|
Strategic thinking of contemporary businesses has been built upon a platform of militant strategists since 400BC when Sun Tzu wrote the Art of War. Sun Tzu spoke about indirect strategies when he proclaimed that winning without fighting is the acme of skill on the battlefield. Sun Tzu?s thoughts about the factor of terrain, if we were to take that into the context of companies competing today, translates to markets, industry structures, market positions, and Porter?s Five Forces. Sun Tzu preached to know and attack the enemy?s strategy. In Sun Tzu?s Art of War, he wrote about several core factors in military strategy and each of these factors can be directly translated to terms of business strategy. Within the strategy development process, it is critical to come up with a a clear and definitive understanding of the market place. The market environment can be analyzed by conducting the PEST analysis, which evaluates the political, legal, economic, socio-demographic, cultural, and technology elements that are at play in the market. Developing a market study allows us to capture the market environmental factors, the market forces, and the trends and market outlook. By first analyzing the market, a business can develop thoroughly thought out strategic options and recommendations that feed into the strategy development. Marketing strategy is driven by both supply and demand side drivers that impact the market place itself, which is comprised of goods and services. A number of businesses are not happy with the outcome of strategy development efforts. There are a couple close permutations of the same strategy development challenge: developing and obtaining buy-in into new ideas. A frequent criticism regarding strategy development is the lack of creative ideas. Members of management are often set in their ways and there is a a lack of acceptance for innovative ideas. As suggested, when we look at the market, both supply and demand analysis need to be evaluated, which includes understanding all the following areas. Develop a visualization of the market force landscape. Do rigorous segment analysis, including segment definition, calculating segment volumes, and segment characterization. Identify points of vertical and horizontal integration. Understand buyer behavior, such as key purchase criteria, developing the customer value chain, identifying the points of purchase, and characterizing customer loyalty. Understand all the key competitors and determine their market shares, split by overall and by product category, core competencies and traits, and market positions. The true structure of both the supply chain and value chain should be diagrammed out and analyzed. Spot where the trends are, as they relate to socio-environmental trends, supply side trends, and demand side trends. Know the historical and emerging trends in the market. Joseph Bower believes thatthe strategic planning and financial budgeting processes are at the heart of the strategy development process. Resource allocation based strategy planning and budgeting is a bottoms up driven way to identification and picking of important business opportunities. Organizational context is made up of governance and the organizational structure, basis of performance measures and incentives, and the managers? core beliefs and cognitive mindset. Bower defines strategic intent as the observable and communicated primary strategy. Bower?s set of beliefs is called the Resource Allocation Process (RAP) framework. Within the RAP framework, when we look at market context, we are analyzing the demands of those customers that make up the major sources of revenue,and technology development. Capital market context is also evaluated, which is defined as demands and influences of capital providers, such as hedge funds. Business strategy development has evolved through several key stages since the early 1900s. Business strategy development started with a focus on financial planning in the 1950s, moving to sustainable planning in the 1960s, to strategic planning in the 1970s and eventually to a focus on strategic management in the present day. Shifts in strategic mindset represent an ever evolving, new business leaders, and emergence of disruptive technologies and trends. A lot of competitive strategy is also hinged on ideas in the 1970s, where the focus of what business leaders devote their efforts to was around thinking strategically to beat competition and the business frameworks of alternative strategies, portfolio analysis, and the BCG Growth Share Matrix were actively used for the first time. In the current day, the strategic development theme is on integrating strategic planning and implementation with a stress on the key concepts of core competencies, strategy planning and execution,and balance scorecard analysis. We can say strategy development is a process requiring creativity. In the initial stages of the strategy development process, the organization must generate insights, which involve making sense of abstruse facts, looking beyond the obvious and generating creative presumptions. In developing a strategic response, the business often must solve new business issues and connect unconnected dots. As we evaluate additional strategic considerations, we must shape and adapt our conventional perspectives by coming up with new products. If a simple project plan would do the trick in strategy development, then there would not be much opportunities for differentiating in the market. In current thinking, there are Mintzberg and Bower present contrasting and complementary ideas around strategy management. Henry Mintzberg proposes for an organization, bottom-ups strategy to drive business strategy development that hinges upon organizational configuration. In organizational configuration, the organization takes on behaviors based on adoption to business surroundings. Mintzberg also advocates a transformation of business processes, where management recognizes the need and has the ability to manage top-down business operational operational transformation. Creativity is about thinking proactively, not reactively. There are countless obstructions to creative thinking, including a reliance on the known and repeating past experiences. Productive idea generation hopes for deviation from past experiences or procedures. Thinking outside the box is a forced process. To manifest creative ideas, participants should evaluate an existing problem from different vantage points. Even after we find an innovative solution, the business must still explore other ideas on the table. We must generate as many alternative approaches as we can to address an existing problem if the goal is to come up with an innovative idea. Management groupthinkand an avoidance with lack of certainty often deter creative thinking in the strategy development session.
strategy development
Related Articles -
strategy, development,
|
