Strategy Process

Andreas Chang, 15 Jun2 2024

 Chapter 2
Strategy Process

1 2 3 4 5
Explain the role of Outline how you Compare and Describe the roles of Evaluate the
strategic leaders become a strategic contrast the roles of vision, mission, and strategic
and what they do. leader. corporate, business, values in a firm’s implications of
and functional strategy. product-oriented
managers in and customer-
strategy and oriented vision
implementation. statements.

6 7 8 9 10
Justify why Evaluate top-down Explain the causes Describe and Compare and
anchoring a firm in strategic planning, of strategic evaluate the two contrast devil’s
ethical core values scenario planning, dissonance and how distinct modes of advocacy and
is essential for long- and strategy as to navigate strategic decision making. dialectic inquiry as
term success. planned emergence. inflection points frameworks to
improve strategic
decision making.
 1
Explain the role of
strategic leaders
and what they do.

Pre-test
 1
Explain the role of
strategic leaders
and what they do.

Strategic Leadership Power

Executives’ use of power and • The ability to influence
influence to direct the activities others to do things.
of others when pursuing an • Formal authority (their
organization’s goals.
position), informal
authority (persuasion)
• Successful use of power
and influence
• to direct the activities of
others when
• pursuing an
organization’s goals
• Enabling organizational
competitive advantage
 1
Explain the role of
strategic leaders
and what they do.

What is Strategic
Leadership?

Enabling
Successful use of Directing the Pursuing an organizational
Power:
power and influence activities of others organization’s goals competitive
advantage

The ability to
influence others to do
things

Formal Authority
(their position),
Informal Authority
(persuasion
 1
Explain the role of
strategic leaders
and what they do.

Public Events
2%
Business Meals
5%
Calls
6%
Email
7%

Working Alone
13%
Face-to-Face Meetings
67%

Source Data: O. Bandiera, A Prat, and R. Sadun (2012)

 1
Explain the role of
strategic leaders
and what they do.
 Chapter 2
Strategy Process

1 2 3 4 5
Explain the role of Outline how you Compare and Describe the roles of Evaluate the
strategic leaders become a strategic contrast the roles of vision, mission, and strategic
and what they do. leader. corporate, business, values in a firm’s implications of
and functional strategy. product-oriented
managers in and customer-
strategy and oriented vision
implementation. statements.

6 7 8 9 10
Justify why Evaluate top-down Explain the causes Describe and Compare and
anchoring a firm in strategic planning, of strategic evaluate the two contrast devil’s
ethical core values scenario planning, dissonance and how distinct modes of advocacy and
is essential for long- and strategy as to navigate strategic decision making. dialectic inquiry as
term success. planned emergence. inflection points frameworks to
improve strategic
decision making.
 2
Outline how you
become a strategic
leader.

How Do You Become A Strategic Leader

Upper-echelons Level-5 Leadership

Theory Pyramid

A conceptual framework that A conceptual framework of

views organizational leadership progression with
outcomes - strategic choices five distinct, sequential levels.
and performance levels - as
reflections of the values of the
members of the top
management team.
 2
Outline how you
become a strategic
leader.

Leaders Can Leaders Can

Positively Impact Destroy
Performance Shareholder Value

• Mark Zuckerberg - Facebook • Ken Lay - Enron

• Elon Musk - Tesla & SpaceX • John Sculley - Apple
• Jeff Bezos - Amazon • Bernard Ebbers - WorldCom
• Sheryl Sandberg - Facebook • Richard Fuld - Lehman Brothers
• Angela Ahrendts - Apple • Rochard Wagoner - General
• Mary Barra - General Motors Motors
• Howard Schultz - Starbuck • Robert Nardelli - The Home
Depot and Chrysler
• Ron Johnson - JC Penney
 2
Outline how you
become a strategic
leader.

How Do You Become A Strategic Leader?

1 • It is a function of innate abilities and

learning
Great Companies

Have things in
common:

2
• Leadership actions reflect:
• Age, education, and career experience • Sustained competitive
• Personal interpretations of situations
advantage.
• Stock returns of
almost 7X the general
• Upper Echelon’s Theory: market.

3
• Organizational outcomes reflect the values of • Transition from
top management team. average performance
• Their uniques perspectives
• Shaped by personal circumstances, values, and to sustained
experience advantage.
• Consistent patterns of
leadership
• Summarized in the

4
Level 5 Leadership
• Outcomes include: pyramid
• Strategic choices and performance levels.
 2
Outline how you
become a strategic
leader.

“A leader is best when

Level
5: people barely know he
EXECUTIVE exists. Not so good when
Build enduring
greatness through people obey and acclaim
a paradoxical blend of
personal humility and
him. Worse when they
professional will despise him. But of a good
leader who talks little when
Level 4: EFFECTIVE LEADER
Catalyzes commitment to and his work is done his aim
vigorous pursuit of a clear and
compelling vision, stimulating higher
ful lled they will say: ‘We
performance standards did it ourselves.’”
Lao-tzu (c. 565 B.C.)
Level 3: COMPETENT MANAGER
Organizes people and resources toward the
e ective and e cient pursuit of predzrtemined
objectives

Level 2: CONTRIBUTING TEAM MEMBER

Contributes individual capabilities to the achievements of group
objectives an works e ectively with others in a group setting

Level 1: HIGHLY CAPABLE INDIVIDUAL

Make productive contributions through motivation talent,
knowledge, skills, and good work habit
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 2
Outline how you
become a strategic
leader.

Level
5:
Corporation Entrepreneur
EXECUTIVE
Build enduring
greatness through

Personal growth in response to business needs

a paradoxical blend of
personal humility and

Distinct positions within corporate structure

professional will

Level 4: EFFECTIVE LEADER

Catalyzes commitment to and
vigorous pursuit of a clear and
compelling vision, stimulating higher
performance standards

Level 3: COMPETENT MANAGER

Organizes people and resources toward the
e ective and e cient pursuit of predzrtemined
objectives

Level 2: CONTRIBUTING TEAM MEMBER

Contributes individual capabilities to the achievements of group
objectives an works e ectively with others in a group setting

Level 1: HIGHLY CAPABLE INDIVIDUAL

Make productive contributions through, talent, knowledge, skills,
and good work habit
ff
ffi
ff
 2
Outline how you
become a strategic
leader.

Corporation Entrepreneur The progression of

Leaders Through
Level
5: the Pyramid

Personal growth in response to business needs

EXECUTIVE

Distinct positions within corporate structure

Build enduring
greatness through a
paradoxical blend of
personal humility and
Each level build
professional will upon the previous
one.
Level 4: EFFECTIVE LEADER
Catalyzes commitment to and vigorous
pursuit of a clear and compelling vision,
stimulating higher performance standards
Prior levels must
be mastered
before moving on.
Level 3: COMPETENT MANAGER
Organizes people and resources toward the e ective
and e cient pursuit of predzrtemined objectives

Each level helps

individuals
Level 2: CONTRIBUTING TEAM MEMBER develop capacity
Contributes individual capabilities to the achievements of group
objectives an works e ectively with others in a group setting for great success

Level 1: HIGHLY CAPABLE INDIVIDUAL A Level 5

Make productive contributions through, talent, knowledge, Executive:
• Works to help organization
skills, and good work habit succeed
• Helps others to reach their full
potentials
ffi
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 Chapter 2
Strategy Process

1 2 3 4 5
Explain the role of Outline how you Compare and Describe the roles of Evaluate the
strategic leaders become a strategic contrast the roles of vision, mission, and strategic
and what they do. leader. corporate, business, values in a firm’s implications of
and functional strategy. product-oriented
managers in and customer-
strategy and oriented vision
implementation. statements.

6 7 8 9 10
Justify why Evaluate top-down Explain the causes Describe and Compare and
anchoring a firm in strategic planning, of strategic evaluate the two contrast devil’s
ethical core values scenario planning, dissonance and how distinct modes of advocacy and
is essential for long- and strategy as to navigate strategic decision making. dialectic inquiry as
term success. planned emergence. inflection points frameworks to
improve strategic
decision making.
 3
Compare and
contrast the roles of
corporate, business,
and functional
managers in
strategy and
implementation.

The Strategy Process

Strategy Strategy
Formulation Implementation
• The choice of strategy • Organization,
• Where and how to coordination, integration.
compete • How works gets done.
• The execution of strategy.

Three distinct areas: corporate, business, and functional

 3
Compare and
contrast the roles of
corporate, business,
and functional
managers in
strategy and
implementation.

Corporate Strategy
• Where to compete?
• Industry, markets, and
geography?

Business Strategy
• How to compete?
• Cost leadership,
differentiation, or value
innovation.

Functional Strategy
• How to implement a chosen
business strategy?
• Different strategies require
different activities across the
various functions
 3
Compare and
contrast the roles of
corporate, business,
and functional
managers in
strategy and
implementation.

Strategic Formulation and Implementation across Levels:

Corporate, Business, and Functional Strategy

Corporate
Headquarters
Strategy
Where to compete? Strategic Business
Unit (SBU):
Stand alone divisions of
a larger conglomerate,
Business each with their own profit
Strategy
SBU 1 SBU 2 SBU 3
How to compete? How to compete? How to compete?
and loss responsibility

Business Function 1 Business Function 1 Business Function 1 Business Function 1

Functional
Strategy How to implement How to implement How to implement How to implement
business strategy? business strategy? business strategy? business strategy?

Kahneman, D (2011)
 Chapter 2
Strategy Process

1 2 3 4 5
Explain the role of Outline how you Compare and Describe the roles of Evaluate the
strategic leaders become a strategic contrast the roles of vision, mission, and strategic
and what they do. leader. corporate, business, values in a firm’s implications of
and functional strategy. product-oriented
managers in and customer-
strategy and oriented vision
implementation. statements.

6 7 8 9 10
Justify why Evaluate top-down Explain the causes Describe and Compare and
anchoring a firm in strategic planning, of strategic evaluate the two contrast devil’s
ethical core values scenario planning, dissonance and how distinct modes of advocacy and
is essential for long- and strategy as to navigate strategic decision making. dialectic inquiry as
term success. planned emergence. inflection points frameworks to
improve strategic
decision making.
 4
Describe the roles of
vision, mission, and
values in a firm’s
strategy.

VISION MISSION
• What is our purpose?
• How to accomplish our
• What do we want to
goals?
accomplish ultimately?

VALUES
• What commitments do we make?
• What safeguards do we put in
place?
• How do we act both legally and
ethically as we pursue our
vision and mission
 4
Describe the roles of
vision, mission, and
values in a firm’s
strategy.
De nition o
important, R
Developme
and Evalua

Vision 2035 Mission

The mission of BINUS University is to build the nation
and to contribute in global community development by
providing world class education by means of :
A World-class University, fostering and
empowering the society in building and • Educating BINUSIAN to develop exemplary characters
through holistic approach that meets global standards.
serving the nation. Educating BINUSIAN to be leaders with multiple skills by providing
holistic approach using global standards and hands-on entrepreneurial
learning experiences.
• Resolving the nation’s issues through high impact research.
Guiding BINUSIAN to resolve the nation’s issues through high impact and
internationally recognized research by integrating the nusantara’s diversity
and wisdom for enriching quality education.

Values • Fostering BINUSIAN as lifelong learners through self-

enrichment.
Nourishing BINUSIAN spirit to develop exemplary character through
personal and professional growth by leveraging best practices for lifelong
Based on our belief in God, THRIVING FOR EXCELLENCE
our passion for education, S ELALU BERUSAHA UNTUK MENJADI UNGGUL
learning.
and our view of a bright • Empowering BINUSIAN to continuously improve society’s
ERSERVERANCE
future, we are committed to
developing the nation and to
P ENUH KEGIGIHAN quality of life.
building a global community NTEGRITY
Transforming BINUSIAN to be empowering agents through community
through education and
technology.
I NTEGRITAS YANG TINGGI service programs that improve the quality of life needed for building and
ESPECT
serving the nation.
R ASA SALING MENGHORMATI • Being the main driver to enrich the BINUS Higher Education
This commitment is re ected system.
NNOVATION
in the values of Bina
Nusantara, which become I INOVASI BERKELANJUTAN Enriching the quality of Higher Education by utilizing the best practices to
the guidance of our actions: EAMWORK consolidate a world class Education system with a uni ed spirit to foster
T ERUS BEKERJA SEBAGAI SATU TIM and empower.
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 4
Describe the roles of
vision, mission, and
values in a firm’s
strategy.

Vision Strategic
A statement that
captures an
Intent
organization’s purpose A stretch goal that
and aspiration. It spells pervades the entire the
out what the entire organization with a
organization ultimately sense of purpose.
want to accomplish.
 4
Describe the roles of
vision, mission, and
values in a firm’s
strategy.
De nition o

Examples of Vision and Mission Statements

important, R
Developme
and Evalua

Tesla
01 Mission statement:
To create the most compelling car company of the 21st century by driving the world’s
transition to electric vehicles.
Vision statement:
To accelerate the world’s transition to sustainable energy.

Nike

02
Mission statement:
Create groundbreaking sports innovations, make our products sustainably, build a creative and
diverse global team, and make a positive impact in communities where we live and work.
Vision statement:
Bring inspiration and innovation to every athlete* in the world.

Ikea
Ikea
03 Mission statement:
Offer a wide range of well-designed, functional home furnishing products at prices so
low that as many people as possible will be able to afford them.
Vision statement:
To create a better everyday life for the many people.

Amazon

04
Mission statement:
We strive to offer our customers the lowest possible prices, the best available selection,
and the utmost convenience.
Vision statement:
To be Earth’s most customer-centric company, where customers can nd and discover
anything they might want to buy online.
fi
fi
 4
Describe the roles of
vision, mission, and
values in a firm’s
strategy.
De nition o
Examples of Vision and Mission important, R
Developme

Statements
and Evalua

Our Vision
Empowering our students to
Live with Passion and Lead
with Compassion

Our Mission
We nurture leaders in
Research, Industry and
Government to serve the
nation

[Link]
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 4
Describe the roles of
vision, mission, and
values in a firm’s
strategy.

The Interplay between Purpose-driven Vision,

Strategic Intent, and Core Competencies

Purpose-driven Vision

Strategic Intent:
• Outlines firm’s stretch goal.
Strategic Intent: • Is based on a firm’s vision
Stretch goal that • Actions based on vision will:
pervades the entire Strategic Intent • Build necessary resources
organization with a sense • Build capabilities
of purpose. • Ensure continuous
organizational learning
• Ensure learning from failure

Core Competencies
 4
Describe the roles of
vision, mission, and
values in a firm’s
strategy.

Vision MISSION

•wants
What an organization
to be, and •and
What an organization does,

•accomplish
what it wants to
ultimately •How to accomplish its vision
 4
Describe the roles of
vision, mission, and
values in a firm’s
strategy.

Vision
• Captures an organization’s aspiration.
MISSION
• Spells out what the organization wants
to accomplish.
• How to accomplish our goals?
• Identify the long term objectives • What an organization actually does
• Should be forward-looking and inspiring • The products and services it will provide
• The markets in which it will compete
• An
•
effective vision:
Is expressed as a statement
•
•
Should be forward-looking and inspiring
Should provide meaning for employees in pursuit
• Defines how the vision is accomplished
of the organization’s ultimate
goals
 Chapter 2
Strategy Process

1 2 3 4 5
Explain the role of Outline how you Compare and Describe the roles of Evaluate the
strategic leaders become a strategic contrast the roles of vision, mission, and strategic
and what they do. leader. corporate, business, values in a firm’s implications of
and functional strategy. product-oriented
managers in and customer-
strategy and oriented vision
implementation. statements.

6 7 8 9 10
Justify why Evaluate top-down Explain the causes Describe and Compare and
anchoring a firm in strategic planning, of strategic evaluate the two contrast devil’s
ethical core values scenario planning, dissonance and how distinct modes of advocacy and
is essential for long- and strategy as to navigate strategic decision making. dialectic inquiry as
term success. planned emergence. inflection points frameworks to
improve strategic
decision making.
 5
Evaluate the strategic
implications of product-
oriented and customer-
oriented vision
statements.

Vision Statements and

Competitive Advantage

Vision Statements and Firms

Performance are related

The relationship is strongest when:

• The vision is customer oriented

• Internal stakeholders help define the
vision
• Organizational structure align to the
vision, for example, compensation
 5
Evaluate the strategic
implications of product-
oriented and customer-
oriented vision
statements.

Customer oriented Product oriented

vision statement vision statement

• Allow companies to adapt to changing • Focus on improving existing products

environment and services
• Focus on problem solving for the • Defines a business in terms of goods
customer and service provided
• Defines a business in terms of • Forces managers to take a more myopic
providing solutions to customer needs view.
• Customer needs may change • Can hinder the understanding of the
• The means of meeting those needs may competitive landscape.
change also
• Examples: US Railroad companies.
• Examples Ford Motor Company:
• They were focused on the railroad
• Entered the market in the early 1900’s
• He didn’t build a better horse and buggy
business.
• Ford’s focus: “to provide personal mobility for • They should have been focused on
people around the the world transportation and logistics.
 5
Evaluate the strategic
implications of product-
oriented and customer-
oriented vision
statements. De nition o
important, R
Developme
Examples of Vision Statements and Evalua

Alibaba To make it better to do business anywhere.

To be Earth’s most customer-centric company, where customers can find and

Amazon
discover anything they might want to buy online.

Facebook To make the world more open and connected.

GE To move, cure, build and power the world

To organize the world’s information and make it universally accessible and

Google
useful.

Nike To bring inspiration and innovation to every athlete in the world.

SpaceX To accelerate the world’s transition to sustainable energy.

Tesla To be the best retailer in the hearts and minds of consumers and employees.
fi
 Chapter 2
Strategy Process

1 2 3 4 5
Explain the role of Outline how you Compare and Describe the roles of Evaluate the
strategic leaders become a strategic contrast the roles of vision, mission, and strategic
and what they do. leader. corporate, business, values in a firm’s implications of
and functional strategy. product-oriented
managers in and customer-
strategy and oriented vision
implementation. statements.

6 7 8 9 10
Justify why Evaluate top-down Explain the causes Describe and Compare and
anchoring a firm in strategic planning, of strategic evaluate the two contrast devil’s
ethical core values scenario planning, dissonance and how distinct modes of advocacy and
is essential for long- and strategy as to navigate strategic decision making. dialectic inquiry as
term success. planned emergence. inflection points frameworks to
improve strategic
decision making.
 6
Justify why
anchoring a firm in
ethical core values
is essential for long-
term success.

VALUES
• Organizational core values:
• Ethical standards and norms.
• Govern the behavior of individuals
• Provide stability to the strategy.
• Serve as guardrails to keep the
company on track

• Helps employees:
• Understand the company culture
• Deal with complexity.
• Resolve conflict.
 6
Justify why
anchoring a firm in
ethical core values
is essential for long-
term success.
 6
Justify why
anchoring a firm in
ethical core values
is essential for long-
term success.

Core Value
Mission: Values Statement
Strategic Commitments Statements of principles to
guide an organization as it
works to achieve its vision and
• Credible actions that • Organizational core fulfill its mission for both internal
back up the vision and values: conduct and external
interactions: it often includes
mission statements • Ethical standards and norms
explicit ethical considerations.
• Govern the behavior or
• The commitments are individuals
often: • Provide stability to the
• Costly strategy
• Long-term oriented • Serve as guardrails to keep
the company on track
Organizational Core
• Difficult to reverse
Values
Ethical standards and norms
• Helps employees: that govern the behavior of
• Understand the company individuals within a firm or
culture organization.
• Deal with complexity
• Resolve conflict
 Chapter 2
Strategy Process

1 2 3 4 5
Explain the role of Outline how you Compare and Describe the roles of Evaluate the
strategic leaders become a strategic contrast the roles of vision, mission, and strategic
and what they do. leader. corporate, business, values in a firm’s implications of
and functional strategy. product-oriented
managers in and customer-
strategy and oriented vision
implementation. statements.

6 7 8 9 10
Justify why Evaluate top-down Explain the causes Describe and Compare and
anchoring a firm in strategic planning, of strategic evaluate the two contrast devil’s
ethical core values scenario planning, dissonance and how distinct modes of advocacy and
is essential for long- and strategy as to navigate strategic decision making. dialectic inquiry as
term success. planned emergence. inflection points frameworks to
improve strategic
decision making.
 7
Evaluate top-down
strategic planning,
scenario planning, and
strategy as planned
emergence.

When setting the strategic process, strategic

leaders rely on three approaches:

Strategy as
Strategic Scenario
planned
planning planning
emergence
 7
Evaluate top-down
strategic planning,
scenario planning, and
strategy as planned
emergence.

Three Approaches to Strategy Process

Strategy as
Strategic Scenario
Planned
Planning Planning
Emergence

A formal A formal Strategic Plan,

top-down top-down but it is less
approach approach formal
 7
Evaluate top-down
strategic planning,
scenario planning, and
strategy as planned
emergence.

When setting the strategic process, strategic

leaders rely on three approaches:

Top-down strategic
planning:

A rational, data-driven
Strategic planning strategy process through
which top management
attempts to program future
success
 7
Evaluate top-down
strategic planning,
scenario planning, and
strategy as planned
emergence.

AAnalysis
• Vision, Mission, and values
• External Analysis
• Internal Analysis

F
Formulation
• Corporate Strategy
• Business Strategy
• Functional Strategy

I
Implementation
• Structure, Culture, and Control
• Corporate Governance, Business Ethics,
and Business Models

This framework :
• Explains and predicts differences in firms performance
• Helps leaders formulate and implement a strategy that can result in superior performance
 7
Evaluate top-down
strategic planning,
scenario planning, and
strategy as planned
emergence.

Top-Down Strategic Planning Overview

Top management
attempts to program
success through
analysis of:
Data-driven •
•
Prices
Costs
• Margins
strategy • Market demand
• Head count
process. • Production runs
• Five-year plans and budgets
• Performance monitoring
 7
Evaluate top-down
strategic planning,
scenario planning, and
strategy as planned
emergence.

Scenario Planning within the AFI Strategy Framework

Analysis

M rfor
Identify Multiple

Pe
on m
ito an
Future Scenarios

rin ce
Formulations

g
Develop Strategic
Plans to Address
op

Future Scenarios
o

Fmplementation
L
a ck
db

Execute
e
Fe

Dominant
Strategic Plan

an A
t Pl Ne ctiv
a n w ate
in ary Pl
an and Create Strategic
m s
Do ces if N E Options
a rd e ec xec Through Developing
N
isc if es ute
Alternative Plan(s)
D sa
ry
 7
Evaluate top-down
strategic planning,
scenario planning, and
strategy as planned
emergence.

Black Swan Events

Top-down strategic planning:

• The high impact of a highly improbable Black Swan

event. Events
• It can affect strategic planning
• In the past, most people assumed that all Incidents that describe
highly improbable but
swans were white. high-impact events
• When they first encountered swans that were
black, they were surprised.
Examples:
• security breach of an IT
system.
• Accounting scandals Enron
• Real estate bubble: 2008
financial crisis
 7
Evaluate top-down
strategic planning,
scenario planning, and
strategy as planned
emergence.

Questions to Ask in Scenario Planning

1. What resources and capabilities do

we need to compete successfully in
each future scenario?

3. What strategic initiatives should we

put in place to respond to each
respective scenario?

5. How can we shape our expected

future environment?
 7
Evaluate top-down
strategic planning,
scenario planning, and
strategy as planned
emergence.

Top-down and Bottom-Up:

• Bottom-up strategic initiatives emerges

• Evaluated and coordinated by
management Strategy As Planned Emergence
• Less formal and less stylized.
Strategy process in which organizational
structure and systems allow bottom-up
strategic initiatives to emerge and be
evaluated and coordinated. Strategic
Initiatives can bubble up from deep within
Relies on Data, plus: the organization through autonomous
actions serendipity, and resource
• Personal experience. allocation process.
• Deep domain expertise
• Front line employee insights
 7
Evaluate top-down
strategic planning,
scenario planning, and
strategy as planned
emergence.

Key Point about Strategy

Intended Strategy Emergent Strategy Realized Strategy

• Any unplanned strategic

• The outcome of a rational initiative.
and structured top-down • Bubbles up from the • Combination of intended
strategic plan. bottom of the organization. and emergent strategy
• Can in uence and shape a
rm’s overall strategy
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fl
 7
Evaluate top-down
strategic planning,
scenario planning, and
strategy as planned
emergence.

Intended strategy Realized strategy Emergent strategy

The outcome of a Combination of Unplanned strategic

rational and intended strategy initiative bubbling up
structural top-down and emergency from the bottom of
strategic plan. strategy. the organization

Strategic Initiative Autonomous Actions

Any activity a firm
pursue to explore and Strategic initiatives
develop new undertaken by lower-
products and level employees on
process, new their own volition and
markets, or new ofter in response to
ventures unexpected situation.
 7
Evaluate top-down
strategic planning,
scenario planning, and
strategy as planned
emergence.

Strategic Initiatives Can Bubble Up from Deep within a Firm, through:

Resource Allocation
Autonomous Actions Serendipity
Process (RAP)
Any random events,
pleasant surprises, The way a firm
Strategic initiatives
and accidental allocates its
undertaken by lower-
happenstance that resources based on
level employees on
can have a profound predetermined
their own volition and
impact on firm’s policies, which can
ofter in response to
strategic initiatives. be critical in shaping
unexpected situation.
its realized strategy.
 7
Evaluate top-down
strategic planning,
scenario planning, and
strategy as planned
emergence.

Realized Strategy : Combination of Top-Down

Intended and Bottom-Up Emergent Strategy

Analysis

Formulation
Intended Strategy
Implementation
• Top-Down Strategic Plan

Realized
Strategy
Unrealized Strategy
• Unpredictable Plan
Bottom-Up Emergent
Strategy
• Autonomous Actions
• Serendipity
• Resource Allocations
Process
 7
Evaluate top-down
strategic planning,
scenario planning, and
strategy as planned
emergence.

Shortcomings of the Top-Down Approach

1. May not adapt 2. Formulation is

well to change. separate from
implementation.

4. Leaders’ future
3. Information
vision can be
flows one way.
wrong

E.g.:
• Steve Job predicted consumer’s needs.
• Apple did not engage in market research.
• Since Cook took over, their planning process has evolved
 Chapter 2
Strategy Process

1 2 3 4 5
Explain the role of Outline how you Compare and Describe the roles of Evaluate the
strategic leaders become a strategic contrast the roles of vision, mission, and strategic
and what they do. leader. corporate, business, values in a firm’s implications of
and functional strategy. product-oriented
managers in and customer-
strategy and oriented vision
implementation. statements.

6 7 8 9 10
Justify why Evaluate top-down Explain the causes Describe and Compare and
anchoring a firm in strategic planning, of strategic evaluate the two contrast devil’s
ethical core values scenario planning, dissonance and how distinct modes of advocacy and
is essential for long- and strategy as to navigate strategic decision making. dialectic inquiry as
term success. planned emergence. inflection points frameworks to
improve strategic
decision making.
 8
Explain the causes of
strategic dissonance
and how to navigate
strategic inflection
points

Strategic Inflection Point

Kodak
Nokia
"Digital photography is "We have a great device Examples of Common Themes:
not going to have any portfolio and are con dent
1. Overcon dence in Current Products/
signi cant impact on our in our ability to stay Strategies:
traditional lm business." competitive."
Olli-Pekka Kallasvuo ◦ "Our existing products will continue to
George Fisher (CEO, 2006-2010) dominate the market."
(CEO, 1993-2000) ◦ "Our current strategy is working;
there's no need to change."
2. Underestimating Competition or Market
Trends:
◦ "Competitors' new technologies will
not impact our market share."
Blockbuster BlackBerry ◦ "The market demand for our traditional
(formerly Research products will remain strong."
In Motion) 3. Misjudging Consumer Preferences:

"Net ix is not even on "There’s nothing wrong ◦ "Consumers will always prefer our type
of product."
the radar screen in with the company as it ◦ "There's no signi cant shift in
terms of competition." exists right now." consumer behavior that we need to
address."
John Antioco
(CEO, 1997-2007) Thorsten Heins
(CEO, 2012-2013)
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 8
Explain the causes of
strategic dissonance
and how to navigate
strategic inflection
points

Strategic Inflection Point

Self-
Strategic dissonance Reinforcing
occurs when a firm’s Success
static fit no longer State of Organization
matches competitive
realities Strategic
Inflection
Point
Dissonance Gap

Strategic inflection
point :
a turning point in
determining the future of Self-
a company, the moment
Reinforcing
when the fundamentals of
Failure
a business and its
industry about to change.
Time
 Chapter 2
Strategy Process

1 2 3 4 5
Explain the role of Outline how you Compare and Describe the roles of Evaluate the
strategic leaders become a strategic contrast the roles of vision, mission, and strategic
and what they do. leader. corporate, business, values in a firm’s implications of
and functional strategy. product-oriented
managers in and customer-
strategy and oriented vision
implementation. statements.

6 7 8 9 10
Justify why Evaluate top-down Explain the causes Describe and Compare and
anchoring a firm in strategic planning, of strategic evaluate the two contrast devil’s
ethical core values scenario planning, dissonance and how distinct modes of advocacy and
is essential for long- and strategy as to navigate strategic decision making. dialectic inquiry as
term success. planned emergence. inflection points frameworks to
improve strategic
decision making.
 9
Describe and
evaluate the two
distinct modes of
decision making.

Two Decision Making Modes

System 1: System 2:
• Fast • Slow
• Unconscious • Conscious
• Automatic • E ortful
• Everyday, Snap Decisions • Complex, Analytical
• Error prone, Higher Decisions
Likelihood of Biases • Reliable, Low likelihood of
Biases
ff
 9
Describe and
evaluate the two
distinct modes of
decision making.

Two Decision Making Modes

System 1:
System 2:

• Brain’s default mode. • Logical, analytical,

• Gut reaction. deliberate.
• Familiar, e cient, • Requires more energy.
automatic. • Slower
• Requires little energy.
ffi
 9
Describe and
evaluate the two
distinct modes of
decision making.

Two Decision Making Modes

Theory of Bounded
Cognitive limitations
Rationality
Constrains such asa
When individuals face
time of brain’s ability to
decisions, their
process large amounts
rationality is confined
of data that prevent us
by cognitive limitations
from appropriately
and the time available
processing and
to make a decision.
evaluating each peace
Thus individuals tend to
of information we
“satisfied” rather than to
encounter.
optimize
Cognitive Bias

Illusion of Control Our tendency to overestimate out ability to control events.

Escalating Continuing to support a project when it is showing signs that it

Commitment may not succeed.

Confirmation Bias Teaching for information to support existing beliefs.

The tendency to use simple analogies to make sense out of

Reason by Analogy complex problems.

Representativeness Drawing conclusions based on smaller samples or anecdotes

When opinions around a leader without individuals critically

Groupthink evaluating and challenging that a leader’s opinions and
assumptions
 Chapter 2
Strategy Process

1 2 3 4 5
Explain the role of Outline how you Compare and Describe the roles of Evaluate the
strategic leaders become a strategic contrast the roles of vision, mission, and strategic
and what they do. leader. corporate, business, values in a firm’s implications of
and functional strategy. product-oriented
managers in and customer-
strategy and oriented vision
implementation. statements.

6 7 8 9 10
Justify why Evaluate top-down Explain the causes Describe and Compare and
anchoring a firm in strategic planning, of strategic evaluate the two contrast devil’s
ethical core values scenario planning, dissonance and how distinct modes of advocacy and
is essential for long- and strategy as to navigate strategic decision making. dialectic inquiry as
term success. planned emergence. inflection points frameworks to
improve strategic
decision making.
 10
Compare and contrast
devil’s advocacy and
dialectic inquiry as
frameworks to improve
strategic decision
making.

How to Improve Decision Making

Devil’s Advocacy
• The path forward is Dialectic Inquiry
challenged with
alternative viewpoints • Alternative are explored
• Highlights what can go • Compromises are
wrong discussed
• Criticisms are offered
 10
Compare and contrast
devil’s advocacy and
dialectic inquiry as
frameworks to improve
strategic decision
making.

How to Use a Devil’s Advocate to Improve Strategic

Decision Making
Team1 generates a detailed course of action

Team 2 plays devil’s advocate and questions assumptions of

and criticizes the course of action.

Team 1 receives proposed course of action based on input

received from Team 2

Team 2 questions assumptions of and criticizes revised

course of action. Team 1 further revises the proposed course
of action

Both teams agree upon a course of action. The entire process

frequently takes under the supervision of a higher-level
executive or executive team.
 10
Compare and contrast
devil’s advocacy and
dialectic inquiry as
frameworks to improve
strategic decision
making.

How to Use Dialectic Inquiry to Improve Strategic

Decision Making
Step 1. Thesis and Antithesis
Team 1 generates a detailed course Team 2 generates a detailed but
of action (Thesis) alternative course of action (Thesis)

Step 2. Debate
Team 1 presents proposal to higher- Team 2 presents alternative
level executive team proposal to higher-level executive

Step 3. Synthesis
Higher-level executive team takes one of three courses of action: adopts
neither Team 1”s nor Team 2”s proposal, adopts either proposal, or adopts
a synthesis (some combination of both proposals)
Thank you
 4
Describe the roles of
vision, mission, and
values in a firm’s
strategy.

Captures an organization’s aspiration

sand spells out what the organization Identifies the long-
wants to accomplish term objective.

The relationship is strongest when: An effective vision:

• The vision is customer oriented. • is expressed as a statement
• Internal stakeholders help define • Should be forward-looking and
the vision. inspiring
• Organizational structures align to Roles of Vision • Should provide meaning for
the vision, for example, employees in pursuit of the
compensation and Mission organization’s ultimate goals

Research shows that vision Mission is strategic intent: outlines a

statements and firm performance are firm’s stretch goal and is based on a
related. firm’s vision

Actions based on vision will build

necessary resources and capabilities,
ensure continuous organizational
learning and learning from failure
 7
Evaluate top-down
strategic planning,
scenario planning, and
strategy as planned
emergence.

Scenario Planning : Overview

Ask “What if” Ques ons

• Top management envisions different
scenarios.
• Then they derive strategic responses

Op mis c and Pessimis c

100% Interna onal
Experience 02 Involve students in
passionate and
collabora ve projects
futures are planned

• Computer Programming (Impera ve,

Considera ons can Func onal, OO, Algorithms and AI,
Crea ve,
adap ve, Future-ready Data Science and Analy cs), Graphics
include: inquisi ve,
analy cal and Binus
Computer
Programming
(Computer Vision, Physics,
New Laws detail – oriented
Internatio Bioinforma cs)
Demographic Shifts nal • Web, Mobile, IoT and Technology
Changing economic conditions Integra on.
Technological advances 03 01 • Infrastructures (System Programming,
Project Based Entrepreneurial Network and System Administra on,
Learning mindset
Security, DB and Data
• Personal Development and expression
(Organiza on and rigor)
• Entrepreneurial mindset (Company
Experience, Group and Interpersonal)
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 09 Devil’s Advocacy and
Dialectic Inquiry as
Frameworks

Different Approaches to Scenario Planning

1 • Obtain input from different levels and functions:

• R&D, Manufacturing, and Marketing and Sales.

2 • Determine how to compete situationally

3 • Attach probabilities into different future sales:

• Highly likely vs unlikely
 7
Evaluate top-down
strategic planning,
scenario planning, and
strategy as planned
emergence.

Strategic Initiatives
• Autonomous actions
• Strategic initiatives
undertaken by
employees
• A response to
An activity a rm Can bubble up from unexpected situations
pursues to explore deep within a rm
and develop: through: • Serendipity
• Random events,
surprises,
• New products and • Autonomous actions coincidences
• Has an e ect on
processes • Serendipity strategic initiatives

• New Markets • Resource-allocation • Resource

Allocation Process
• New Ventures processes (RAP)
• How a rm allocates
resources based on
policy
• Helps shape realized
strategy.
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 09 Devil’s Advocacy and
Dialectic Inquiry as
Frameworks

Strategic Initiatives

Can be limited
due to our cognitive Managers can
solutions become better at
• Choosing “good enough” decision making.
options vs optimal
solutions • Theories and frameworks
• Human decision making is help make sense of
lled with cognitive
limitations and biases. uncertain information.
• Arti cial intelligence can be
augment the information at
our ngertips
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