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This document discusses corporate strategy and the need to reinvent industries and regenerate strategies. It outlines three phases of competition for the future: intellectual leadership, managing migration paths, and competing for market share. The goal of strategy should be to shape future industry structure by creating new opportunities, not just competing within the existing industry. Formulating strategy requires understanding how to serve future customer needs and decompose the existing economic model of the industry.
This document discusses corporate strategy and the need to reinvent industries and regenerate strategies. It outlines three phases of competition for the future: intellectual leadership, managing migration paths, and competing for market share. The goal of strategy should be to shape future industry structure by creating new opportunities, not just competing within the existing industry. Formulating strategy requires understanding how to serve future customer needs and decompose the existing economic model of the industry.
This document discusses corporate strategy and the need to reinvent industries and regenerate strategies. It outlines three phases of competition for the future: intellectual leadership, managing migration paths, and competing for market share. The goal of strategy should be to shape future industry structure by creating new opportunities, not just competing within the existing industry. Formulating strategy requires understanding how to serve future customer needs and decompose the existing economic model of the industry.
Introduction Definition Why Corporate Strategy High profile initiatives launched recently Beyond Restructuring Beyond Reengineering Regenerating Strategy The quest for Competitiveness
The Quest for Competitiveness
Restructuring Reengineering Reinventing
the Portfolio and Processes and Industries and Downsizing Continuous Regenerating Headcount Improvement Strategies
Smaller Better Different
Today 5 to 10 Years in the Future Which customers are you Which customers will you serving today? be serving in the future? Through what channels Through what channels will do you reach you reach customers in customers today? the future? Who are your Who will be your competitors today? competitors in the future? What is the basis for What will be the basis for your competitive your competitive advantage today? advantage in the future? Where do your margins Where will your margins come from today? come from in the future? What skills or What skills or capabilities make you capabilities will make unique today? you unique in the future? In what end product In what end product markets do you markets will you participate today? participate in the future? Our promise that a company can control its industry only if it understands how to control the destiny of its industry. Organizational transformation is a secondary challenge. The primary challenge is to become the author of industry transformation. No Company can escape the need to re-skill its people, reshape its product portfolio, redesign its process and redirect its resources/ Towards a new view of Strategy Our starting premises are simple : Competition for the future is competition to create and dominate emerging opportunities to take out new competitive space. Creating the future is mo challenging than playing catch up, in that you have to create your own map. The goal is not simply to benchmark a competitors products and Processes and imitate its methods, but to develop an independent point of view about tomorrows opportunities and how to exploit them. Path-breaking is a lot more rewarding than benchmarking. One doesnt get to the future first by letting someone else blaze the trail. At a broad level, Future requires four things : 1. An understanding of how competition for the future is different; 2. A process for finding and gaining insight into tomorrows opportunities; 3. An ability to energize the company top-to- bottom for what may be a long and arduous journey towards the future; and 4. The capacity to outrun competitors and get to the future first, without taking undue risks. The New Strategy paradigm Not Only But Also The Competitive Challenge Reengineering processes Regenerating Strategies Organizational Transformation Industry transformation Competing for market share Competing for opportunity share Finding the Future Strategy as learning Strategy as forgetting Strategy as positioning Strategy as foresight Strategic plans Strategic architecture Mobilizing for the Future Strategy as fit Strategy as stretch Strategy as resource allocation Strategy as resource accumulation and leverage Getting to the Future First Competing within an existing Competing to shape future Industry Industry structure Competing for product Competing for core leadership competence leadership Competing as a single entity Competing as a coalition Maximizing the ratio of new Maximizing the rate of new Product hits market learning Minimizing time-to-market Minimizing time to global preemption Three phases of competition for the future Intellectual Management of Competitions for Leadership Migration Paths Market Share Gaining industry Preemptively Building a Foresight by building core worldwide supplier Proving deeply competencies, network Into industry exploring alternate Drivers. product concepts. Crafting an appropriate and reconfiguring market positioning strategy the customer interface. Preempting competitors in critical markets Developing a creative Assembling and Maximizing Point of view about the managing the efficiency and Potential evolution of: necessary coalition productivity. Functionality of industry Core competencies participants. Customer Interface
Summarizing this point Forcing competitors Managing
of view in a onto longer and competitive strategic architecture. more expensive interaction. migration paths. The need for Genetic Diversity Is the industry reasonably concentrated, with fairly stable market-share positions among the incumbents? (that is, are the incumbents spending most of their time watching each other, and are they counting on gentlemanly competition to keep their margins up?) Alternately, is the industry highly fragmented? (that is, has no one yet discovered opportunities to capture economies of scale?) When you ask managers across the industry whats the secret to making money in the industry, do you get more or less the same answer? (that is, is everyone following the same profit recipe?) Have most of the top management teams spent their entire careers in the industry? (that is, has in-breeding reduced genetic variety?) Is the industrys take-up rate for new technology slower than most? (that is, are there opportunities to use technology to change the rules of the game?) Have the leaders tended to rely on high barriers to entry, rather than product and process innovation, to protect their profitability? (That is, have the leaders been able to rest on their laurels?) Has the basic concept of the product or service remained unchanged for a significant period of time? (That is, there an orthodoxy about what customers want and how to serve them?) Do regulatory issues preoccupy top managers across the industry? (That is, do managers blame industry problems on regulators rather than search for creative solutions?) Decomposing the economic engine What is our basic value proposition How have we segmented the market? Concept of What kind of customers do we serve? Served Market Where are our customers?
Where in the business system do we take
profit? Where do and Revenue our margins come from? Marginhas What structure determined the size of our margins? What are the major cost and price drivers? What do we believe we know how to do well? What physical infrastructure supports our business? Configuration of What kinds of skills predominate in our Skills & Assets company? What is the trejectory of our development spending?
How alert are we new value delivery models?
Flexibility and How easily could investment programs be Adaptiveness reoriented? How easily could the infrastructure be reconfigured? Which constituencies would most resist change? Finding the limits of the Current Economic Engine Concept of Served What customers and needs Market arent we serving?
Revenue and Could profits be extracted at a
Margin Structure different point in the value chain?
Configuration of Might customers needs be better served
Skills & Assets by an alternate configuration of skills and assets? Flexibility and What is our vulnerability to new rules Adaptiveness of the game? Strategy as Form Filling Strategy Planning Crafting Strategic Architecture Planning Goal Incremental improvement Rewriting industry in market share and rules and creating position new competitive space Planning Formulate and ritualistic Exploratory and Process open-ended Existing industry and An understanding of market structure as the discontinuities and base line competencies as the base line Industry structure analysis A search for new (segmentation analysis) functionalities value chain analysis, or new ways of cost structure analysis delivering competitor bench traditional marking, etc.) functionalities
Tests for fit between Enlarging oppor-
resources and plans tunity horizons
Capital budgeting and Tests for signifi-
allocation of resources cance and timeli- among competing ness of new projects opportunities Individual businesses Development of as the unit of analysis plans for competence acquisition and migration Development of opportunity approach plans
The corporation as the
unit of analysis
Planning resources Business unit Many managers
Few experts The collective wisdom of the company Staff driven Line and staff driven Old Frame Strategy Long term = Distant return Ambition = Risk-taking Commitment = Big Bucks
New Frame Strategy
Long term = A point of view about industry evolution and how to shape it Ambition = A stretching aspiration that is de-risked through the tools of resource leverage Commitment = An intellectual and emotional commitment that ensures consistency and constancy Twenty questions about the future 1. Does senior management have a clear and collective point of view how the future will be or could be different? 2. Do senior managers see themselves as industry revolutionaries or are they content with the status quo? 3. Does the company have a clear and collective agenda for core competencies, deploying new functionalities and evolving the customer interface? 4. Is top management allocating as much time and intellectual energy to pre-market competition as to market competition? 5. Is the company exercising an influence over industry evolution that is disproportionately large, given the companys resources? 6. Do all employees share an aspiration for the enterprise and possess a clear sense of the legacy they are working to build? 7. Is there a significant amount of stretch in that aspiration that is, does it exceed current resources by a substantial amount? 8. Has senior management operationalized that aspiration into a clear set of corporate challenges? 9. Is ti clear to everyone in the company how their individual contribution links into the companys overall aspiration? 10. Have managers clearly identified current corporate and industry conventions and subjected those conventions to close scrutiny? 11. Are the conditions under which the firms existing economic engine might run out of steam clear to all managers? 12. Do employees at all levels possess a deep sense of urgency about the challenge of sustaining success? 13. Does the firms opportunity horizon extend sufficiently far beyond the boundaries of existing product markets? 14. Is there an explicit process for identifying and exploiting opportunities that lie between or transcend individual business units? 15. Does the management and allocation of core competencies receive as explicit attention as the management and allocation of more tangible resources? 16. Are there a sufficient number of ongoing marketplace experiments to ensure that the company learns faster than rivals about the precise location of tomorrows opportunities? 17. Does the firm have a capacity for global preemption (either using its own infrastructure or piggy-backing on partners)? 18. Have all senior potential opportunities for resource leverage been fully exploited? 19. Are senior executives confident that they will leave a legacy to future managers and employees that exceeds the legacy they themselves inherited? 20. Are you having fun? (The answers to the first 19 questions are irrelevant if you are not enjoying the challenge of competing for the future). Discussions Findings..