERS
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)
Buyer volume and information
Brand identity
Price sensitivity
Threat of backward integration
Product differentiation
Substitutes

SUPPLIER POWER
Supplier concentration
Differentiation of inputs
Switching costs
Threat of forward integration
Cost relative to total purchases in industry

SUBSTITUTES
Switching costs
Buyer inclination to substitute
Variety of substitutes
Price-performance tradeoff of substitutes
Necessity for product or service

DEGREE OF RIVALRY
Exit barriers
Industry concentration
Fixed costs
Industry growth
Intermittent overcapacity
Switching costs
Brand identity
Diversity of rivals
Corporate stakes

OTHER STAKEHOLDERS
Employees
Unions
Government
Trade and Professional Associations
Other Direct Influencers

ROLE OF COMPLEMENTORS
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
Identify Key Competitive Factors
Identify key Competitors

COMPETITIVE PROFILE
EXERCISE

INDUSTRY FORESIGHT
Customer
Needs
Unarticulated
Articulated
Customer
Served Unserved Types

INTERNAL ENVIRONMENT
Internal Profile Analysis
SWOT Analysis

INTERNAL PROFILE ANALYSIS
Identify Key Core Functions
Identify Key Measures for Core Functions
Build Matrix

SWOT ANALYSIS
Internal Environment
 Strengths
 Weaknesses
External Environment
 Opportunities
 Threats

SWOT EXERCISE

STRATEGIC MANAGEMENT
MODEL
Strategy Formulation
 Where do we want to be?
 Vision
 Mission
 Values
 Goals
 Objectives

GOAL
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
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
Add specificity beyond Goals
Answer the questions
 What is to be accomplished?
 When?
Should contain the SMART Elements

OBJECTIVES: SMART MODEL
Specific
Measurable
Aggressive but Attainable
Results-Oriented
Timeframe

STRATEGIC OBJECTIVE
EXAMPLES
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
Strategy Implementation
 Everyone is Responsible
 Few Guidelines
 No Easy 10-Step Checklist to Follow

STRATEGIC MANAGEMENT
MODEL
Strategy Implementation
 Most open-ended part of Strategic Mgmt
 People implement strategies not Organizations

STRATEGIC MANAGEMENT
MODEL
Strategy Implementation
 How do we get there?
 Work Action Plans
 GOOMs

STRATEGY IMPLEMENTATION
CONSIDERATIONS
7-S Framework – Strategic Fit
Human Resources
Patience

7-S FRAMEWORK
Shared Values
Strategy
Structure
Systems
Skills
Style
Staff

HUMAN RESOURCE RULE
Hire Smart
Train Hard
Manage Easy

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
GOOMs
Implementation Conference
CEO involvement
Other Strategies?

GOOMS
Goals
Outcomes
Objectives
Measures

DEFINITIONS
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: Completion Date
Organization:
n.n Goal
Outcome
n.n Objective
Measure
Task Description Team Lead Staff Hours Completion
Date
Plan-
Do-Check-Act

STRATEGIC MANAGEMENT
MODEL
Measurement / Performance
 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
 How do we measure our progress?
 5 Types of Measures
 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
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
“Drill Down” Application
Sponsors, Team Leads, and Team Members
Work Action Plan
“Project” Champion
Leadership Training
Leadership Conference Presentations

ESTABLISHING
ORGANIZATIONAL
PERMANENCE
Training Emphasis
Certification
Awards & Recognitions
“Caught-Ya”
Celebrations
Walk the Walk

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