03 WP Strategic Planning and Implementation
03 WP Strategic Planning and Implementation
Strategy is about
making choices,
trade-offs; its about
deliberately choosing
to be different.
MICHAEL PORTER
www.decisionlens.com
When strategic planning creates an impetus for change, leaders are faced
with the challenge of breaking existing mental models and busting organizational silos while simultaneously harvesting the knowledge imbedded in
decentralized or shifting power structures. Achieving this in a collaborative
and transparent way is vital to good decision making and achieving breakthrough results. Failure to do so is a formula for strategic disaster.
We will discuss the application of Collaborative Decision Making (CDM) as a
means of bringing together the knowledge of the diverse stakeholders often
involved in strategic analysis to shape the strategic thrust of the organization. We will discuss how CDM can increase the levels of collaboration and
transparency with which an organization gains the insights necessary to
establish its direction or conquer new or uncharted territories to create and
sustain competitive advantage.
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Implementation
Environment
Assessment
Strategy
Aligned Goals
& Objectives
Capabilities
& Resources
Assessment
Figure 1
Medium
High
Selective Investment/
Divestment
Low
Industry Attractiveness
Grow/Penetrate
Specialize
Seek Niches
Consider Acquisitions
Seek dominance
Grow
Maximize investment
Controlled Exit
or Harvest
Selective Harvest
or Investment
Specialize
Seek niches
Consider exit
Controlled Harvest
Prune lines
Minimize investment
Position to divest
Low
Medium
High
Figure 2
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Demand Uncertainty
Industry Profitability
Industry Competitiveness
Global Opportunity
0.0
0.1
0.2
0.3
0.4
0.5
0.6
Political
Economic
Social
Technological
Market Share
Brand Equity
0.00
Entry Barriers
0.05
0.10
0.15
0.20
Production Capacity
Profitability (Relative to Competitiors)
Figure 3
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0.03
0.06
0.09
0.12
0.15
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Using the pairwise approach, participants to the analysis were asked a series of questions like the following;
After everyone has submitted their judgments, the judgments are revealed on a single screen. This is illustrated
in Figure 4.
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nate Competitive Environment given the previous judgments. This type of inconsistency is typically seen when
either the definitions of the criteria are not clear, or
when too many criteria are being applied and confounding participants logic. Inconsistency values smaller
than 10% (0.10) indicate group consistency. If the number exceeds that level (>0.10), the software application
provides insight into those judgments creating inconsistency and can demonstrate the impact on the overall
priority of the criteria.
Another important measure derived from the judgment
exercise is Alignment. If all members of the group were
to choose the same strength of preference, on the same
side of each pairwise comparison, the group would be
Figure 5: Group priorities for Market Attractiveness criteria with Inconsistency and Alignment measures
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rating definition
Weight
Constrained
15%
(.15)
Marginal
35%
(.35)
Sufficient
100%
(1.0)
Excess
85%
(.85)
Once these rating scales were established for each criterion, stakeholders were asked to rate the SBUs against
each criteria. The software then takes the scores of these
ratings and multiplies them by the criteria weights and
sums them across all criteria to determine the score for
each SBU. These scores provide a measure of the value
of each SBU based on the prioritized criteria making
up the Market Attractiveness and Business Competitive
Strength assessments for the organization.
Completion of these rating discussions and the capturing of judgments along the way created the data to
form an aggregated view of the groups opinion of the
various SBUs. Using the software to conduct sensitivity analysis allowed decision makers to quickly see the
drivers and the stability of the priorities. Applying this
technique to the Market Attractiveness dimension they
were able to quickly see beyond the immediate rank
attractiveness that:
0.00
0.05
0.10
0.15
0.0
0.20
SBU Turtle .1
0.2
0.4
0.6
0.8
0.4
0.6
0.8
1.0
0.0
0.2
0.0
1.0
0.2
0.4
0.6
0.8
1.0
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Budget $19,800,000.00
Project
0.03
0.06
0.09
0.12
0.15
SBU Lion
$ 3,500,000.00
SBU Tiger
$ 6,000,000.00
SBU Rabbit
$ 2,700,000.00
SBU Bear
$ 1,000,000.00
SBU Turtle
$ 4,300,000.00
SBU Cheetah
$ 10,000,000.00
Project
Base Year
Request
Scenario 1
(Base)
Scenario 2
(MA)
Scenario 3
(BSC)
SBU Lion
$ 3,500,000.00
100%
42%
100%
SBU Tiger
$ 6,000,000.00
68%
100%
0%
SBU Rabbit
$ 2,700,000.00
100%
100%
100%
SBU Bear
$ 1,000,000.00
100%
100%
100%
SBU Turtle
$ 4,300,000.00
0%
0%
100%
SBU Cheetah
$ 10,000,000.00
85%
86%
82%
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High
8.5
85%
68%
Medium
5.1
Low
Industry Attractiveness
SBU Turtle
SBU Lion
SBU Tiger
SBU Rabbit
SBU Cheetah
SBU Bear
Unfunded
Low
Medium
High
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Base Year
Request
Scenario 1
(Base)
Scenario 4
(Turtle Divestiture)
SBU Lion
$ 3,500,000.00
100%
100%
SBU Tiger
$ 6,000,000.00
68%
48%
SBU Rabbit
$ 2,700,000.00
100%
100%
SBU Bear
$ 1,000,000.00
100%
100%
SBU Turtle
$ 4,300,000.00
0%
28%
SBU Cheetah
$ 10,000,000.00
85%
85%
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Dogs
Cash Cows
Low
High
Market Share Growth
Project
Base Year
Request
SBU Lion
Stars
Question Marks
High
Stars
High Share/High Growth
(Invest)
SBU Turtle
Dogs
Low
Question Marks
Low Share/High Growth
(Analyze)
High
Low
Cash Cows
SBU Lion
SBU Rabbit
SBU Cheetah
3%
SBU Tiger
SBU Bear
Unfunded
Low
High
Scenario 1
(Base)
Scenario 2
(MA)
Scenario 3
(BSC)
Scenario 4
(Turtle Divestiture)
Scenario 5
(BCG Matrix)
$ 3,500,000.00
100%
42%
100%
100%
3%
SBU Tiger
$ 6,000,000.00
68%
100%
0%
48%
100%
SBU Rabbit
$ 2,700,000.00
100%
100%
100%
100%
100%
SBU Bear
$ 1,000,000.00
100%
100%
100%
100%
100%
SBU Turtle
$ 4,300,000.00
0%
0%
100%
28%
0%
SBU Cheetah
$ 10,000,000.00
85%
86%
82%
85%
100%
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Conclusions
We have shown with this analysis that CDM is a means
of creating a meaningful and representative set of criteria, which can be weighted to the specific strategic
environment when applying an analysis framework like
the GE-McKinsey, Market Attractiveness versus Business
Competitive Strength matrix to strengthen these analyses.
We have also shown how the resource optimization
scenarios using this approach can give greater insights
into the high level considerations outlined in the various
segments of the strategic matrix to guide the process of
probing and establishing actionable insights.
Additionally, using sensitivity analysis helps teams
quickly understand the key drivers of priorities and
can help to draw out strategic objectives within a given
SBU. By highlighting major trade-offs, this approach
can prioritize and focus the use of allocated resources to
mitigate weaknesses, build strengths, focus efforts, and
advance the preparation of future portfolio moves.
Lastly, sensitivity analysis has been shown to create a
variety of views into the strategic situation. By flexing to
these various views, the different sensitivity analyses and
optimizations we can draw from give richer insights to
guide and shape specific objectives and courses of action.
Environment
Business Units
Portfolios
Programs
Projects
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