Generating Strategic Alternatives. 2 The second step in the S&PA decision process develops creative,...

Generating Strategic Alternatives

2

The second step in the S&PA decision process develops creative, doable strategies.

Strategy Table Information Sources

1.09 • Generating Strategic Alternatives

EvaluatedAlternatives Plan

Decision Board

Project Team

FrameAlter-natives

3

Generating a range of creative, doable alternatives is a vital element of decision quality.

Creative, Doable Alternatives:

• Creative• Doable• Significantly different• Comprehensive• Compelling

Key tools:

• Creativity methods• Strategy table

Failure modes:

• Only one alternative• Missing a great alternative• Considering “not doable”

alternatives


• Creative• Doable• Significantly different• Comprehensive• Compelling

Key tools:

• Creativity methods• Strategy table

Failure modes:

• Only one alternative• Missing a great alternative• Considering “not doable”

alternatives

1

3 4

5

6

DecisionQuality


4

Combining analytic techniques with creativity methods produces compelling, doable strategies.

• Building Strategy Tables

• Summary


5

Decision Hierarchy

Tactics

Policies

Strategic Decisions

A strategy table helps develop specific alternatives for each strategic decision.

Strategic Decisions (one column for each)

Alternative 1

Alternative 2

Alternative 3

• • •

• • • • • • • • • • • •

Strategy Table

•Plant•Technology•Products•Quality•Marketing

Plant Technology Products Quality Marketing

There is one column in the table for each strategic decision.


6

We identify mutually exclusive alternatives for each strategic decision.

PlantConfigurationand Location

TechnologicalStretch

ProductRange

Quality and CostPosition

MarketingStrategy

Current

Close #1

Close #1;build domesticgreenfield

Close #1;build foreign

greenfield

State of art

Proven

Current

Full line

One basicline and

specialties

Value-added

specialtiesonly

Quality and cost leadership

Improved quality;deferredcost

reduction

Minimalquality

improvements

Sellquality and

influence market growth

Sellquality

Current

Example: Manufacturing Plant Modernization


7

Conduct a brainstorming session to create a wide range of ideas for strategies.

• Run out (milk) the business

• Moderate modernization

• Aggressive modernization

• Consolidation

• Sell our business (violates “take as given?”)

• Niche player only

• Buy out major customers

• Buy out major competitors

• Outsource to foreign manufacturers

• Joint venture for specialties

Strategy Themes


8

Using questions can help elicit a broader range of ideas.

Role-Playing “What would we do if we were…”

− Big Pharma? A small biotech?

− Resource unconstrained?

− Serving all the needs of specific physicians?

− A Managed care provider?

− Others…

Devil’s Advocate Questioning

What could your competitor do to hurt you the most?

Back-casting Go forward into the future. Assume a resolution of the problem. How could this have occurred?


9

Each alternative strategy comprises a consistent set of choices—one alternative under each decision.

Current



greenfield

State of art

Proven

Current

Full line

One basicline and

specialties

Value-added

specialtiesonly



reduction

Minimalquality

improvements

Sellquality and


Sellquality

Current



ProductRange


MarketingStrategy

Aggressive Modernizatio

n

StrategyAlternatives

Close #1


10

Four creative and doable strategy alternatives (“strategies”) emerge in the modernization decision.

Current



greenfield

State of art

Proven

Current

Full line

One basicline and

specialties

Value-added

specialtiesonly



reduction

Minimalquality

improvements

Sellquality and


Sellquality

Current



ProductRange


MarketingStrategy

Aggressive Modernizatio

n

ModerateModernizatio

n

Consolidation

Run Out

StrategyAlternatives

Close #1


11

Construct a strategy rationale that conveys why the alternative is compelling.

Description: Regain quality and cost leadership in a $2

billion/year business with growth rates estimated in

excess of 10% per year for the next decade.

Major Uncertainties: Introduction of low cost products from SE Asia

manufacturing

Quality differentiation achievable

Performance of new technology

Description: Regain quality and cost leadership in a $2

billion/year business with growth rates estimated in

excess of 10% per year for the next decade.

Major Uncertainties: Introduction of low cost products from SE Asia

manufacturing

Quality differentiation achievable

Performance of new technology

Strategy: Aggressive Modernization

Strengths

• Utilizes existing plants and

product line

• High flexibility to switch

production to match customer

needs

• Significant quality

improvement and leadership

position

Weaknesses

• Major capital required

$800 million

• Cost reduction program

requires significant

supplier and labor

concessions

Strategy Rationale


12

Like drilling “test wells,*” evaluating the initial alternatives identifies sources of value and risk.

Test Well #1

Test Well #2

Test Well #3

*An upstream oil and gas veteran would call these “exploration wells,” not “test wells.”


13

As with oil exploration, results of initial testing often point to a better “hybrid alternative.”

Test Well #3

Test Well #2

Test Well #1

Production Well

The location of the production well (chosen course of action) is not expected to be one of the test well sites (initial

alternatives).1.09 • Generating Strategic Alternatives

14

Analysis typically reveals a hybrid alternative that combines best features of initial strategies evaluated.

Strategy #1 Strategy #2 Strategy #3

EvaluationEvaluation

Hybrid Strategy


15



• Alternative Generation− Creativity

− Need-Finding: Viewing from multiple perspectives

− Idea Generation: Creating Real Options

− Sorting

• Summary


16

The goal of strategy generation is a small number of high-quality strategic alternatives that:

• Respond to the real issues and challenges facing your business

• Incorporate the best creative thinking

• Cover the full range of possibilities but are significantly different

• Encompass all parts of your business

• Are doable and compelling.


17

The second board meeting addresses the alternatives developed by the project team.

EvaluatedAlternatives Plan

Decision Board

Project Team

Frame

Strategy Table Information Sources

Alter-natives


19

Appendix


20

“Nested” strategy tables help to expand the alternatives for each decision.

Main Strategy Table

PlantTech-

nologyProducts Quality Marketing

Product Strategy Table

Product

StrategiesBasic Line A Basic Line B

Specialty

Product I

Specialty

Product J

Specialty

Product K

Full line

One basic

line and

specialties

Value-added

specialties

only

Maintain

Phase out

Drop now

Maintain

Phase out

Drop now

Yes

No

Yes

No

Yes

No

Full line

One basic line and

specialties

Value-added specialties

only


21



• Alternative Generation− Creativity

− Need-Finding: Viewing from multiple perspectives

− Idea Generation: Creating Real Options

− Sorting

• Summary


22

Alternative Generation

• Why good alternatives are important

• Exercises and Tools

Creativity

Need-Finding

Idea-Generation

Sorting


23

Without a robust set of options, the value of analysis is significantly compromised.

LEARN MORE in the process of developing better solutions

− Test new or unconventional ideas without big commitments (prototyping)

− Bring together the best contributions from a broad set of perspectives

CREATE VALUE by generating innovative approaches

−The highest value options are rarely the obvious ones

−Efficient use of resources; choose among many options rather than work-rework-rework again

REALIZE VALUE in setting up well for execution

−Support communication with internal and external stakeholders

−Fosters confidence, understanding and buy-in across the organization

Even great analysis of an mundane idea cannot turn it into a brilliant strategy.


24

In many organizations, creativity is the opposite of analysis.

Value Discipline

Value Discipline

Shareholder Value

AppliedCreativity

AppliedCreativity

“Ah ha” Factor

Customer-Focused

Finance, Market Research, C-suite

SpreadsheetAnalysis

R&D, PR, Communications

“The bean-counters only know how to say “no”.”

“Innovation is messy and hard to measure.”

In isolation, leads to…• Blue-sky concepts, not actionable• Too difficult or expensive to

implement• Short-sighted, quick-fix ideas

In isolation, leads to…• Naval-gazing, inwardly focused• Incremental or “me too” ideas• Weak value proposition, not related

to customer needs


25

A toolkit and language that includes both creativity and analysis is best positioned to produce high value strategy.

Refine Options and Evaluate Trade-offs

Produce Growth Opportunities

Cycle builds learnings

and buy-in

Value Discipline

Value Discipline

AppliedCreativityApplied

Creativity

Although most people (and organizations) are more comfortable on one side or the other, great strategists can use either or both as needed.


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Alternative Generation

Creativity

+

Need-Finding

+

Idea Generation

+

Sorting


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Creativity

Principles:

• Everyone can be creative (though some of us have forgotten how or are out of the habit)

• Many of us were at our most creative when we were children (or are in a child-like frame of mind)

• Creativity often requires that one step out of the usual routine

• Creativity is important in business• Creative leaders perform better and inspire teams• Creative team members make things happen (1+1 = 3)• Creativity is a source of organic growth that provides value to

all stakeholders• Creative lives are more fun

Note: Many of these exercises and perspective are based on Stanford University’s Joint Program in Design


28

Warm-up Exercise: Personal Introductions

Objective: Get to know one-another and remind each other of our creative and playful selves

Exercise:

Create a self portrait with pipe cleaners which is most reflective of you.

Tell the group your name and talk about why you chose that item


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Exercise: Monk on the Mountain

• "One morning, exactly at sunrise, a Monk began to climb a tall mountain. A narrow path, no more than a foot or two wide, spiraled around the mountain to a glittering temple at the summit. The Monk ascended the mountain, deep in meditation, stopping many times along the way to rest and eat the dried fruit he carried with him. He reached the temple shortly before sunset. After several days of fasting he began his journey down the mountain, starting exactly at sunrise, back along the same path, again with many pauses along the way for food and meditation. His average speed descending was, of course, greater than his average climbing speed.

• The Puzzle: Is there one spot along the path that the Monk occupies on both trips at exactly the same time of day? If so, prove it.

James Adams; Conceptual Blockbusting, a Guide to Better Ideas


30

Exercise: 30 Circles

1. Draw 30 circles on a page

2. Make 5 rows with 6 circles in each row

3. Once you have 30 circles in a 5x6 grid

4. Turn the circles into something


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Intellectual

• Expert belief

• Inflexible style

• Isolated

• Wrong information

Often, our own and others’ biases get in the way of creativity.

James Adams; Conceptual Blockbusting, a Guide to Better Ideas

Perceptual

• Stereotyping

• Difficulty isolating the problem

• Choosing too tight a view

Emotional

• Fear of failure

• Embarrassment

• Uncomfortable with imagination or intuition

Cultural/Environmental

• Control is good, chaos is bad

• Not supposed to have fun

• Lack of support for new ideas

Categories of Conceptual “Blocks”:


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Need-Finding

• Objective: identify unmet needs and areas of opportunity that, if solved, could bring value to all stakeholders− Note, this is about identifying needs, NOT solutions

− The best ideas are always those that meet ACTUAL end-user needs

• Needs can potentially be addressed by many different solutions− E.g., “I should get a new chair” is a narrowly-framed solution. “I need a

comfortable place to work” can be addressed by swapping chairs with someone, a comfy sofa, yoga, better lighting, a pillow, an ergonomic desk, etc.

− Getting at the core of an issue will lead to more and better alternatives



Need-Finding Tool: Idea Maps

• An Idea Map is a graphic, free-association process that helps you, the explorer, “find your way” around a topic

• This map is inside-out because you create it yourself from the location of interest− Not top-down like a regular map – you don’t want someone else’s view

− Maps are often useful in proportion to their completeness• Push for as much detail as possible

• Start at the center: what is the topic you want to understand better?− Move out from there: what are different elements to this topic?

− Continue to free-associate out from the center, identify connections and conflicts

34

Idea Mapping ExerciseIssue: I need a new car

CARS

Manufacturers

Transportation

Other UsesStyle

Ex-US

US

Reliability

Cost

Co. Viability

Unions

History

Pensions

Commute Job Location

Home

Alternatives

Bicycle

TrainCarpool

Image

Carry StuffFun

Power

Color

Activity

Mileage

Vacation

Skiing

Tahoe

Kids

2 car-seats

BuildingMaterials

More?

Sports

MovingFriends

Playhouse

Garden

Freeway

New Job


35

Idea Mapping Exercise: Pharma Example

Who are all the stakeholders? What are their needs in relation to the condition we are addressing?

Asthma Rx

Physicians

Managed Care

REPORT

Patients

Parents

Child/teen

Dependability

Safety

Consistency of Response

Ignore condition

Low-profile

No side effects

Good cost-to-benefit value

Reduce acute (expensive)

episodes

Easy to comply with

Good education and support programs

Minimal side effects

Manufacturer

High impact

Profitability

IP protection


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More Need-Finding Tools

• Ethnographic Research− Hands-off observation of stakeholders in their “natural habitat”− Look for unconscious workarounds and haphazard fixes

• Day-in-the-Life-of (DILO) Interviews− Visit and participate in customers’ daily lives − Seek to understand what the challenges are in their jobs or lives− Only later ask, “is there a way we could help with our product or service?”

• Note: Examine the experience with fresh eyes− What does the user like/not like about the current experience? What is

lacking?− What else does this person do? Feel? Want?− What un-articulated needs might we uncover for this customer?


37

Idea Generation

•There are four parts to a good brainstorming session− Framing a good question

− Warming up

− the Brainstorm itself

− Naming the outcomes


38

Framing

Common Issues Poorly-framed… Better…

Closed-end questions

“I need ten ideas for…” “How many ways can we think of…”

Too narrow, describing methods or means

“How can we invent a new wheel barrow”

“How can I move bricks from here to there?”

Too broad or abstract

“How can we make everyone in the company happy?”

“How do we improve communication (or facilities/ planning/ etc)”


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Warming-up

• To be at their best, people need to move from their analytic/critical focus to a synthesis/non-judgmental focus.

− Bring a joke book to pass around− Ask people to share a childhood nickname or hobby− Ask the team to come up with 25 uses for a paper clip− Visual games - Pictionary™, or “complete the drawing”

game• Physical environment and team dynamics matter

− Be sure to give this exercise enough time− Address any potential conflicts ahead of time− Bring food, candy, toys, etc. (play-doh, pipe-cleaners, etc.)


40

Brainstorming: General rules to fine-tune this familiar tool

Defer Judgment

“The dread of criticism is the death of genius.”

– William Gilmore Simms, American author,

1806-1870

Defer Judgment

“The dread of criticism is the death of genius.”

– William Gilmore Simms, American author,

1806-1870

Quantity

“To have a great idea, have a lot of them.”

– Thomas Edison, inventor, 1847-1931

Quantity

“To have a great idea, have a lot of them.”

– Thomas Edison, inventor, 1847-1931

Quality = Crazy

“One doesn’t discover new lands without first consenting to lose sight

of the shore for a very long time.”

– Andre Gide, French critic, 1869-1951

Quality = Crazy

“One doesn’t discover new lands without first consenting to lose sight

of the shore for a very long time.”

– Andre Gide, French critic, 1869-1951

Leapfrog

“Ideas are like rabbits. You get a couple and learn how to handle them, and pretty soon you have a dozen.”

– John Steinbeck, American author, 1902-

1968

Leapfrog

“Ideas are like rabbits. You get a couple and learn how to handle them, and pretty soon you have a dozen.”

– John Steinbeck, American author, 1902-

1968


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Naming

•Participants often feel like nothing happened if you do not “name” and “number” the outcomes of the session− Unique ideas are given a descriptive and often funny name

that captures the essence of the idea− Things that were recorded can be combined into ideas;

likewise ideas can be split up into multiple ideas− The goal is to say “we had 52 ideas” and be able to

describe each with a unique name− Choosing the best ideas comes next


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Brainstorming Exercise

• Assume that a steel pipe is imbedded in the concrete floor of a bare room as shown. The inside diameter of the pipe is 0.06” larger than the diameter of the ping pong ball that is resting at the bottom of the pipe. Your team has been given the following objects:

*James Adams; Conceptual Blockbusting, a Guide to Better Ideas

• 10 feet of clothesline, a hammer, a screw driver, a box of Corn Flakes, a file, a wire coat hanger, an old shoe, a dog leash, and a light bulb

• List all the ways you can think of to remove the ball without damaging the ball, the pipe, or the floor.


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More Tools for Idea Generation (1): Morphologies

• Create new concepts by creating unnatural structures

− Make many random runs through the alternatives in a Strategy Table

− Interpret your "invention" as a Alternative; could you build a case for it?

• Example:

Cylindrical Plastic Cap Ink

Alternatives: square metal attached cap cartridge

faceted glass no cap embedded

sculptured wood retracts paper tip

beaded paper use for cleaning solid ink

>>> New Innovation: A “square (cubic), wooden, cap-less, solid ink pen", one corner of the cube writes, and each face of the cube can hold a personal picture.


*James Adams; Conceptual Blockbusting, a Guide to Better Ideas

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More Tools for Idea Generation (2): Put Yourself on Someone Else’s Shoes

Role-Playing “What would we do if we were…”

− Big Pharma? A small biotech?

− Resource unconstrained?

− Serving all the needs of specific physicians?

− A Managed care provider?

− Others…

Devil’s Advocate Questioning

What could your competitor do to hurt you the most?

Back-casting Go forward into the future. Assume a resolution of the problem. How could this have occurred?


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• Objective: identify a set of Alternatives that is worth evaluating

• The right set of Alternatives will…− Cover a wide range of “test wells”

• Allow the team to explore and learn from the full range of possibilities

− Push the boundaries but be realistic• Do not include options that are completely out of scope

− Gives management confidence that the topic has been fully-explored• Include options that decision-makers will want to understand better and evaluate• Be willing to share the full list and range of brainstormed ideas


Sorting

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There are several prioritization approaches that can be used.

Group consensus/discussion: Ask the group to highlight the top 3-4 options and confirm agreement. − Best used if the choice is

straightforward or team is already well-aligned

Low Risk

Best Options

High

Risk

Low Value

High Value

Voting (n/3): Each participant is given a set number of votes, calculated as 1/3 the number of options under consideration. Have each person mark their votes on the wall.

− Generally shows team preference and provides guidance but is not guaranteed to provide a clear “top 3” or “top 4”. Good basis to begin discussion, however.

2x2 Matrix: Each option is mapped against a 2x2 matrix of value vs. risk., or other important characteristics of the market

− The dividing lines and specificity are less important than relative placement

− Those in the best value corner are carried forward

Scoring System: Each option is scored against commercial and technical considerations on a scale of 1 to 5

− Those with the highest overall fit (sum of scores) are carried forward.

Option 1

Option 2

Unmet Medical Need

3 4

Market Attractiveness

2 4

Competitive Advantage

2 2

Scientific Rationale

3 4

Complexity of Program

3 1

Total Score (Fit) 13 15

Matrix and Scoring require team consensus on the list and score or placement in the matrix. This may require off-line input or iteration.

Matrix and Scoring require team consensus on the list and score or placement in the matrix. This may require off-line input or iteration.


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Judging the quality of alternatives indicates whether value-creation potential has been fully explored.


0% “Business as usual”− Only one alternative− Considering infeasible alternatives− Missing good/great alternatives

50% “Creative, good alternatives”− Alternatives that “span the space”− May need to verify feasibility− No clear winner; need evaluation

100% “Hybrid alternatives” − Explored options and gaming strategies− New alternatives combining best features− Understand how to implement each strategy

3Meaningful, Reliable

Information

4Clear

Values andTrade-offs

5LogicallyCorrectReasoning

6Commitmentto Action

0% 100%

DecisionQuality

1Appropriate

Frame

2Creative,Doable

Alternatives

2Creative,Doable

Alternatives


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