Strategy machine an Idea
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The document discusses strategies for firms that are "stuck in the middle" between low-cost competitors and differentiated competitors. It proposes that such firms have blurred strategies and cultures (paragraph 1). It then outlines Porter's framework for strategic positioning based on low costs or differentiation (paragraph 2). The next sections discuss various strategies for achieving competitiveness, including restructuring, reengineering processes, and reinventing strategies (paragraph 3). The remainder of the document describes a "Strategy Machine" methodology for developing strategies, including consolidating information, formulating strategies, and finalizing strategies for implementation. It involves visualizing value curves and strategic profiles over multiple levels.
Strategy machine an Idea
- 2. HYPOTHESIS: STUCK IN THE MIDDLE The firm stuck in the middle is almost guaranteed low profitability. It either loses the high-volume customers who demand low price or must bid away it profit to get this business away from low cost firms. Yet it also loses high-margin targets - the cream – to the firms who are focused on high- margin targets or have achieved differentiation overall. The firm stuck in the middle also probably suffers from a blurred corporate culture and a conflicting set of organizational arrangements and motivation system M.E. Porter Strategic advantage Strategictarget Industrywide Particular Segment Only Uniqueness Perceived by the customer Low Cost Position Differentiation Overall Cost leadership Focus What is the potential of the business?
- 3. THE QUEST FOR COMPETITIVENESS Restructuring the Portfolio and Downsizing Headcount Smaller Reengineering Process and Continuous Improvement Better Different Reinventing Industries and Regenerating Strategies The Quest for Competitiveness Fat Lazy Blind Pursue differentiation and low cost to break the value-cost- trade-off
- 4. CONSIDER Low cost position may well be crucial, but low-cost position overall is not necessarily important or the only way to compete. Arching low-cost position overall often involves a sacrifice in other areas of strategy, like differentiation, technology, or service on which other competitor strategic are based. But… Competing on bases others than low cost must be constantly aware of the differential between their cost and those of the overall low-cost strategic competitors. Although Vision is a scarce commodity, structural analysis can help direct thinking toward the areas of change that would yield the highest payoff. … Value Innovation …
- 5. GENERIC FRAMEWORK OF THE STRATEGY MACHINE The level of serial movements has an impact of the total quality. The needed Quality define the elements of each the serial level. Map of strategy space instead of price and volume Consolidation Formulation FinalisationFocus Comprehension Consensus Consequences Commitment Structuring the existing Data/ Information with the “Competitors response profile’s” Build up Competitive strategic framework Identify Information lacks Define the vital Dimensions of Competitive Strategy Characterising the Strategic Groups Customer Equity, Customer Life time Value The Implication for Formulation of Strategy Formulation of Vision, and Goal. Hand over to the BSC process
- 6. STRATEGY MACHINE – DESCRIPTION OF LEVEL • Level 1: Key Machine Modules • Level 2: Detail the Modules • Level 3: Module Elements A A1 A2 A1.1 A1.2 A1.3 The goal is a transformation process that is revolutionary in result, but evolutionary in execution
- 7. THE QUALITY LEVERS OF “STRATEGY” If your company's strategic profile does not clearly reveal those qualities, your strategy will likely be muddled, undifferentiated, and hard to communicate Levers Drivers A Company characteristic profile Own Agenda Low cost and simplify the business Strategic profile Emphasise only few factors – Low Cost Four action Framework New competitor factors Differentiate the profile (from the industry average profile) Strategy Canvas among industry player Truthfully Strong and Authentic Trust and interest for Customer Clear cut out Clear message Advertise an offering Elimination Raising Reducing Creating Differentiate value Curve within the industry Drawn factors form alternative industry Focus Divergence Compelling Tagline
- 8. STRATEGY MACHINE – LEVEL 1 Consolidation Visual Awakening Focus Visual Exploration Formulation Strategy Fair Finalisation Visual Communication Synthesized the future value curve: Draw your "to be" strategy canvases based on insights from field observations. Get feedback on alternative strategy pictures from customers, lost customers, competitors' customers, and non- customers. Use feedback to build the “Best to be" strategy. Value Curve Before/ After tbd1 tbd1 tbd1 tbd2 tbd3 tbd4 tbd5 tbd6 tbd7 tbd8 tbd9 tbd10 tbd11 tbd12 Levelbefore Levelafter Low High Low Value Curve Before/ After tbd1 tbd1 tbd1 tbd2 tbd3 tbd4 tbd5 tbd6 tbd7 tbd8 tbd9 tbd10 tbd11 tbd12 Levelbefore Levelafter Low High Low Value Curve Before/ After tbd1 tbd1 tbd1 tbd2 tbd3 tbd4 tbd5 tbd6 tbd7 tbd8 tbd9 tbd10 tbd11 tbd12 Levelbefore Levelafter Low High Low Value Curve Before/ After tbd1 tbd1 tbd1 tbd2 tbd3 tbd4 tbd5 tbd6 tbd7 tbd8 tbd9 tbd10 tbd11 tbd12 Levelbefore Levelafter Low High Low Value Curve Before/ After tbd1 tbd1 tbd1 tbd2 tbd3 tbd4 tbd5 tbd6 tbd7 tbd8 tbd9 tbd10 tbd11 tbd12 Levelbefore Levelafter Low High Low Value Curve Before/ After tbd1 tbd1 tbd1 tbd2 tbd3 tbd4 tbd5 tbd6 tbd7 tbd8 tbd9 tbd10 tbd11 tbd12 Levelbefore Levelafter Low High Low Value Curve Before/ After tbd1 tbd1 tbd1 tbd2 tbd3 tbd4 tbd5 tbd6 tbd7 tbd8 tbd9 tbd10 tbd11 tbd12 Level before Level after Low High Low Distribute your before-and-after strategic profiles on one page for easy comparison. Support only those projects and operational moves that allow your company to close the gaps to actualize the new strategy. Design Stairway to Value innovation Visualizing Strategy at the Corporate Level / BU Create the new Portfolio Map (PMS) and Focus activities Flesh out the founded strategy and validate the ideas to ensure their commercial viability. It shows the strategic profile of an industry by depicting very clearly the factors that affect competition among industry players The basic component is the value curve. Which shows the strategic profile of current and potential competitors, identifying which factors they invest in strategically The factors of competition for the industry are listed on the horizontal axis. The vertical axis indicates the degree to which the company and the providers of alternative services invest in the competitive factors. Value Curve Before/ After tbd1 tbd1 tbd1 tbd2 tbd3 tbd4 tbd5 tbd6 tbd7 tbd8 tbd9 tbd10 tbd11 tbd12 Level before Level after Low High Low Inputs: • Customer/ User List • Competitor Profile • Factor list Outputs • Value curve Inputs: • Customer/ User needs • Different point of view of a new strategy Outputs: • Different potential value curve The way is to catch the resolving differences of opinion about the current state of play. Inputs: • Six path Framework • Field observations Outputs: • Validate Strategy canvas • Vision, • First draft of Goals and Objective -+-- Have you addressed adoption hurdles up front Adoption -+-- Does you cost structure meet the target cost Cost +-+++ Is your price easily accessible to the mass of buyers? Price -++- Is there exceptional buyer utility in your business idea? Are there compelling reasons to buy you offering? Utility Competitor 3Competitor 2Competitor 1CompanyQuestion -+-- Have you addressed adoption hurdles up front Adoption -+-- Does you cost structure meet the target cost Cost +-+++ Is your price easily accessible to the mass of buyers? Price -++- Is there exceptional buyer utility in your business idea? Are there compelling reasons to buy you offering? Utility Competitor 3Competitor 2Competitor 1CompanyQuestion Value Curve Before/ After tbd1 tbd1 tbd1 tbd2 tbd3 tbd4 tbd5 tbd6 tbd7 tbd8 tbd9 tbd10 tbd11 tbd12 Level before Level after Low High Low Inputs: • The future strategy canvas Outputs: • Company strategy • Action plan • Strategic aligned action map • Communication model • Prepare BSC Draw the company's strategic profile or value curve showing how it invests in the factors of competition and how it might invest in them in the future. Discover the adoption of hurdles for non-customers. Observe the distinctive advantages of alternative products and services. See which factors you should eliminate, reduce, raise and create (ERRC).