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Strategic Management
Modern Approaches
for the New Rapidly-changing Innovation-driven Economy

© Vadim Kotelnikov, Founder, Ten3 Business e-Coach, www.1000ventures.com

 Strategic Management
Modern Approaches for the New Rapidly Changing Innovation-driven Economy

Clickable titles

Click 1. Strategy Management: Two Approaches

Click 2. Strategy Schools: An Overview

Click 3. Environmental Analysis

Click 4. Strategy Formulation

Click 5. Strategy Implementation

Click 6. Strategic Achievement & Strategy Innovation

© Vadim Kotelnikov
Slide + Executive Summary
Founder, Ten3 Business e-Coach To see Slides with Executive Summaries,
www.1000ventures.com view or print slides as Note Pages
 The Tree of Business
From Strong Roots To Superior Results

Deliver Superior Value

Marketing, Selling, “Profits should be a reflection not of a

Servicing, Partnering corporate greed but a vote of
confidence from society that what is
offered by the firm is valued.”
– Konosuke Matsushita

Live Your Vision

Strategies, Organization, “Vision without action is a daydream.
Processes, Innovation Action without vision is a nightmare.”
– Japanese proverb

Strengthen Your Roots

Vision, Values,
Capabilities, Resources “For every thousand hacking at the
leaves of evil, there is one striking
© Vadim Kotelnikov
at the root.” – Henry David Thoreau
More information at 1000ventures.com: “The Tree of Business”
 Corporate Vision
Providing Purpose, Direction and Motivation
Vision is a short and inspiring statement of what your organization
intends to become and to achieve at some point in the future.

Corporate Vision May Contain Commitment to:

 Creating an outstanding value for customers and other stakeholders
 Developing a great new product or service
 Developing a great company

Examples of a Corporate Vision

GE We bring good things to life

Ford To become the world's leading consumer company for automotive
products and services
Microsoft To enable people and businesses throughout the world to realize
their full potential
Ten3 To inspire innovation and help people and companies achieve more
1000ventures.com
 Mastering Your Enterprise Strategy
The Three Hierarchical Levels of Strategy

Strategy is a set of Enterprise strategy is

analytic techniques concerned with the
for understanding match between your
and influencing Corporate company’s internal
your company’s capabilities and
Strategy its external
position in the
Business you should be in environment
market place

Business Strategy
Tactics
to beat the competition

Functional Strategy
Operational methods
to implement the tactics
More information at 1000ventures.com: “Enterprise Strategy”
 The Corporate Strategy Logic
Strategy Pyramid (old) vs. Strategy Stretch (new)
STRATEGY PYRAMID STRATEGY STRETCH
Top-down Top-down + Bottom-up

Strategic Intent
Vision
Mission
Goals Challenges

Strategies
Tactics Opportunities

Action plans

Old Strategy-based New Opportunity-driven

Business Development Model Business Development Model
• Effective in known & stable environment • Effective in new & unstable environment
• Builds on existing competencies • Builds on new competencies
1000ventures.com
 Opportunity-driven Business Development
Choosing Between Strategy and Opportunity Approach

Use Strategy Approach Use Opportunity Approach

Known environment Unknown environment

Stable environment Unstable environment

Building on existing
Building on new competences,
competencies, capabilities,
capabilities, products, markets
products, markets

Need consolidation Need rapid growth

Need stability and certainty Need change, accept uncertainty

Established capacity for

Lack capacity for flexibility,
flexibility, corporate venturing,
corporate venturing, and speed
and speed
Adapted from “Changing Strategic Direction”, Peter Skat-Rørdam 1000ventures.com
 Strategic Management
Strategic Programming Model for Stable Environment

STRATEGY
FORMULATION FEEDBACK LOOP

Identify
Evaluate Results
Mission

Derive
Objectives STRATEGY IMPLEMENTATION

Identify Create Master Establish Master

Alternative Strategies Plans/Programs Budget

Evaluate Create Medium-Run Establish Medium-Run

Alternatives Plans/Programs Operating Budgets

Select Create Short-Term Establish Short-Term

Preferred Alternatives Plans/Programs Tactical Budgets
Adapted from “Strategic Management”, Alex Miller More information at 1000ventures.com: “Strategic Management”
 FutureStep
Strategic Management for Adaptive Organizations

STRATEGIC STRATEGY STRATEGY

DIAGNOSIS DEVELOPMENT IMPLEMENTATION

1. Process 2. 6. Ecosystem 10. Development of the

planning Strategic modeling strategic agenda
and issues
kick-off scan 7. Scenario 11. Identification of
building key change initiatives

5. Mobilizing 9. Strategic
for change gaming and simulation

3. Fact 4. Capability
finding assessment 8. Strategic 12. Identification of
and and option building strategic triggers
analysis prognosis

Adapted from “Managing Complexity”, Robin Wood 1000ventures.com

 Business-level Strategy
Four Categories of Business Tactics

Anticipatory Tactics Tactics of Engagement

PREEMPTION ATTACK
 Pioneering  Frontal assault
Offensive  Attacking yourself  Flanking maneuver
Tactics  Intimidation  Guerilla warfare
 Capture  Siege warfare

DETERRENCE RESPONSE

 Raising structural barriers  Counterattack

Defensive
 Expected retaliation  Fast follower
Tactics
 Discouraging attacks  Retrenchment
 Diplomatic peacekeeping  Withdrawal

Adapted from: “Strategic Management”, Alex Miller More information at 1000ventures.com: “Business Strategy”
 Strategic Management
Strategy Programming vs. Strategy Innovation

STRATEGY PROGRAMMING STRATEGY INNOVATION

Analysis & Strategic Learning
Strategy Strategy
Analysis
Formulation Implementation Dynamic Strategy Formulation

Experimental Strategy Implementation

AREAS OF EFFECTIVE APPLICATION

CONDITIONS STRATEGY PROGRAMMING STRATEGY INNOVATION

Environment Simple & stable Complex & dynamic

Organization Unadaptive Adaptive

Change Slow Fast

Innovation Incremental Radical

© Vadim Kotelnikov 1000ventures.com

 Strategic Management
Modern Approaches for the New Rapidly Changing Innovation-driven Economy

Clickable titles

Click 1. Strategy Management: Two Approaches

Click 2. Strategy Schools: An Overview

Click 3. Environmental Analysis

Click 4. Strategy Formulation

Click 5. Strategy Implementation

Click 6. Strategic Achievement & Strategy Innovation

© Vadim Kotelnikov
Inventor, Author & Founder
Ten3 Business e-Coach
www.1000ventures.com
 Strategic Management
Correlation Between the Eleven Dominant Strategy Schools

Unpredictable, Environmental Resource-based

confusing
Cognitive
Learning
Power (micro)
Cultural
EXTERNAL
WORLD Configuration
Power (macro)
Positioning
Design
Comprehensible, Planning Entrepreneurial
controllable

Rational INTERNAL PROCESSES Natural

Adapted from: “Strategy Safari”, Mintzberg, Ahlstrand, and Lampel 1000ventures.com

 “The Art of War” by Sun Tzu (app. 500 B.C.)
Five Elements and Four Skills that Define a Competitive Position

HEAVEN
(Trends over Time)

LEADER
Vision
(Learning & Guiding) Action

PHILOSOPHY
(Corporate
Culture & Mission)

Knowing
Positioning
METHODS
(Organization & Processes)

GROUND
Adapted from (Marketplace)
“The Warrior Class”, Crearbridge Publishing 1000ventures.com
 “The Art of War” by Sun Tzu
Planning
Planning
• If the enemy has a strong position, entice him away from it.
• If the enemy is confused, be decisive.
• If the enemy is solid, prepare against him.
• If the enemy is strong, avoid him.
• If the enemy is angry, frustrate him.
• If the enemy is weaker, make him arrogant.
• If the enemy is relaxed, make him work.
• If the enemy is united, break him apart.
• Attack him when he is unprepared. Leave when he least expects it.
• Your will find a place where you can win. Don't pass it by.

1000ventures.com
 Strategic Management: Porter’s Model
Factors That Determine Competitiveness Within an Industry

New entrants

Threat of new entrants

Bargaining
power of INDUSTRY
suppliers COMPETITORS
Suppliers Buyers
Bargaining
Intensity of rivalry power of
buyers
Threat of substitutes

Substitutes

Source: “Competitive Strategy”, Michael E. Porter 1000ventures.com

 Strategic Management
Blue Ocean Strategy vs. Red Ocean Strategy

Red Ocean Strategy Blue Ocean Strategy

Head-To-Head Competition Creation of New Markets

Compete in existing market space Create uncontested market space

Beat the competition Make the competition irrelevant

Exploit existing demand Create and capture new demand

Make the value-cost trade-off Break the value-cost trade-off

Align the whole system of a firm’s Align the whole system of a firm’s
activities with its strategic choice activities in pursuit of
of differentiation OR low cost differentiation AND low cost

Source: Blue Ocean Strategy by W. Chan Kim & Renee Mauborgne 1000ventures.com
 Strategic Management
Resource-Based Model of Above-Average Returns

Identify & Study ► RESOURCES

► Inputs into a firm’s production process

CAPABILITY
Determine ► ► Capacity of an integrated set of resources to
integratively perform a task or activity

COMPETITIVE ADVANTAGE
Determine ►
► Ability of a firm to outperform its rivals

An ATTRACTIVE INDUSTRY
Locate ► ► An industry with opportunities that can be
exploited by the firm’s resources and capabilities

Select & Act ► STRATEGY FORMULATION & IMPLEMENTATION

► Strategic actions taken to earn above-average returns

Enjoy ► Superior Returns

Adapted from: “Strategic Management”, Fourth Edition More information at 1000ventures.com: “Resource-based Model”
 Strategic Management
Modern Approaches for the New Rapidly Changing Innovation-driven Economy

Clickable titles

Click 1. Strategy Management: Two Approaches

Click 2. Strategy Schools: An Overview

Click 3. Environmental Analysis

Click 4. Strategy Formulation

Click 5. Strategy Implementation

Click 6. Strategic Achievement & Strategy Innovation

© Vadim Kotelnikov
Inventor, Author & Founder
Ten3 Business e-Coach
www.1000ventures.com
Three-level Business Intelligence System
Internal and External Sources of Changes

Within
the
Enterprise

Industry & Market

Structure

External
– demographics, changes in perception,
and new knowledge
1000ventures.com
 The Tao of a Strategic Analysis
Analyzing Markets and Leveraging Capabilities

Yin Yang
Outside-In Inside-Out

Analyzing markets Leveraging capabilities

Strategic analysis of the of Strategic analysis of the

the industries and markets characteristic of your company
in which your company to identify your distinctive
operates to identify those capabilities and surround them
markets in which your with a collection of
company's capabilities can complementary assets which
yield competitive enable your company to sell its
advantage. distinctive capabilities in the
market it operates.

© Vadim Kotelnikov 1000ventures.com

 Strategic Analysis: Lessons from Jack Welch Best
5 Questions To Answer practices

Do you want to formulate a winning

competitive strategy?
Ask yourself these five questions to
understand where your business is going:

1. What does your global competitive environment look like?

2. In the last three years, what have your competitors done?
3. In the same period, what have you done to them?
4. How might they attack you in the future?
5. What are your plans to leapfrog over them?

"The greatest thing in this world is not so much where we are, but
in which direction we are moving." – Oliver Wendell Holmes
1000ventures.com
 Managing Business Evolution
External and Internal Domains In and Around Your Firm

Business Environment (“PEST” forces)

Business Ecosystem (economic web)
Strategic Landscape (competitive arena)
Business Designs

Strategic Moves

Business Process and Infrastructure

Managerial Options
Projects, programs, acquisitions, patents, licenses, initiatives

THE INTERNAL DOMAIN

THE EXTERNAL DOMAIN

Adapted from “Managing Complexity”, Robin Wood 1000ventures.com
 Strategic Management
Framework for Describing the Strategic Situation

The Physical
Environment Pressure
The Media
Groups
New Products
Shareholders Society

Company
Financial New Customers New
Government
Markets Suppliers Suppliers Customers
Competitors

Employees The Law

New Competitors
New
The Economy
Technology
New Business
Models
1000ventures.com
 Strategic Management
Competitive Analysis

EXTERNAL MARKET CONDITIONS

Availability and degree Government Power, vigor, & competence
of product substitutes regulations of complementors

SYNERGY of INTERNAL
Possibility of RESOURSES and CAPABILITIES Comparative
what your competitive
business is strength of
doing can be Competitive existing firms
Distinctive, Distinctive,
done in a Tangible
Position Intangible & potential
different & of a Firm entrants
better way
Reproducible
Degree of Potential for
sophistication of capacity
Conditions Switching costs expansion by
products and of supply involving
customers existing firms &
material suppliers of new entrants
inputs inputs
© Vadim Kotelnikov 1000ventures.com
 Strategic Management
Modern Approaches for the New Rapidly Changing Innovation-driven Economy

Clickable titles

Click 1. Strategy Management: Two Approaches

Click 2. Strategy Schools: An Overview

Click 3. Environmental Analysis

Click 4. Strategy Formulation

Click 5. Strategy Implementation

Click 6. Strategic Achievement & Strategy Innovation

© Vadim Kotelnikov
Inventor, Author & Founder
Ten3 Business e-Coach
www.1000ventures.com
 Creating Sustainable Profit Growth
Nine Questions To Answer

1. How can you identify current needs?

Customer
2. How can you anticipate future needs?
Needs
3. How can you create customer needs?

4. How can you meet customer needs?

Customer
5. How can you exceed customer expectations?
Satisfaction
6. How can you retain customers?

Moving 7. How fast can you meet customer needs?

Ahead of 8. How can you meet them before anyone else?
Competition 9. How can you be constantly first to market?

© Vadim Kotelnikov More information at 1000ventures.com: “Creating Sustainable Profit Growth”

 Balanced Business
Balancing Outside-In and Inside-Out Strategies
Look at your business from outside-in as well as inside-out

Outside-In Inside-Out
Try to understand what's Having answered the above
going on in the real world questions, work backward:
by asking these questions
relentlessly:
1. What needs do we satisfy now? What
need could we satisfy now? In future?
1. What's happening in
2. What's the gap between them and
the marketplace?
what we do now, and how to bridge it?
2. How the needs are
3. What advantages and internal
changing?
capabilities do we have? What
3. What's causing the advantages and capabilities do we
changes? need to create?
4. Where are the resulting 4. What old competencies do we need to
opportunities? deemphasize?

Adapted from: "Kaizen - The Key to Japanese Competitive Success", Masaaki Imai 1000ventures.com
 Lessons from Jack Welch Best
Articulate Your Vision practices

"Leaders inspire people with clear visions of how

things can be done better." The best leaders do not
provide a step-by-step instruction manual for workers.
The best leaders are those who come up with new
idea, and articulate a vision that inspires others to act.

 Create and project a clear vision

 Articulate a few clear stretch goals for your company
 Make sure you have the very best people to carry
your vision out.

More information at 1000ventures.com: “Vision, Mission, Goals”

 Strategic Intent
Focusing on Tomorrow’s Opportunities

A strategic intent is your

company's vision of what
it wants to achieve in the Strategic Intent
long term.

Strategic intent is also senior Challenges

management's primary
motivational tool for radical idea
generation.
Opportunities
Senior management uses
strategic intent to communicate a
misfit between current resources
and corporate aspirations and New Opportunity-driven
motivate idea generation when it Business Development Model
actively encourages the quest for • Effective in new & unstable environment
new opportunities. • Builds on new competencies
1000ventures.com

More information at 1000ventures.com: “Strategic Intent”

 Opportunity-driven Business Development
Discovering Opportunities

Implement CHALLENGE
the business
opportunities
logic

EVALUATE DEFINE
and select the opportunity
opportunities space

DEVELOP START
an opportunity the opportunity
portfolio search
REFINE
opportunities
Adapted from
“Changing Strategic Direction”, Peter Skat-Rørdam 1000ventures.com
 Opportunity-driven Business Development
Organizing Rapid Opportunity Search

Establish
search guidelines Focus Areas for Opportunity Search
FUNCTIONAL CROSS-FUNCTIONAL
Select search teams
 Customers  Processes & projects
 Internal capabilities  Other industries
Engage search teams
 Resources  Unexpected events

Discuss ideas  Suppliers  Disruptive ideas

 Partners  Observing people
Identify opportunities  Competitors  Changes in
perception
 Know-how
Refine opportunities institutions  Trends

Adapted from “Changing Strategic Direction”, Peter Skat-Rørdam More information at 1000ventures.com: “Searching for Opportunities”
 Strategy Formulation
SWOT Analysis
Internal External

Build on STRENGTHS Exploit OPPORTUNITIES

• What trends may impact your business?
• What is your competitive advantage?
• How can you exploit external changes?
• What are your core competences?
• How to turn problems into
• What are your distinctive capabilities?
opportunities?
• Other strengths
• Other opportunities

Resolve WEAKNESSES Avoid THREATS

• What are your weak point? • What obstacles do you face?
• What problems do you have? • What your competitors could do?
• What necessary expertise do you lack? • What could damage your business?
• Other weaknesses • Other threats

1000ventures.com
 Competitive Strategies
Survival vs. Market Leadership Strategies
SURVIVAL STRATEGY LEADERSHIP STRATEGY
Area of Competition
Staying alive Targeting market leadership
Winning and Retaining Customers
Creating higher customer
Customer Value Low cost/benefit ratio
value
Marketing Strategy Mass marketing Differentiation and positioning
Customer Satisfaction Customer service Customer intimacy
New attributes. New product categories.
Product Innovation
Line extensions. New brands. Speed.
Building Your Sustainable Competitive Advantage
Strategic Growth Focus Building resources Building distinctive capabilities
Innovation Linear Systemic
Technology Innovation Incremental Radical
Process Innovation Functional improvements Enterprise-wide BPM
Perfecting traditional Creating new adaptable
Business Innovation
business model business models
© Vadim Kotelnikov More information at 1000ventures.com: “Competitive Strategies”
 Sustainable Competitive Advantage
The Five Criteria

Unique

Applicable Difficult to
to multiple Sustainable replicate
situations Competitive
Advantage

Superior to the
Sustainable competition
More information at 1000ventures.com: “Sustainable Competitive Advantage”
 Sustainable Competitive Advantage
Resource-based View

Resources

Sustainable Superior
Core
Competitive Value
Competencies
Advantage Creation

Capabilities

More information at 1000ventures.com: “Sustainable Competitive Advantage”

 Sustainable Competitive Advantage
The Focal Point of Strategy

DISTINCTIVE CAPABILITIES Synergistic

(cannot be replicated by competitors)
combination of
TANGIBLE your distinctive
 Intellectual property rights and reproducible
 Exclusive licenses
 Statutory monopolies capabilities
INTANGIBLE
 Strong brands REPRODUCIBLE CAPABILITIES
 Leadership (can be replicated by competitors)
 Tacit knowledge & skills  Technical capabilities
 Teamwork  Financial capabilities
 Organizational culture  Marketing capabilities
 Business processes  Explicit knowledge
 Partnerships  Non-exclusive licenses

© Vadim Kotelnikov More information at 1000ventures.com: “Sustainable Competitive Advantage”

 Fast Company
Owning Your Competitive Advantage
"Many companies, acting solely in the interest of short-term expense
reduction, have tossed the baby out with the bathwater and ended up
outsourcing the only thing(s) that allowed them to get to market fast or first.“
– J. Jennings and L. Haughton

Owning your competitive advantage will allow you:

1 To reinvent your business and constantly improve what you do

2 To harvest creative resources of your evangelists – your staff who share

your passion and objectives
3 To eliminate outsourcing-related speed breakers and the communication
gap between you and your sub-contractor
4 To build your competitive advantage continuously and implement new
ideas immediately
5 To be flexible in choosing new directions for further development and
play your own game
More information at 1000ventures.com:
Adapted from “It’s not be big that eat the small…It’s the fast that eats the slow”, J.Jennings & L.Haughton “Fast Company”
 Strategy Formulation
GE Multifactor Business Portfolio Matrix

Selective Invest / Invest /

Business Position

HIGH
Investment Grow Grow

Harvest / Selective Invest /

MEDIUM Divest Investment Grow

Harvest / Harvest / Selective

LOW Investment
Divest Divest

LOW MEDIUM HIGH

Industry Attractiveness
Source: GE & McKinsey & Co. 1000ventures.com
 Competitive Strategies
Three Generic Business Strategies

– producing and marketing a good quality

Cost Leadership product or service at a lower cost
than your competitors.

– creating a product or service that is

Differentiation perceived as being unique
"throughout the industry".

– addressing a "focused" segment

Focus of the marketplace, product form or
cost management process

Source: “Competitive Advantage”, Michael Porter 1000ventures.com

 Four Types of Marketing Warfare
The Strategic Square

Defensive Warfare Offensive Warfare

Strategy for market leaders Strategy for No 2 or No 3

 Attacking themselves with  Avoiding the strengths of

new ideas a leader’s position
 Blocking competitive moves  Attacking the leader’s
weaknesses

Flanking Warfare Guerilla Warfare

Strategy for new players Strategy for small players

 Moving into an uncontested  Finding a market small enough

area to defend
 Contains the element of  Being prepared to bug out at a
surprise moment’s notice

Adapted from “The Power of Simplicity”, Jack Trout 1000ventures.com

 Erecting Barriers to Entry
A Source of Competitive Advantage for an Incumbent Firm

► Proprietary technologies / processes

► Absolute cost advantages

► Proprietary product / service differences

► Synergistic alliances with owners of complementary competences

► Brand identity

► Switching costs

► Economies of scale / capital requirements

► Access to distribution / marketing / selling channels

► Government policies / regulations

► Expected retaliation
1000ventures.com
 Effective Competing
Develop Your Differentiation Strategies
STRONG WEAK
Differentiation Ideas Differentiation Ideas
 Being First  Attribute Ownership  Quality
 Leadership  Market Specialty  Customer Orientation
 Heritage  Customer Intimacy  Creativity
 Preference  How Your Product is Made  Price
 Hotness  Being the Latest  Breadth of Line
Adapted from “Differentiate of Die”, Jack Trout

Differentiating Statement of Ten3 Business e-Coach

Case in
Point We don’t just teach – we inspire!
We invented Business e-Coaching in 2001.
Today, we have customers in 100+ countries.
“We invented” = Being First; “We inspire” = Market Specialty; Attribute Ownership
“Customers in 100+ countries” = Leadership (in the targeted market niche)
More information at 1000ventures.com: “Differentiation Strategies”
 Strategic Brand Management
A Foundation of Your Sustainable Competitive Advantage

Roles
CONSUMERS MANUFACTURERS
That Brands Play
1. Identification of source of 1. Means of identification to
product simplify handling or tracing

2. Assignment of responsibility 2. Means of legally protecting

to product maker unique features

3. Risk reducer 3. Signal of quality level to

satisfied customers
4. Search cost reducer
4. Means of endowing products
5. Promise, bond, or pact with with unique associations
maker of product
5. Source of competitive
6. Symbolic device advantage
7. Signal of quality 6. Source of financial returns

Source: ‘Strategic Brand Management’, Kevin Lane Keller More information at 1000ventures.com: “Brand Management”
 Corporate Growth Strategies
Achieving Bottom-Line Results and Top-Line Growth
“Shun the incremental and go for the leap.“ – Jack Welch

Evolution + Revolution

VENTURE
STRATEGIES
• In-company Ventures
• Spinouts
• Venture Investing
• Venture Acquisitions

EFFICIENCY IMPROVEMENT
• Business Process Management
• Lean Production
• Continuous Improvement / Kaizen
• Quality Management / Six Sigma
© Vadim Kotelnikov More information at 1000ventures.com: “Sustainable Growth Strategies”
 Using Innovation Portfolio Best
Lessons from Silicon Valley Companies practices

Why should you use the portfolio approach to manage innovation?

1. Risk management 3. Timing of new initiatives
The four reasons
2. Visibility 4. Discovering synergies

Project Type and Resources vs. Net Income

Net Income Potential

High Project / Headcount

3 1
2 # = 75+
Medium
6 4
5 # = 50-75
Low
# < 50
Extension Platform Breakthrough
Adapted from:
“Relentless Growth”,
Christopher Meyer
Project Type
More information at 1000ventures.com: “Innovation Strategies”
 Strategic Alliances
Synergizing Resources, Expertise, and Capabilities
Gain competitive advantage
through access to your partner’s resources

0% 20% 40% 60% 80%

Joint Marketing & Promotion

Joint Selling or Distribution

Technology Licenses

R&D Contracts Involvement of

fast-growing companies
Design Collaborations
in different types of
Production Arrangements strategic alliances
Business Expansion Abroad

Outsourcing On an average, each fast-growing

company is engaged in 5 different
Other Alliances
types of strategic alliances
Source of information: Trendsetter Barometer, PWC More information at 1000ventures.com: “Strategic Alliances”
 Lessons from Toshiba Best
Strategic Alliances as a Key Element of Strategy practices

Toshiba’s approach: to develop strategic alliances with different

partners for different technologies because a single company
cannot dominate any technology or business by itself.

Toshiba’s Company Technology

Selected
Alliances GE Light bulb filaments

Apple Computers Multimedia computer products

Microsoft Hand held computer systems

Motorola Memory chips

IBM, Siemens Semiconductors

1000ventures.com
 Strategic Management
Modern Approaches for the New Rapidly Changing Innovation-driven Economy

Clickable titles

Click 1. Strategy Management: Two Approaches

Click 2. Strategy Schools: An Overview

Click 3. Environmental Analysis

Click 4. Strategy Formulation

Click 5. Strategy Implementation

Click 6. Strategic Achievement & Strategy Innovation

© Vadim Kotelnikov
Inventor, Author & Founder
Ten3 Business e-Coach
www.1000ventures.com
 Strategy Implementation
Major Impediments To Strategy Implementation

1 Functional mindset

2 Lack of cross-functional expertise

3 Lack of systems thinking and action

4 Organizational resistance to change

5 Lack of strategic motivation

6 Inability to adapt to change

© Vadim Kotelnikov 1000ventures.com

 Systems Approach To Strategy Implementation
Dynamic Balancing of Your Business System

The primary goal of any

business is to increase
stakeholder value.
Customer Innovation
It is achieved through a
dynamic balancing of
competing values.
STRATEGY
In order for a business to
maximize economic value,
it must balance customer
Finance Processes satisfaction and
competitive market forces
with internal cost and
growth consideration.
If your business wheel is unbalanced,
it will roll neither far nor fast. More information at 1000ventures.com:
“Balanced Approach to Business Systems”
 Strategic Leadership
Generic Role and Main Functions

Three Broad Functions Seven Role Functions

1. Purpose / Vision
2. Strategic Thinking and
Planning

Achieving the common 3. Operational / Administration

TASK 4. Organization Fitness to
Situational Requirement
5. Energy, Morale,
Confidence, Spirit
6. Allies and Partners,
Building and Motivating and
Stakeholders, Political
Maintaining the Developing the
TEAM INDIVIDUAL 7. Teaching and Leading the
Learning by Example
Adapted from “Effective Strategic Management”, John Adair More information at 1000ventures.com: “Strategic Leadership”
 Strategy Implementation
Strategic Motivation

Two Kinds of Motivation

Attitude Motivation
Incentive Motivation

Instruments of Strategic Attitude Motivation

 Articulate an inspiring strategic intent
 Launch a crusade
 Stretch!
© Vadim Kotelnikov 1000ventures.com
 Lessons from Jack Welch Best
See Change As An Opportunity practices

Change is a big part of the reality in business.

"Willingness to change is a strength, even if it
means plunging part of the company into total
confusion for a while... Keeping an eye out for
change is both exhilarating and fun."

 It's nonsense to fear change

 Adapt your management style
 Spark other to deal with change
 Deal with change in a proactive manner
 Defy tradition
 Think short-term and long-term change
 Reinvent your business constantly
More information at 1000ventures.com: “Change Management”
 Leading Change
The Eight Stage Change Process

Defrosting the hardened status-quo

1 Establishing a sense of urgency
2 Creating the guiding coalition
3 Developing a vision and strategy
4 Communicating the change vision
Introducing many new practices
5 Empowering a broad base of people to take action
6 Generating short term wins
7 Consolidating gains and producing even more change
Grounding the changes in the culture, and making them stick
8 Institutionalizing new approaches in the corporate culture
Adapted from: “Leading Change,” John P. Kotter More information at 1000ventures.com: “Change Management”
 Strategic Project Management (SPM)
Conventional Project Management vs. SPM
Conventional Project
SPM
Management
Link with
direct and explicit vague and distant
business strategy
usually portrayed as a highly flexible, creative,
Project definition
'given' depending on options

follows on directly from only done once a project

Project planning
project definition strategy is set

important but only in context

absolutely central – it is all
Attitude to detail – tries always to see the big
about control
('helicopter') picture
emphasis on formal far-reaching stakeholder
Importance of
structures: project analysis – requires continual
stakeholders
manager, team, sponsor scanning

Dealing with activities planned first, then uncertainty analysis done

uncertainty critical path analysis done first, then activities planned
Adapted from: “Strategic Project Management”, by Tony Grundy and Laura Brown 1000ventures.com
 Milestone-based Thinking
A Roadmap for Setting Goals and Achieving Success
Milestone-based thinking helps you organize your activities and
your available resources into a logical sequence of steps or stages.

Milestone Events
Brief description of
Why is this Required
Milestones specific activities required Timing
important? resources
for the Milestone
Milestone 1
Milestone 2
Milestone 3
Milestone X
Milestone XX
Milestone XXX
The Goal Achieved

Milestone-based approach encourages thinking about work in terms of processes

rather than tasks. Milestones mark the self-regulation points of these processes.
More information at 1000ventures.com: “Milestone-based Thinking”
 Performance Measurement
Balanced Scorecard Framework
How do we look to shareholders?

Financial
Perspective
How do What
customers Objectives Targets must we
see us? Measures Initiatives excel at?

Customer Internal Process

Perspective Vision & Perspective
Objectives Targets Strategy
Objectives Targets
Measures Initiatives Measures Initiatives
Learning & Innovation
Perspective
Objectives Targets
Measures Initiatives
Adapted from: How can we sustain our ability to
“Balanced Scorecard”,
Norton and Kaplan change and improve? 1000ventures.com
 Leading-Edge Three-Tier Reporting Model
Showing Investors Quality & Sustainability of Performance

Enhancing Giving CEO’s and

shareholder value other decision-makers
Tier 3 a roadmap
through
Company- for identifying,
ValueReporting
specific information measuring
and reporting
on real corporate
Tier 2 value drivers
Industry-
specific standards

Tier 1
Global
Generally Accepted Accounting Principles (GAAP)

Source: PricewaterhouseCoopers 1000ventures.com

 Strategic Management
Modern Approaches for the New Rapidly Changing Innovation-driven Economy

Clickable titles

Click 1. Strategy Management: Two Approaches

Click 2. Strategy Schools: An Overview

Click 3. Environmental Analysis

Click 4. Strategy Formulation

Click 5. Strategy Implementation

Click 6. Strategic Achievement & Strategy Innovation

© Vadim Kotelnikov
Inventor, Author & Founder
Ten3 Business e-Coach
www.1000ventures.com
 Strategic Planning
New Dynamic Model for the New Era of Rapid Change
TRADITIONAL STATIC MODEL
Effective if change cycle is longer than duration of your project

Planned
Planning Implementation
Results

NEW DYNAMIC MODEL

Effective if change cycle is shorter than duration of your project

External Change: technology x market x competition

Planning (+ adapting + anticipating)

Internal change: learning x capabilities Results
•Planned
•Modified
Implementation
•New
© Vadim Kotelnikov More information at 1000ventures.com: “Strategic Planning”
 Business Plans
What Is More Important: Plans or Planning?

Results of Ten3 global

Internet polls “Advise!”
Plan
30%

Planning
70%
"Plans are nothing;
planning is everything.“
– Dwight D. Eisenhower
1000ventures.com, 1000advices.com
 Dynamic Strategy Formulation Best
Lessons from Silicon Valley Companies practices

A Concurrent Top-down and Bottom-up Strategy Development Process

Top-down
1. Vision
2. Growth plans
3. Target markets

Bottom-up
1. New product ideas
2. Product plans
3. Market feedback

1000ventures.com
 Fast Company: Fast Decision-making Best
Establishing Corporate Guiding Principles practices

Purpose: Fast evaluation of any proposed new course of action

Case in Point: Charles Schwab’s Guiding Principles

 Is it fair and responsive to our customers?

 Does it respect our fellow employees and the spirit of teamwork?
 Are we striving relentlessly to improve what we do and how we do it?
 Will it earn, and will we be worthy of, our customer's trust?
 Will it reinvent the business?
 We are willing to risk short-term revenue to do the right thing for the
customer and ensure long-term success.
 Will we own the technology?
 Does it leverage the brand to build trust?
 Will it create and nurture a spirit of innovation?
More information at 1000ventures.com: “Fast Company”
 Strategic Achievement
Thinking × Action × Learning → Synergy

Strategic STRATEGIC THINKING

THINKING 1. Look behind the symptoms
2. Combine intuition and data
3. Recognize the value of synergy
4. Live the life of the customer
5. Balance the short and long term
Strategic Strategic
LEARNING ACTION

STRATEGIC ACTION
1. Make a choice
STRATEGIC LEARNING 2. Take risks
1. Undertake strategic control 3. Sell the new strategy
2. Experiment 4. Calculate the reactions
3. Constantly refine the strategy 5. Get the timing right
4. Learn from mistakes 6. Acquire the appropriate resources

Adapted from “Changing Strategic Direction”, Peter Skat-Rørdam More information at 1000ventures.com: “Strategic Achievement”
 Strategic Thinking
Three Key Characteristics of Strategic Thinking

1. Focused on vision and value creation

2. Relentless, creative, explores many
options, including outside-the-box ones
3. Action-oriented, means thinking in
concrete terms of the actions – what,
who, and when.

"Today, most strategy experts do not regard strategy as planning

but rather as thinking." – Peter Skat-Rørdam

1000ventures.com
 Strategic Thinking
7 Principles

1. Focus on your vision

2. Focus on the whole
3. Think systemically
4. Search for synergies
5. Look beyond the obvious
6. Change perceptual positions
7. Balance the short and long term

"To become an effective strategist requires constant practice in

strategic thinking." – Kenichi Ohmae
1000ventures.com
 80/20 Strategic Thinking
How To Achieve More with Less

20%  80% of outputs result from

20% of inputs
80%  80% of consequences flow
80% from 20% of causes

 80% of results come from

20% 20% of effort

INPUT OUTPUT

Progress means moving resources from low-value to high-value uses:

• 80% of value is produced with 20% of resources
• 80% of growth and profitability comes from 20% of clients
• 80% of defects can be eliminated by correcting 20% of causes
• 80% of cost reduction can be achieved by focusing on 20% of the whole business
Source: “The 80/20 Principle”, Richard Koch More information at 1000ventures.com: “80/20 Principle”
 Lessons from Jack Welch Best
Stretch! practices

Stretch is a goal or challenge that is significantly

beyond the organization's current performance
level. Stretch targets energize. "We have found that
by reaching for what appears to be the impossible,
we often actually do the impossible; and even when
we don't quite make it, we inevitably wind up doing
much better than we would have done."

 Stretch your business strategy

 Stretch yourself
 Ask managers and employees to reach for their dreams
 Reward business leaders even for falling short of a stretched goal
 Don't abuse stretch – make sure that you do the right stuff
 Keep stretching
More information at 1000ventures.com: “25 Lessons from Jack Welch”
 High-Growth Business Development
Launching a Crusade
Cause – the Real Reason Your Business Exists
Cause is that which gives rise to an action, a motive, a principle, a belief
and purpose. It answers the question "Why we are really doing this?". A
cause provides a feeling of belonging, a sense of purpose and loyalty,
peer pressure to perform, and a catalyst for action.

Eight Criteria for a Cause Big Enough for a Crusade

1. Causes are never goals
2. Causes come from the heart, not from the mind
3. Causes are big, bold, and aspirational
4. Causes are inclusive
5. Causes aren't just about money Walt Disney's
Cause:
6. Causes have an Aha! Effect
"To build a place
7. A cause needn't be credible to the outside world to make people
8. Causes are expressed in few words happy."
Adapted from “It’s not be big that eat the small…It’s the fast that eats the slow”, J.Jennings & L.Haughton 1000ventures.com
 Organizational Learning
The Four Elements of Strategic Learning

– needs to be viewed – needs to be

EXTERNAL
as a source of created from
ENVIRONMENT
possibilities (both desirable
good and bad) elements of the
past together with
Organizational
new elements

PAST Operations FUTURE

– needs to be
Learning
interpreted and
understood in the – must change to
context of today accommodate and
INTERNAL seize possibilities of
ENVIRONMENT varying kinds

Adapted from: “Managing Complexity”, Robin Wood 1000ventures.com

 Strategy Innovation
The Four Steps of the Strategic Learning Process

Measuring and ENVIRONMENTAL Challenging

taking corrective ANALYSIS assumptions
action about the future
Three levels of analysis: and generating
general, operating, and insights
STRATEGY internal
IMPLEMENTATION
STRATEGY
Committing resources Feedback FORMULATION
to worthwhile initiatives loop
New concept formation
based on the new
insights
EXPERIMENTATION
Taking initiative Building
to change things Search for input-output ownership and
and energizing relationships and match alignment among
people to the environment stakeholders
© Vadim Kotelnikov More information at 1000ventures.com: “Strategy Innovation”
 Strategic Management
Modern Approaches for the New Rapidly Changing Innovation-driven Economy

1. Strategy Management: Two Approaches

2. Strategy Schools: An Overview
3. Environmental Analysis THANK
4. Strategy Formulation
5. Strategy Implementation YOU!
6. Strategic Achievement & Strategy Innovation

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