KSOM Outline Background: Strategy - A conceptual framework, the big issue is executing strategy...
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Transcript of KSOM Outline Background: Strategy - A conceptual framework, the big issue is executing strategy...
KSOM
Outline
• Background: Strategy - A conceptual framework, the big issue is executing strategy
• Strategy Maps: The 1st step to executing strategy is describing strategy
• Alignment: Internal alignment of performance drivers with customer value proposition is source of competitive advantage
• Cause-effect: Strategy is a hypothesis, test it out analytically
@Ashok K. Sar 1Winning Thru Effective Strategy Execution
KSOM
Strategy Execution
• What: Less than 10% strategies effectively formulated are executed effectively
• Why:– Problem of description– Lack of understanding … 95% of workforce– Inability to link with budgets … 60% of organi
zations– Spending less than 1 hour per month discussing
strategy … 85% of executive teams
Winning Thru Effective Strategy Execution @Ashok K. Sar 2
KSOM
Strategy: A conceptual frameworkV.I.P.
• Creating and sustaining competitive advantage– Managing Value– Managing Imitation– Managing Perimeter
• Strategic positions– Best products– Total customer solutions– Systems Lock-in
@Ashok K. Sar 3Winning Thru Effective Strategy Execution
KSOM
Value
Winning Thru Effective Strategy Execution @Ashok K. Sar 4
CustomerWillingnessTo pay
Price
Cost – AmountPaid to employeesAnd suppliers
Supplier’s Cost (orOpportunity cost)
Total Value
Value captured by customers
Value captured by firm
Value captured by suppliers
KSOM
Ashok Sar 5
Added Value – Two Competitors
Supplier opportunity costHarnischfeger crane = $ 2 m
Willingness to pay forHarnischfeger crane = $ 7.5 m
Willingness to pay forKranco crane = $ 7.5 m
Supplier opportunity costKranco crane = $ 2 m
HarnischfegerAdded value
= $ 0 mn.
Supplier opportunity costKranco crane = $ 2 m
Supplier opportunity costHarnischfeger crane = $ 3 m
Willingness to pay forHarnischfeger crane = $ 9 m
Willingness to pay forKranco crane = $ 7.5 m
Total value created = $ 5.5 m
Total value created = $ 5.5 m
Total value created = $ 6 m
Total value created = $ 5.5 m
HarnischfegerAdded value= $ .5 mn.
KSOM
Managing Imitation
• Basing value creation on broad range of resources & capabilities which are imperfectly tradable, imitable & substitutable, & superior fit
• Internal accumulation - combining tradable inputs with existing asset stocks and learning by doing and not endowment, sharing or acquiring
• Think of : 10 R&C being imitated to the extent of 80% = Total imitation of ?
Winning Thru Effective Strategy Execution @Ashok K. Sar 6
KSOM
Managing Perimeter
• Products• Geographic territories• Value chain activities
Winning Thru Effective Strategy Execution @Ashok K. Sar 7
KSOM
@Ashok K. Sar 9
Fiduciary Perspective Customer Perspective
Internal Perspective
Learning & Growth Perspective
Winning Thru Effective Strategy Execution
Describing Strategy
KSOM
AlignmentDesigning a Strategy Map -> Balanced Scorecard
• Are financial objectives clearly defined?• Is the customer value proposition clearly
defined?• Are key business processes aligned with each
customer value proposition & financial objectives?
• Are the human capital & information capital aligned with key business processes?
• Is the organization capital aligned with a strategic change agenda?
Winning Thru Effective Strategy Execution @Ashok K. Sar 11
KSOM
Ashok Sir icfai 12
Building Personal Scorecards
• Cross functional team• Short duration• Full time• Clear deliverables– Cause and effect tree– Criteria– Building team scorecard– Create linkage to performance appraisal– Implementation Tool kit