30 strategy models over 75 years
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This document outlines 30 strategy models used over the past 75 years. It provides brief descriptions of 10 models, including SWOT analysis, Porter's 5 Forces model, Porter's 3 generic strategies, Burgelman's strategy dynamics model, Porter's value chain model, core competencies and the resource-based view, Nonaka and Takeuchi's knowledge spiral, Peters, Athos and Waterman's 7S framework, scenario planning, and Ansoff's growth grid. The models are tools for strategic planning and analysis that help assess the competitive environment and identify appropriate strategies.
30 strategy models over 75 years
- 1. 30 Strategy Models over 75 years ABG Springboard and Turning Point Groups Shiv 3 May 2021 Shiv- 30 Strategy Models over 75 years
- 2. This deck outlines the various strategy tools we use, for your basic awareness and understanding. There are 30 models that cover about 75 years of strategy thinking. Shiv- 30 Strategy Models over 75 years
- 3. 1. SWOT analysis Strengths Weaknesses Opportunities Threats Shiv- 30 Strategy Models over 75 years The most used model in all companies, because it is simple to understandand use. Good to remember that X axis is about impact and Y axis is about probability It is a qualitativemodel, strength of assumptionsis important
- 4. 2. Porter’s 5 Forces Model Strategy has a competitive context that involves buyers, sellers, substitutes. This model helps you see this more holistically. It’s a descriptive model, not a prescriptive one. Think about power in which box is either increasing or decreasing and why Shiv- 30 Strategy Models over 75 years Rivalryfrom existing competitors Threat of new entrants Buyer bargaining power Threat of substitutes Supplier bargaining power
- 5. 3. Porters 3 Generic Strategies Cost Difference Broad 1.Cost leadership 2. Differentiation Narrow 3. Focus 3.Focus Shiv- 30 Strategy Models over 75 years Porter argues that there are 3 Generic strategies to deliver aboveaverage results in any industry: 1. You can be the cost leader via efficiency 2. You can develop uniqueproduct offerings or services offerings 3. You can focus on niche segments or markets. You must ask who is the cost leader in your market, who is the most innovative, who is stuck in the middle. The normal journey is to get to low cost first, then differentiate and finallybroader differentiationin a broader market.
- 6. 4. Burgelman’s Strategy Dynamics Model Companysticks with industry rules Companychanges industry rules Environmentis rule abiding Low industry change Controlledindustry change Environmentis rule changing Independent industry change Runawayindustry change Shiv- 30 Strategy Models over 75 years The buildingof a strategy does not happenin a vacuum. It happensin the context of an environmentthat can be stable or dynamic. It is important to know what kind of an industry you are in and what kind of a company you are. Manytimes companies tend to say x company can do it but we cannot , invariableoffering excuses to give because they dint want to change.
- 7. 5. Porter’s ValueChain Shiv- 30 Strategy Models over 75 years Supplier Value Chain OrganizationalValue Chain Buyer Value Chain Support activities Infrastructure HR Technology Procurement How can these create value for a buyer Primary activities Inboundlogistics Operations Outboundlogistics Sales and marketing Service Profit poll Think of your company as a chain of activities within a chin that captures value in the industry. How well do the company functionsperform and add value? How can we improve the collaboratingwaysof working between functions to create valuefir the buyer? Are the individualfunctions the best in industry? How does your way of creating value map vs competition?
- 8. 6. Core Competencies, Resourcebased view Shiv- 30 Strategy Models over 75 years Understanding external environment Understanding Internal dynamics Core competencies Understanding competitive dynamics Core competencies are a combination of resources and capabilitiesavailable in a company. They become strategic assets when they have distinctive capability,particularlywhen it helps achieve results. Look at the external environmentand try and get flexible to met the external changes. The companyinternal dynamics are held together by a set if values and behaviors A company has tacit knowledge of what’s happeningwith competitors and the market.
- 9. 7. Nonaka and Takeuchi’s Knowledge Spiral • Your company wants to know what you are good at and how you can turn that into an advantage. • A key component is how you learn and what you know. • Tacit knowledge is what we know and don’t need to write it down. • Explicit is what we know and has ben codified and clearly stated • Socialization is where most new knowledge comes from, this is about how learning is shared in a company. • Internalization is how we formally teach what’s written down. • Externalization is to write down your recipes using models so that they are easy to learn • Combination outs your recipe and formal knowledge together to create better ways to achieve your goals. Shiv- 30 Strategy Models over 75 years
- 10. 8.Peters,Athos and Waterman’s 7 S framework Structure Strategy Systems Superordinate goals Skills Staff Style Shiv- 30 Strategy Models over 75 years 1. Strategy dependson combiningmany parts in a way that can deliver superior value 2. This framework shows that strategy is mote than managing a portfolio. 3. Organizationismore than structure. 4. Each part of the organization mustbe aligned to create value. 5. The key is to make the 7 work in a coherent way 6. Is there sufficient tension between these parts and what opportunitiesexit there?
- 11. 9. Scenario Planning • List the assumptions you are making about the future. • Assumptions must be open and transparent and hence increase range of options to discuss. • Focus moves form what’s happening globally to what competition is doing • Consider a range of obvious and less obvious options. • Making sense : what does a trend mean? • Anticipate changes: What might happen in the future? What might competition do? • Learning: how can we learn about what’s happening and with our customers? Are we experimenting with the new learning? • Develop strategy: Are we flexible enough to deal with an uncertain future? Shiv- 30 Strategy Models over 75 years
- 12. 10. Ansoff Growth Grid Shiv- 30 Strategy Models over 75 years Current product/service New product product/service Current market Increase penetration, what is retaliation and legalities? Product development, how expensive and how risky? New market Market development, new users and places? Diversification,will it be positive or negative? 1. This is a simple model and many American firms used this to explore global markets in the 1970 s and 1980s. 2. Start by listing current products and markets. 3. Look at SWOT 4. Think about existing capabilitiesfor current markets and how can they be stretched.
- 13. 11. BCG Matrix High Relative market share Low relative market share High market growth Stars Question marks Low market growth Cash cows Dogs Shiv- 30 Strategy Models over 75 years 1. This is the staple diet of MBAs. 2. When Bruce Henderson did this, it was more of a capitalallocationmodel, where do you invest and why do you invest? 3. The definitionif a market is critical, if you define too broadlyor narrowly, then it makes no sense. 4. In the past market share was equated with profitabilityand there was enough correlation,that’snot true anymore. 5. The simplistic use of this can lead to a stupid strategy
- 14. 12. Kim and Mauborgne’s four actions New Value Curve Which factors should be reduced below industry average? Which factors should be created that the industry has never offered? Which factors should be raised well above industry benchmark? Which factors should be eliminated that industry takes fir granted? Shiv- 30 Strategy Models over 75 years 1.Look at yourproduct in terms of customer and non customer preferences. 2.You could reduce some attribute, eliminateit completelyor raise the level of that attributeor create a future attribute 3.You are trying to avoidred oceans where everyone is competing You are trying to find blue oceans
- 15. 13. Greiner’s Growth and Crisis Model Phase 1 Creativity Phase 2 Direction Phase 3 Delegation Phase 4 Co- ordination Phase 5 Collaboration Phase 6 Alliances Large Orgn Red tape crisis Growth crisis Mid size Autonomy crisis Control crisis Start Up Leadership crisis Shiv- 30 Strategy Models over 75 years Time
- 16. 14.De Wit and Meyer’s Strategy Tensions Shiv- 30 Strategy Models over 75 years Find the best Make a choice Strike a balance Best of both Pressure for A Pressure for B 1. This model argues that strategy is about choices that come from different views. 2. This s about trade offs 3. Every choice has an opposite that is attractiveor unattractive. 4. In every situation, consider the extreme opposite. 5. The aim is to get a devilsadvocate perspective
- 17. 15.Cummings and Wilson- Orientationand Animation High Animation NATO- No action talk only organization Excellent, but don't pursue too many things Low Animation Doomed Needs a gear shift, lethargic orgn Low orientation High Orientation Shiv- 30 Strategy Models over 75 years 1. Strategy helpsfocus people and to motivatethem 2. Use animationas a synonym for motivation 3. How is the strategy being communicated? 4. How is it being understood? 5. What fears is it creating in the orgn?
- 18. 16. Lewin’s forcefield analysis Existing Driving Restraining Future Outsi de What is happening outside? Tailwinds Head winds What will happen outside Inside What is happening inside? Tailwinds Head winds What will happen inside Shiv- 30 Strategy Models over 75 years 1. This is the parent of change models 2. It examines forces that impede desired change and enablers of change 3. It argues that headwinds must be reduced and increase/use the power of tailwinds 4. Describe the future situation
- 19. 17. Kotter’s 8 phases of change 1 Establishsense of urgency 2 Create coalition 3 Develop clear vision 4 Share vision 5 Empowerpeople to clear 6 Secure short term wins 7 Consolidateand keep winning 8 Anchor Shiv- 30 Strategy Models over 75 years 1. In this model there are 8 steps and it starts with establishinga sense of urgency. 2. Buildingcoalitionfor change is important 3. Short term wins are important to pursue a strategy 4. At some point some changes are needed
- 20. 18. Kaplan and Norton’s balancescorecard Vision and Strategy Financial measures for our shareholders Processes, what processes should we be best at? Learning, how do we keep learning and improving? Customer, how should we appear to customers? Shiv- 30 Strategy Models over 75 years 1. Once you havea strategy, you must measure how it is doing. 2. Strategy is more than financial measures. 3. There is nothing called a perfect scorecard 4. You can create a range of strategic focus items. 5. It is good to have a sense of measurement. 6. Don’t get obsessed with the measures or the scorecard, a rough progress in the right direction is better than no progress.
- 21. 19. Hrebiniak’s modelof strategy execution • Execution results • Leadership • Organization culture • Power and Influence Corporate strategyand business strategy Corporate structureand business structure Change management Incentives and controls Shiv- 30 Strategy Models over 75 years 1. In the 2000s there is a lot more focus on execution of strategy. 2. It is about managing the portfolio. 3. Each of the parts interacts with the other parts 4. This is about organizing effort in the desired direction
- 22. 20. Hammer andChampy – Businessprocess redesign 8.Ongoing continuous improvement 7. Evaluate the new process 6.Make new process operational 5.Impelment the new process Business Process reengineering 1. Develop vision and initiatives 2. Understand existing processes 3.Identify process for redesign 4.Identify change levers Shiv- 30 Strategy Models over 75 years 1. Processes are importantto deliver results 2. A lot of strategy fails because new processes don’t come in 3. One needs to review existing processes and then change it. 4. Don’t be a slave to a process that doesn’t deliver results, change it or fix it. 5. Many organizationshave archaic processes
- 23. 21.Michaud and Thoenig’s Strategic Orientation Strong pressure Mercenary Organic Weak pressure Fragmented Self sufficient Short Term Long term Shiv- 30 Strategy Models over 75 years 1. Organizationshavedifferent perceptions of how much they need to change. 2. Mercenary organizationsface the heat but react in a short term manner 3. Organic organizationsrecognize the challenge but take a long time to correct 4. Fragmented organizationsare set in their ways. 5. Self sufficient organizationssense weak signals but are willingto put change in motion.
- 24. 22.Burgelman and Grove’s Strategy bet model Sufficient cash reserves Safe bet Wait to bet Insufficient cash reserves Bet the company Desperate Bet Validated Opportunity Not yet validated opportunity Shiv- 30 Strategy Models over 75 years Cash Reserves AutonomousOpportunity 1. Its difficult for any organizationto pursue multipleopportunities 2. You can alter the choice of resources by looking at level of change 3. You need level of validationto take bets 4. It is wise to take a betting the company strategy after some part of the gamble is successful 5. You need time to change, you need cash to come in before you burn it on a bet.
- 25. 23. Argyris’s double loop and single loop learning 1. Single loop learning involves actions and how they lead to mismatch or errors. 2. Double loop learning involves actions, mismatch or errors to governing values Shiv- 30 Strategy Models over 75 years • Strategic plans lead to learning, each time something works or doesn’t work, it can teach a lesson. • The issue is whether the learning staysat the operational level orto a broader organizationlevel • For example, look at last year, what worked and hat didn’t work, how much of that learning is at all levelsthat need to learn so that the next year is better? • Is there any mismatch between strategy and how the execution is playingout in terms of recrafting or learnings?
- 26. 24.Mintzberg’s Deliberate and Emergent strategy Shiv- 30 Strategy Models over 75 years Intended Strategy DeliberateStrategy RealizedStrategy Unrealized Strategy Emergent Strategy 1. It is good to know differences between planningsomething deliberatelyandwhat actually happens. 2. Look at past statements and annual reports and see how much of what’s said is deliberate 3. Look for patterns over time 4. Think of where the growth ideas came from 5. What role did luck play on the way?
- 27. 25. Johnson’s white spacemodel Poor orgn fit Rare, essentially some legacy SBU hanging around for divestment White Space Good orgn fit Core business Adjacency Existing customers New customers Shiv- 30 Strategy Models over 75 years Nature of Customer Nature Of Opportunity 1. After generating new ideas, you must check how they fit in. 2. If they are a good fit, what are you doing with the opportunity? 3. Think about how many other people could have the same idea?
- 28. 26. Prahalad and Hart’s Bottom of the Pyramid More than 100,000 but less than a million $ - 391 million people Between $10,000 and $99,999 – 1.1 billion people Less than $10,000 per annum – 3.5 billion Shiv- 30 Strategy Models over 75 years More than $ 1 million – 36 millionpeople 2010 data 1. The idea is that there is a bigger and attractive market at the bottom, of people who earn less than $ 2 a day. 2. Me, RajnikantSabnavisand Kimsuka Narasimhanput together the shampoo case study slides that feature in this book. 3. This thinkingmade many boards challengethe CEOs on whether they had a India, China strategy, or emerging markets strategy. 4. This approachis called the sachet-isationof products and services. 5. People at the bottom of the pyramidare more brand consciousthan these at the top, I’ve alwayssaid “ rich people buy brandsfor vanity, poor people buy brands for security” 6. Most MNCsfailed with BOP, because they didn’t localize the strategy
- 29. 27.Stacey’s Strategy from Complexity High Lo Complicated Simple to proceed Low Hi complex Anarchy Med Complicatedpath Low High Shiv- 30 Strategy Models over 75 years Agreement Certainty 1. In every company thee is a certain level of agreement , disagreement on what’s happeningin the external world. 2. If your companyhas high levels of uncertaintyand high level of disagreement then you are at the edge of chaos. 3. If there is too much agreement, the you are sleep walking 4. High certainty of a market or segment invariablymeans lower profitability.
- 30. 28. Hart’s Sustainability Value framework A strategy around clean technology, this gets innovation and repositioning A shared roadmap for meeting unmet needs, this gets growth A strategy around pollution prevention, this gets cost down and risk reduction A strategy around product stewardship, this gets corporate reputation and legitimacy Sustainable Value Shiv- 30 Strategy Models over 75 years 1. Start by understandingthe sustainabilityof your existing strategy. 2. Don’t view sustainability as conforming to regulations 3. Focus on efforts for cleaner technology in your industry 4. External groups will be vigilantabout this in the future.
- 31. 29. House of Strategy Shiv- 30 Strategy Models over 75 years Values – Culture and Capabilities Goal 1 Goal 2 Goal 3 Goal 4 Goal 5 Mission – The Purpose of your work Vision Desirable Future 1. How does the vision describe the future? 2. How well does the mission indicate what we are trying to achieve on a dailybasis? 3. Are values generic or do they encourage a specific way of working and build a uniqueculture? 4. Remove anything that confuses 5. Don’t be generic or motherhood in the words or sentences you use
- 32. 30. Innovation+ Strategy = Adaptability Recognize Understand Necessary Adaptation Shiv- 30 Strategy Models over 75 years Strategy and Innovation 1. The RUN loop 2. Innovationsis about creating new ideasand making those ideas useful 3. Strategy is about shaping the future 4. Adaptabilityis the abilityto recognize the need to change. All success comes from successful adaptation.