This Slideshare presentation is a partial preview of the full business document. To view and download the full document, please go here: http://flevy.com/browse/business-document/strategy-development-fundamentals-1654 DOCUMENT DESCRIPTION A strategy is the integrated array of distinctive choices made by a company to develop and sustain a winning proposition in the market place (value, difference, position, effectiveness). This presentation proposes a practical definition of strategy development. It also identifies critical success factors and guiding principles for effective strategy development. This deck shows how strategy development relies on a systematic logical flow (insights/options/response) that seeks answer 3 fundamental questions: 1. What are the opportunities offered by the market and how well positioned is the company to capture them? 2. What are the company's options to shape or adapt to the market conditions to its best advantage? 3. What select few priorities will the company need to focus on and how in order to win? This deck also introduces the 4 key outcomes of strategy development: * A robust and creative strategy that clearly identifies the select priorities to drive success. * Organizational understanding, momentum, and enthusiasm. * Strategic actions embedded in day-to-day business. * Reinforced capability to adapt and evolve as market and industry develop.

1. Business Framework
Strategy Development Fundamentals
A strategy is the integrated array of distinctive choices
made by a company to develop and sustain a winning
proposition in the market place (value, difference,
position, effectiveness). This presentation proposes a
practical definition of strategy development. It also identifies
critical success factors and guiding principles for effective
strategy development.
Find our other documents at http://flevy.com/seller/learnppt
STRATEGY
DEVELOPMENT
Decisions
Debate and Decisions
not Review and Approval
Action
Analysis
Evidence and Choices
not Opinions and Facts
Mobilization and Execution
not Planning and Informing
Providing superior
insights on what the
business could do
by identifying the
right issues,
assembling the
right evidences,
and conducting
rigorous options
identification and
assessment.
Ensuring a thorough and unbiased
assessment of available options while driving
effective and consistent
decision-making.
Introduce
disruptive/
facilitating
elements
across the
organization
to foster
learning and
mobilization
and
establish the
conditions
for
successful
execution.

2. 4
Strategy development blends analysis, decision, and action to develop a
winning proposition around value, difference, position, and effectiveness
Executive Summary
A strategy is the integrated array of distinctive choices made by a company to develop and sustain a
winning proposition in the market place (value, difference, position, effectiveness).
Strategy development relies on a systematic logical flow (insights/options/response) to answer three
fundamental questions:
• What are the opportunities offered by the market and how well positioned is the company to capture
them?
• What are the company’s options to shape or adapt to the market conditions to its best advantage?
• What select few priorities will the company need to focus on and how in order to win?
It can be conducted in various settings, but should ultimately target four key outcomes:
• A robust and creative strategy that clearly identifies the select priorities to drive success.
• Organizational understanding, momentum, and enthusiasm.
• Strategic actions embedded in day-to-day business.
• Reinforced capability to adapt and evolve as market and industry develop.
State-of-the-art strategy development consequently blends analysis, decision, and action—it is about
the right results, not just the right answers.
1
2
3
1
2
3
4
This document is a partial preview. Full document download can be found on Flevy:
http://flevy.com/browse/document/strategy-development-fundamentals-1654

3. 7
Central to a “strategy that works” is a winning proposition
Winning Proposition
Core to success, and therefore any strategy that works, is the definition and execution of a
winning proposition built around four levers.
Companies diversely “pull” on each lever—chances of success however diminished
when largely underperforming in any of them.
Winning
Proposition
VALUE
• Both tangible and intangible (e.g.,
brand, experience).
POSITION
• Customer and market segments,
geography, value chain.
DIFFERENCE
• Relative to competition and broader
customer referential.
EFFECTIVENESS
• Assets, operations, organization
(including adaptiveness).
Superior
Value Creation
1
2
3
4
This document is a partial preview. Full document download can be found on Flevy:
http://flevy.com/browse/document/strategy-development-fundamentals-1654

4. 10
Strategy development is the activity driving the decisions ultimately optimizing
the delivery of a winning proposition
Resource Allocation Model
Corporate
Business Unit
Function
VALUE POSITION DIFFERENCE EFFECTIVENESS
Business
portfolio choices
(invest/divest).
Core capabilities
(share/nurture,
renew).
Corporate
configuration,
systems, staff,
and culture.
Business
synergies.
Product, market ,
customer,
channel scope.
Core
competences,
assets,
processes.
Assets and
processes
configuration,
business
discipline.
Customer value
proposition.
Tailorization and
alignment
mechanisms.
Delivery
mechanism,
know-how,
innovation.
Performance
management,
investment
prioritization.
Priorities,
measures,
targets.
Resource
allocation
Resource
allocation
Resource
allocation
Winning Proposition
STRATEGY
1 2 3 4
This document is a partial preview. Full document download can be found on Flevy:
http://flevy.com/browse/document/strategy-development-fundamentals-1654

5. 13
Diverse tools can be applied to support each phase of the process
Strategic Decision-making Process – Strategy Development Frameworks
Industry/Competition
• Industry definition
• SWOT, SCP, PEST, Five forces
• Market-sizing and share
• Industry supply/capacity curves
• Strategic control map
• Lifecycle
• Competitors profiling
• Industry value chain/networks
• Strategic groups/clusters
• Financial ratio, Dupont/RONA model
• Growth share matrix
• Key success factors/position matrix
Customers
• Needs-based/value-based segmentation
• Cluster analysis
• Customer value analysis
• Key purchasing criteria
• Price elasticity
• Value exchange framework
• Customer experience
• Product life cycle
• Product substitution S-curve
• Adoption cycle
Economic Performance
• Cost structure analysis/ABC costing
• Break-even analysis
• DCF Portfolio valuation
• Relative cost-positioning
• Economies of scale
• Experience curve
• Price elasticity
• Business/unit profitability
Internal Capabilities
• Company value chain
• Core competences
• Strengths and weaknesses
• Strategies/initiative portfolio
• Execution effectiveness diagnostic
• Venkat matrix
• Cultural assessment
• Talent pool assessment
FIST model
Strength/attractiveness matrix
Maturity/competitive position matrix
Ability to implement/attractiveness
matrix
Market-activated corporate strategy
framework
Customer relevancy matrix
Portfolio Management Process
Cost/benefit analysis - NPV
Decision trees/Decision analysis
Real value options
Game theory
Scenario planning
Vision engineering
Transformation roadmap
Business plan
Benefit tracking
Strategy mapping
Executive dashboard
Balanced Scorecard
Beyond Budgeting
Management by objectives
RACI
Operating model design
Organizational design
Industry
attractiveness
and drivers
of success
Most attractive
customer groups
and needs
Sources and
level of value
creation
Available
sources of
differentiation
RESPONSE ORGANIZATIONALTERNATIVE OPTIONS EVALUATIONINSIGHTS GENERATION
This document is a partial preview. Full document download can be found on Flevy:
http://flevy.com/browse/document/strategy-development-fundamentals-1654

6. 16
Academics disagree as to how the process is best organized—the table below
compares various schools of thought on strategy development
Strategy Development Schools of Thought Comparison
Classical School
Entrepreneurial
School
Learning School
Complexity
Theory
Adaptive
Enterprise
Source Michael Porter
Schumpeter, Collins
and Moore
Mintzberg Santa Fe Institute Darwin
Guiding
principle
Trust the process Trust the leader
Everyone is a
visionary leader
Let it go Keep on moving
Process
implications
Formal.
Thinking and
acting strictly
separated.
Analysis-driven.
Semi-conscious at
best.
Don’t plan, create.
Be flexible, open.
Try fast, learn fast. Create the
conditions for self-
organization.
Decentralize.
Cultivate chaos.
Focus on
organizational
capabilities.
Critics 10% of formal
strategy ultimately
realized.
Culture of awed
dependency.
Tunnel-vision.
Learning, by itself,
does not
guarantee the
formation of a
winning plan.
Applicability to
larger
organizations.
Self-interest can
go against the
best interest of the
organization.
Evolution is a low-
odd game (99% of
past species are
now instinct).
Companies don’t
have ‘learning
disabilities’ – in
theory.
This document is a partial preview. Full document download can be found on Flevy:
http://flevy.com/browse/document/strategy-development-fundamentals-1654

7. 19
So, does strategy development boil down to using the Magic 8 Ball?
“Oddly enough, that was the one time I asked the Magic 8 Ball.”
This document is a partial preview. Full document download can be found on Flevy:
http://flevy.com/browse/document/strategy-development-fundamentals-1654

8. 22
Each approach presents a specific set of challenges
Strategy Development Approaches – Challenges
Formal
Informal
Scheduled Event-based
Strategic
planning
Market
entry
strategy
Marketing
Strategy
Product Portfolio
Strategy
Functional
Strategy
Ground-up
Strategy
Formulation
Turnaround
Annual
off-site
Ad-hoc
off-site
Regular
executive
sessions
Adhoc
executive
sessions
Regular
executive
interactions
Ad-hoc
executive
interactions
Opportunistic
Strategic
Decision Making
Effective responses
to unexpected
opportunities and
problems
Challenges
• Focusing on the right
issues/distraction.
• Connecting specific
response with broader
activities.
• Linkage with ‘formal’
resource allocation
decisions.
• Cascading down the
organization.
Strategic Thinking
Creative, entrepreneurial
insight into a company,
its industry, and its
environment
Formal Strategic
Planning
Systematic, comprehensive
approaches
to developing
strategies
Challenges
• Dependence on ‘quality’
of executive team.
• Exposure to tunnel-
vision/political agenda
bias.
• Linkage with ‘formal’
resource allocation
decisions/process.
• Cascading down the
organization.
Challenges
• Routine.
• Inward observation
(update).
• Flexibility and
adaptiveness to
environment fluidity.
• Bias towards
‘quantifiable strategies’.
• Disconnected from
execution.
This document is a partial preview. Full document download can be found on Flevy:
http://flevy.com/browse/document/strategy-development-fundamentals-1654

9. 25
Contents
Overview
Winning Proposition Development
Strategic Decision-making Process
Strategy Development – Schools of Thought
Strategy Development – Approaches & Outcomes
Guiding Principles
This document is a partial preview. Full document download can be found on Flevy:
http://flevy.com/browse/document/strategy-development-fundamentals-1654

10. 1
Flevy (www.flevy.com) is the marketplace
for premium documents. These
documents can range from Business
Frameworks to Financial Models to
PowerPoint Templates.
Flevy was founded under the principle that
companies waste a lot of time and money
recreating the same foundational business
documents. Our vision is for Flevy to
become a comprehensive knowledge base
of business documents. All organizations,
from startups to large enterprises, can use
Flevy— whether it's to jumpstart projects, to
find reference or comparison materials, or
just to learn.
Contact Us
Please contact us with any questions you may have
about our company.
• General Inquiries
support@flevy.com
• Media/PR
press@flevy.com
• Billing
billing@flevy.com