Wednesday, 8 February 2017

Business Strategy

Slide Deck #1: Strategy

- Strategy: is a set of coordinated and sustainable creative actions designed to solve
one or more core challenge and create vale.

A strategy should leverage current assets, resources and competences and

combine them in a creative way.

The core-challenge is identified by the root-cause analysis.

Value creating is necessary to ensure a sustainable and prosper condition.
- Successful strategies characterise by the following:
Ability to recognise opportunities when they appear.
Clarity of direction.
Objectives and strategy formulation.
Flexibility in order to exploit opportunities
Effective implementation of the strategy.
- Strategy is not about:
A lot of goals.
Race to be the best.
Perfect Plan.
Doing things.
- The steps to develop a strategy are as follows:
Observing: to identify unfulfilled needs and things that dont work and can be solved.
Identifying the core challenges: identify the challenges with the idea and make sure
they are core.

Work out the core challenges: develop a creative solution.

Reduce uncertainty: construct minimum variable products as a solution to the core
challenge, measure the outcome and validate the learning.

Managing execution: if the testing of the MPV confirms the hypothesis then roll out
the strategy, if not the pivot the strategy to obtain a different focus.

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Slide Deck #2: Sources of Competitive Advantage

- Strategy involves this 3 steps:
Understand where you are.
Define how to reach the target.
Define where you would like to be.
- Competitive advantage: is the result of a strategy capable of helping a firm maintain
and sustain a favourable market position.

- Sources of Competitive Advantage:

Structural Advantage: they are usually entry barriers like access to limited
resources.

Frontline Execution: is to consistently outperform competitors in the execution of the

day to days task.

Insight / Foresight: developing or possessing knowledge or insights that other do not

have. The knowledge may lie in scientific or technical expertise, pattern recognition.

Corporate Culture: are the attitudes, values, beliefs, norms and customs of an
organisation that may drive its performance.

- Options to achieve Competitive Advantage:

Cost Leadership: an organisation that is capable of producing products and services
at a cost lower that the average industry. They could implement cost leadership by:

- Learning curve: reduction of average units cost with cumulated experience over
time.

- Economies of Scale: reducing unit cost with an increase of production.

- Improving Supply Chain: improving the supply of raw material, optimising deliver
and manufactured goods.

- Reducing Labour Cost: improving the training of human resources, improving

manufacturing processes required less labour.

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Differentiation: an organisation that offers product and services that are perceived
as differentiated by the end customer how is willing to pay for it a a premium price.

- Product Specification or Performance: a product that has technical specifications

or performance above average.

- Service / Quality: a product or service that is far superior than the average
industry.

- Brand: a product that gives an emotion through ownership.

Nice / Focus: an organisation how focus on a particular segment or niche with one
of the previous two options.

Slide Deck #3: Culture, Governance and Aspirations

- Strategies tend to develop on the basis of what the organisation has done in the past,
especially if it has been successful.

- If strategies do not change in line with the environment we talk about strategic drift.
Some of the causes ares:

Not realising that changes are happening.

Building the strategy on the familiar.
Core rigidities.
Tie into existing relationships.
- Cultural Influence: are the structural embeddedness frames of reference.
- Culture and Strategy Development:
Implementation of the Strategy which causes resistance and also a tighter control to
what is known.

Development of the Strategy: the new strategy is developed/

Culture: abandon of the old paradigm and adoption of the new one as well as the
strategy.

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- Collective Mindset: a set of assumptions methods or notions held by a group of people
which is so established that it creates a powerful incentive within these people to
continue to adopt or accept prior procedures, behaviours and choices.

- Characteristics of strong collective mindset:

Solidarity
Goal, Objectives and Value Alignments.
Execution and Accountability.
Innovation.

Slide Deck #4: External Analysis

- Analysing a situation of a company is a 4 stage process:
Analyse Situation: External (PESTEL) and Internal (SWOT) Analysis.

Define Objectives and Strategic Guidelines.

Define Strategy Initiatives

Plan for Execution.

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- Four Levels of Uncertainty:
Clear Future: can develop strategically relevant forecast.

Alternative Futures: a few distinct outcomes define the future.

Range of Futures: range of possible outcomes around two or three key

uncertainties.

True Ambiguity: multiple dimensions of uncertainty, most difficult to forecast the

future.

- How to deal with Uncertainty:

Clear Future: forecast strategically relevant key drives.

Alternative Futures: determine distinct outcomes and payoffs of the client.

Range of Futures: identify the key uncertainties or drives of change and omit the
minor drivers.

True Ambiguity: reduce uncertainty by adjusting for uncertainties and disaggregating

situation to focus on key drivers.

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Slide Deck #5: Core Competencies:

- Strategy is concerned with matching a firms resources and capabilities to the
opportunities that arise in the external environment.
- A company's resources can be classified in: tangible, intangible and human.
- Tangible Resources:
Financial: the firms borrowing capacity and its internal funds generation which
determines its resilience capacity for investment.

Physical: resources such as size, location, technical, reserves and raw materials.
- Intangible Resources:
Technological: intellectual property, patent portfolio, copyright. Resources for
innovation, research facilities, technical and scientific employees.

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Reputation: reputation with customers through ownership of brands, trademarks and
well stablished relationships.

- Human Resources:
Human: education, training and experiences of employees determine the skills
available to the firm.

- Core competences:
- They can be evaluated through their profit and also earning potential.
Extent of Competitive Advantage established.

Sustainability of Competitive Advantage

Appropriation

- Identify Core Competences:

- To identify core competences of an organisation one can adopt to approaches:
Functional Analysis: identifies organisational capabilities in relation to each of the
principal functional areas of the firm.

Value Chain Analysis: separates the activities of the firm into a sequential chain.

- Functional Competences Classification:

Corporate Functions.
Management Functions.
Research & Development
Operations
Product Design
Marketing

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Slides #7: Setting Strategic Objectives

- The strategic posture is the way we approach the internal and external environment.
There are four strategic postures a company can take|:

Shape the Future: play a leadership role in establishing how the industry operates.

Adapt the Fastest: win through speed, agility and flexibility in recognising and
capturing opportunities.

Reserve the Right to Play: invest sufficient to stay in the game but avoid premature
commitments.

Exit: decide not to participate in the business going forward.

- When defining objective strategies is important to keep in mind:

Aspiration: the reason why the company exist, mission, vision and values.

Context: based on internal analysis and external analysis.

Strategic Posture: top management approach versus external and internal

environment.

Slide Deck #8: Strategy Execution

- Mission: is the purpose of the company why it exist.
- Values: what is important for the company.
- Vision: what would the company would like to be or achieve.
- Strategy: the game plan to achieve the vision, the strategy is built taking into
consideration the mission and the values.

- Mindset Transformation Network:

- A company how wants to change the mindset of the company as well as the
employees needs to have:

- Shared Understanding: an awareness that changing is indispensable and actions

need to be taken.

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- End State Vision: what the end product or desire position should look like in terms
of behaviour and also mindset

- Number of Initiatives: the way we achieve the end state.

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- Slide Deck #9: Strategic Thinking

- Minimum Variable Product (MVP):
- Version of a new product which allows a team to collect the maximum amount of
validated learning about customers with the least effort.

- Goal: build the smallest feature set.

- Advantages of the MPV Approach:

Enables to maximise your learning dollar and minimise your development cost.
Allows you to realise iterations quickly and learn from your mistake.
Build Customer Fans in the marketplace.

- Fundamental Price:
Less is more.
The path of least resistance: minimise frictions and simplify processes.
Think Scarcity - Demand vs Supply.
Focus on closing the loop for the user.
Iterate & Refine with user feedback.

- MVP Validates Three Core Hypothesis:

- Value: will bring anew product or service that the market is willing to pay at a price
which covers the cost and creates value.

- Growth: the MVP will be scalable in order to have meaningful impact.

- Sustainability: the MVP will generate sustainable advantage and it will derive from:
difficulty of being replicated, fully endorsed by internal stakeholders, compliant with
external standards.

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- Lean Test Methodology:

Assumptions: work on a hypotheses, select a market and come up with a possible
solution concept.

Testing the value Hypothesis: develop the prototype simulating the experimental
protocol. First commercial contact by selling to early adopters, learn from the field.

Testing the Growth Hypothesis: new realise of the product or service based on the
field experience. ales to the remain stream, selective roll-out to a second tier of
customers. Fine tuning of the idea and business model driven by the field.

Testing the Sustainability Hypothesis: maintaining the competitive edge, engaging

the team aligning the company strategy.

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