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Practice of Strategy

Practice of Strategy

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Practice of Strategy

  1. 1. Slide 15.1 Johnson, Whittington, Scholes, Angwin and Regnér, Exploring Strategy Powerpoints on the Web, 10th edition ©Pearson Education Limited 2014 Lesson 11: Practice of Strategy BM3040 Strategic Management Pro. Wasantha Rajapakshe, PhD Associate Professor, SLIIT Business School, SLIIT, Malabe.
  2. 2. Slide 15.2 Johnson, Whittington, Scholes, Angwin and Regnér, Exploring Strategy Powerpoints on the Web, 10th edition ©Pearson Education Limited 2014 Learning outcomes • Assess who to involve in strategising, with regard particularly to top managers, strategy consultants, strategic planners and middle managers. • Evaluate different approaches to strategising activity, including analysis, issue selling, decision making and communicating. • Recognise key elements in various common strategy methodologies, including strategy workshops, projects, hypothesis testing and writing business cases and strategic plans.
  3. 3. Slide 15.3 Johnson, Whittington, Scholes, Angwin and Regnér, Exploring Strategy Powerpoints on the Web, 10th edition ©Pearson Education Limited 2014 The pyramid of strategy practice
  4. 4. Slide 15.4 Johnson, Whittington, Scholes, Angwin and Regnér, Exploring Strategy Powerpoints on the Web, 10th edition ©Pearson Education Limited 2014 The pyramid of strategy practice • The pyramid highlights three questions that run through this chapter: who to include in strategy-making; what to do in carrying out strategising activity; and which strategising methodologies to use in this strategising activity. • Placing strategists at the top of the pyramid emphasises the role of managerial discretion and skill in strategy-making. It is the strategists who drive both the strategising activity and the strategy methodologies that are at the base of the pyramid. • Strategists’ choices and skill with regard to activity and methodologies can make a real difference to final outcomes. • The rest of the chapter seeks to guide practising strategists through the key choices they may have to make in action. 4
  5. 5. Slide 15.5 Johnson, Whittington, Scholes, Angwin and Regnér, Exploring Strategy Powerpoints on the Web, 10th edition ©Pearson Education Limited 2014 The strategists (WHO). The various people involved in making strategy. It does not assume that strategy is made just by top management. Strategy often involves people from all over the organisation, and even people from outside. 5
  6. 6. Slide 15.6 Johnson, Whittington, Scholes, Angwin and Regnér, Exploring Strategy Powerpoints on the Web, 10th edition ©Pearson Education Limited 2014 The strategists (who?)– top managers and directors Chief executive officer Top management team Non-executive directors
  7. 7. Slide 15.7 Johnson, Whittington, Scholes, Angwin and Regnér, Exploring Strategy Powerpoints on the Web, 10th edition ©Pearson Education Limited 2014 Strategy skills Three qualities senior managers need to contribute to high-level strategy making: • Mastery of analytical concepts and techniques • Social and influencing skills • Group acceptance as a player – respect.
  8. 8. Slide 15.8 Johnson, Whittington, Scholes, Angwin and Regnér, Exploring Strategy Powerpoints on the Web, 10th edition ©Pearson Education Limited 2014 Who to include in strategy making?
  9. 9. Slide 15.9 Johnson, Whittington, Scholes, Angwin and Regnér, Exploring Strategy Powerpoints on the Web, 10th edition ©Pearson Education Limited 2014 Strategising activities (WHAT). The kinds of work and activity that strategists carry out in their strategy-making. strategy analysis, the selling of strategic issues, the realities of strategic decision-making and the critical task of communicating strategic decisions 9
  10. 10. Slide 15.10 Johnson, Whittington, Scholes, Angwin and Regnér, Exploring Strategy Powerpoints on the Web, 10th edition ©Pearson Education Limited 2014 Strategy analysis (What?) • Managers frequently use a limited set of analytical techniques to devise strategy. Ex. SWOT • Analysis costs time and money – managers need to judge how much analysis they really need.
  11. 11. Slide 15.11 Johnson, Whittington, Scholes, Angwin and Regnér, Exploring Strategy Powerpoints on the Web, 10th edition ©Pearson Education Limited 2014 Strategic issue-selling (1) Strategic issue-selling is the process of gaining the attention and support of top management and other important stakeholders for particular strategic issues.
  12. 12. Slide 15.12 Johnson, Whittington, Scholes, Angwin and Regnér, Exploring Strategy Powerpoints on the Web, 10th edition ©Pearson Education Limited 2014 Guidelines for strategic decision making • Build multiple simultaneous alternatives. • Track real-time information. • Seek the views of trusted advisors. • Aim for consensus, but not at any cost (challenge through conflict can be useful). • Harness/connect intuition.
  13. 13. Slide 15.13 Johnson, Whittington, Scholes, Angwin and Regnér, Exploring Strategy Powerpoints on the Web, 10th edition ©Pearson Education Limited 2014 Strategic decision making Kahneman has identified five common biases in making decisions: • Confirmation bias – seeking data that confirms a decision that has already been made, and to neglect information that might disconfirm it. • Anchoring bias – being tied to one piece of information that may no longer be relevant. For example, managers may rely on past sales trends, and neglect the possibility that these trends might change.
  14. 14. Slide 15.14 Johnson, Whittington, Scholes, Angwin and Regnér, Exploring Strategy Powerpoints on the Web, 10th edition ©Pearson Education Limited 2014 Strategic decision making Kahneman has identified five common biases in making decisions: • Saliency bias – a particular analogy becomes unduly influential (e.g. the ‘halo’ effect). For example, managers may say a particular project is just like a successful project in the past, minimising differences: on the analogy with past experience, they simply expect success to be repeated.
  15. 15. Slide 15.15 Johnson, Whittington, Scholes, Angwin and Regnér, Exploring Strategy Powerpoints on the Web, 10th edition ©Pearson Education Limited 2014 Strategic decision making Kahneman has identified five common biases in making decisions: • Affect bias – becoming too attached to a particular option (the ‘champion’s bias’) • Risk bias – over-optimism reducing real risk. instead of relying on the organisation’s own assessment of its capabilities (an ‘inside view’), decision-makers also look at the record of other organisations undertaking similar projects (an ‘outside view’).
  16. 16. Slide 15.16 Johnson, Whittington, Scholes, Angwin and Regnér, Exploring Strategy Powerpoints on the Web, 10th edition ©Pearson Education Limited 2014 Strategising methodologies (WHICH) • The standard methodologies that managers use to carry out their strategising activities. This includes strategy workshops for formulating or communicating strategy; strategy projects and strategy consulting teams; hypothesis testing to guide strategy work; and the creation of strategic plans and business cases. 16
  17. 17. Slide 15.17 Johnson, Whittington, Scholes, Angwin and Regnér, Exploring Strategy Powerpoints on the Web, 10th edition ©Pearson Education Limited 2014 Strategy methodologies (Which?) Strategy workshops Strategy projects Hypothesis testing Business cases and strategic plans
  18. 18. Slide 15.18 Johnson, Whittington, Scholes, Angwin and Regnér, Exploring Strategy Powerpoints on the Web, 10th edition ©Pearson Education Limited 2014 Strategy workshops (1) Strategy workshops (or strategy away-days) involve groups of executives working intensively for one or two days, often away from the office, on organisational strategy.
  19. 19. Slide 15.19 Johnson, Whittington, Scholes, Angwin and Regnér, Exploring Strategy Powerpoints on the Web, 10th edition ©Pearson Education Limited 2014 Strategy workshops (2) Workshops designed to question existing strategy or develop new strategy should: • Employ strategy concepts and tools • Use a specialist facilitator to focus discussion and ensure participants contribute • Enjoy the visible support of the workshop sponsor (who may well be the CEO) • Diminish everyday functional and hierarchical roles – to remove inhibitions and get away from normal routines.
  20. 20. Slide 15.20 Johnson, Whittington, Scholes, Angwin and Regnér, Exploring Strategy Powerpoints on the Web, 10th edition ©Pearson Education Limited 2014 Strategy projects Strategy projects involve teams of people assigned to work on particular strategic issues over a defined period of time. Projects might be used to: • Explore problems and/or opportunities • Implement agreed elements of strategy
  21. 21. Slide 15.21 Johnson, Whittington, Scholes, Angwin and Regnér, Exploring Strategy Powerpoints on the Web, 10th edition ©Pearson Education Limited 2014 Hypothesis testing Hypothesis testing is a methodology used particularly in strategy projects for setting priorities in investigating issues and options.
  22. 22. Slide 15.22 Johnson, Whittington, Scholes, Angwin and Regnér, Exploring Strategy Powerpoints on the Web, 10th edition ©Pearson Education Limited 2014 Business cases A business case provides the data and argument in support of a particular strategy proposal, e.g. investment in new equipment. A business case should: • Focus on strategic needs • Be supported with key data • Provide a clear rationale • Demonstrate solutions and actions • Provide clear progress measures.
  23. 23. Slide 15.23 Johnson, Whittington, Scholes, Angwin and Regnér, Exploring Strategy Powerpoints on the Web, 10th edition ©Pearson Education Limited 2014 Strategic plans A strategic plan provides the data and argument in support of a strategy for the whole organisation. A strategic plan has the following elements: • Mission, goals and objectives statement • Environmental analysis • Capability analysis • Proposed strategy • Resources required • Required changes in structures, systems and culture.
  24. 24. Slide 15.24 Johnson, Whittington, Scholes, Angwin and Regnér, Exploring Strategy Powerpoints on the Web, 10th edition ©Pearson Education Limited 2014 Summary (1) • The practice of strategy involves critical choices about who to involve in strategy, what to do in strategising activity and which strategising methodologies to use in order to guide this activity. • Chief executive officers, senior managers, non-executive directors, strategic planners, strategy consultants and middle managers are all involved in strategising. Their degree of appropriate involvement should depend on the nature of strategic issues.
  25. 25. Slide 15.25 Johnson, Whittington, Scholes, Angwin and Regnér, Exploring Strategy Powerpoints on the Web, 10th edition ©Pearson Education Limited 2014 Summary (2) • Strategising activity can involve analysing, issue-selling, decision making and communicating. Managers should not expect these activities to be fully rational or logical and can valuably appeal to the non-rational characteristics of the people they work with. • Practical methodologies to guide strategising activity include strategy workshops, strategy projects, hypothesis testing and creating business cases and strategic plans.

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