Dawgen Global Insights July 2021 to August 2021

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DAWGEN GLOBAL INSIGHTS

DAWGEN GLOBAL INSIGHTS I JULY / AUGUST 2021

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INTRODUCTION TO OUR MONTHLY NEWSLETTER DAWGEN GLOBAL INSIGHTS

Welcome to Dawgen Global and our July 2021 to August 2021 edition of our Monthly NewsletterDawgen Global Insights.

This Newsletter has been produced to provide you with an overview of our firm and the wide range of services offered by Dawgen Global entities, whether audit, accounting, tax or advisory services.

Over the past 19 years, I can proudly say that Dawgen has significant experience and expertise that we draw upon, day after day, helping our clients to progress. Our Monthly Newsletter will demonstrate the strength of our firm and the unique and innovative approach we engender.

This is communicated through client case studies on how our team have collaborated to help our clients succeed.

This issue of Dawgen Global Insights explores several management tools and strategies including the Four (4) Schools of Strategy.

The 4 Schools of Strategy—Position, Execution, Adaption, and Execution—can be visualized by being mapped to a simple 2x2 matrix. Each School of Strategy has something significant to offer strategists, as long they are adopted in a balanced manner.

In this edition we also examine the Five (5) P’s of Purpose. Most of us have experienced a uniqueness in some organizations. They stand out, exude fervor and zeal. Their customers are pleased with the company, employees enjoy working there, and investors and shareholders take pride in being part of it.

It is not their exceptional product or service rather the Purpose that makes organizations unique—their reason for existence and the resulting impact it makes on the world.

In order to be genuine, Purpose has to be embedded in the organization’s DNA, which is not a trivial task. This presentation discusses the 5 Ps of Purpose that can help organizations entrench genuine Purpose in its core.

I hope that you will find the information we provide in this Newsletter helpful.

Dawkins Brown

Executive Chairman Dawgen Global

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DAWGEN GLOBAL INSIGHTS I JULY / AUGUST 2021

TABLE OF CONTENT 04 5 Ps of Purpose

18 4 Schools of Strategy DAWGEN GLOBAL INSIGHTS I JULY / AUGUST 2021

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5 Ps of Purpose

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DAWGEN GLOBAL INSIGHTS I JULY / AUGUST 2021

An organization cannot

thrive without a Purpose Purpose should be embedded in the core for an organization to achieve long-term success

M

ost of us have experienced a uniqueness

In order to be genuine, Purpose has to be embedded

in some organizations. They stand out,

in the organization’s DNA, which is not a trivial task.

exude fervor and zeal. Their customers

This article discusses the 5 Ps of Purpose that can

are pleased with the company, employees enjoy

help organizations entrench genuine Purpose in its

working there, and investors and shareholders take

core. The 5 Ps identifies 5 core areas of focus:

pride in being part of it.

It is not their exceptional product or service rather the Purpose that makes organizations unique— their reason for existence and the resulting impact it makes on the world.

1

Product Portfolio Strategy

2

People & Culture

3

Processes & Systems

4

Performance Metrics

5

Positions & Engagement

DAWGEN GLOBAL INSIGHTS I JULY / AUGUST 2021

Purpose has to be genuine and melded in the organization’s core.

5

Purpose entices the stakeholders to identify & happily associate with the company Most of us have experienced a uniqueness in some organizations.

T

hese organizations stand out, exude fervor and zeal. Their customers are pleased with the company, employees enjoy working there, and

investors and shareholders take pride in being part of it.

It is not their exceptional product or service rather the Purpose that makes organizations unique—their reason

Companies that are authentic have mass appeal.

for existence and the resulting impact it makes on the world.

Stakeholders identify with organizations that genuinely follow their Purpose. Leadership allocates resources inline with the Purpose. Employees keep the Purpose front and center while making decisions for the company. On the other hand, ingenuine Purpose may harm the reputation of the company by turning away the stakeholders.

In order to be genuine, Purpose has to be embedded in the company’s DNA, which is no mean task. The “5Ps of Purpose Framework” shows how this can be successfully achieved.

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DAWGEN GLOBAL INSIGHTS I JULY / AUGUST 2021

The 5 Ps of Purpose enables companies to successfully entrench Purpose in the DNA of the company The 5 Ps offer a framework to assist companies entrench Purpose in a methodical, complete manner.

The framework contributes to unlocking the source of value for the company and detect points of weakness. The 5 Ps are 5 areas of conduct and operations:

1

Product Portfolio Strategy

2

People & Culture

3

Processes & Systems

4

Performance Metrics

5

Positions & Engagement

Purpose can pay lots of dividends, but it has to be authentic and imbued

in

the

business model.

organization’s

The 5Ps emphasize the 5 key areas where Purpose needs to be entrenched for it to reverberate through the entire company and beyond.

Source: More Than a Mission Statement, McKinsey, 2020

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The first P of the 5Ps of Purpose calls for aligning products and services with the Purpose of the company OVERVIEW

DETAILS

An organization’s Product / Service

The 1st step entails alignment of the business portfolio with the

Offerings

and

the

associated

company’s Purpose.

modalities of market and position

Companies already in existence may not be able to start afresh but

planning that best caters to the

they can surely reshape their business mix in a dynamic and resolute

target market ought to imbibe the

manner.

Purpose of the company in order to appeal to the stakeholders.

In step 2, the portfolio businesses are filled out with products or services that match the Purpose and the ones that do not are rooted out.

KEY ACTIONS Rethink product portfolio — for example pull out certain

Exhibiting Purpose in the

products, launch new products.

organization’s product / service offerings has to

Modify pricing in line with Purpose.

be approached with an

Re-evaluate portfolio and test rationale of individual assets

open mind in order to

in light of common criteria.

achieve product growth objectives.

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DAWGEN GLOBAL INSIGHTS I JULY / AUGUST 2021

Even established companies are able to reinvent their Purpose in light of the changing times and modify product offerings accordingly Product Portfolio Strategy – Case Example

A

n energy company in the extractive industries since it was founded 85 years ago has proved successfully that Purpose

can be reinvented.

Being in the extractive business for such a long time has not restricted the company from reexploring what an energy company may look like in the transforming environment of the future.

The company has significantly transformed its

planet.”

In line with its Purpose, the company has divested from its petrochemicals businesses and plans to reduce its legacy oil and gas business by 40% by the year 2030.

The company will instead augment its low-carbon energy businesses such as bioenergy, hydrogen, electric vehicle charging businesses, and aims to be a net-zero carbon emitter by the year 2050.

Purpose—“reimagining energy for people and

No matter how old, genuine Purpose enables reinvention in companies.

DAWGEN GLOBAL INSIGHTS I JULY / AUGUST 2021

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The 2nd P underscores the significance of developing people and Organizational Culture that empower Purpose OVERVIEW

Attention to employee well-being

Stakeholders—especially

the

employees—are the bedrock for infusing Purpose in the culture of the company. The employee sentiment is a reality check for a

genuine

versus

superficial

Purpose.

DETAILS Infusing Purpose through people starts with hiring employees who identify with the company’s Purpose.

Purpose should be kept in view while making HR decisions such

boosts

employee

KEY ACTIONS

enthusiasm,

which in turn gets reflected in

Orient recruiting, people

returns

development, and career

on

stocks—research

shows up to 3% more returns

pathways

in

line

than companies that do not focus

empower Purpose.

to

on employee well-being.

Pursuit of meaningfulness in a job

Delineate Purpose KPIs,

should be encouraged rather than

give employees incentives

suppressed in employees.

to meet them, and make

Giving employees suitable means and instruments reinforced by a “speak up” culture to pinpoint gaps is essential to embedding Purpose.

them answerable.

Enunciate the

and

desired

model

individual

mindsets and behaviors that express Purpose.

as HR development and career path development.

Happy stakeholders are the backbone

Research indicates that Employee

of the company – Genuine Purpose

Engagement is 4 times greater in companies driven by Purpose.

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provides happy stakeholders.

DAWGEN GLOBAL INSIGHTS I JULY / AUGUST 2021

Companies world wide are recognizing & enabling employees to find meaningfulness in jobs People & Culture – Case Examples

A

n example of employee well-being is a move to increase employee pay in the year 2019 by a large multinational on-line

payment company.

Not only that, the company

increased benefits and also made all employees its shareholders.

meaningfulness of her job.

Another example in the People and Culture aspect of Purpose—Employee Engagement—was exhibited by a well-known electronic items retail company when its CEO invested heavily in employee training.

The organization provided employees with heavy

Encouraging employees to find meaningfulness

discounts to buy the company’s products, use them,

in job and grasping an opportunity when it arises

and then recommend them to others. The company

was demonstrated by a senior executive of an

also formed ‘geek squads’ of employees who

energy company who later became the CEO.

choose, install, personalize, and support products

The CEO promoted an employee to lead the

that company sells.

Purpose engagement effort after she questioned

Meaningfulness drives employees to do extra for the company.

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The 3rd P entails finetuning processes and systems of the company to reflect and be geared towards achieving Purpose OVERVIEW

DETAILS

Operational initiatives, rewards,

Robust systems and practices are

has to be an all-encompassing

and governance procedures—the

the impetus of Purpose and they

exercise that should involve the

company counts on to establish

can be embedded regardless of

whole supply chain.

value and to fulfil its Purpose—

the sector the company operates

address the “how” of company’s

in.

business model.

Embedding

Embedding Purpose throughout the supply chain becomes a

Purpose

in

the

company systems and processes

source of strength in testing times.

KEY ACTIONS

Embedding Purpose in the process and systems should be planned bearing in mind the present as well as the future.

Adjust

operational

processes

to

achieve

Purpose-linked goals.

Make

sure

behaviors

are in line with Purpose throughout

the

supply

chain.

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DAWGEN GLOBAL INSIGHTS I JULY / AUGUST 2021

Purpose should not only reverberate throughout the company but also in outside partners Processes & Systems – Case Examples

A

tech giant provides a very good example of considering planning for embedding Purpose into its processes and systems. It had set itself

the goal of being carbon neutral and achieved it in 2012.

The company now aims even higher—i.e., to use only

Genuine Purpose

renewable energy for its complete operations by the

rubs off on the

year 2030—becoming carbon negative. The company assesses an internal carbon fee on its business divisions

world.

and uses the funds from such assessments to further invest in carbon-reduction efforts within the company as well as worldwide.

Another multinational retail corporation exemplifies infusing Purpose in its supply chain by aiming to reduce emissions up to one Gigaton throughout its supply chain by the year 2030. The company helped its suppliers reduce emissions in 6 identified categories by developing a platform that enables suppliers to chart their emission reductions. Suppliers come up with their own reduction goals based on the SMART principles – Specific, Measurable, Achievable, Relevant, and Time-limited. The progress on these goals has to be reported annually by the suppliers. The company recognizes and rewards top achievers.

A leading global resource company showed the value of embedding Purpose in its processes when during the COVID-19 crisis it moved to support its small, local, indigenous suppliers by reducing payment terms period significantly. It recognized the vulnerability of its partners during a time of crisis and sought to play a part in supporting them.

This reverberation has

become mutual with time.

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The 4th P demands appraising achievement of Purpose through key performance indicators and metrics not only routine operations, but

OVERVIEW Purpose

also allocation decisions—such as

should

meticulously.

be

gauged

capital expenditures and Mergers

Since Purpose is

and Acquisitions—and company-

a customized feature its metrics have to be specific too. Off-theshelf metrics available in the industry will not portray a true picture.

is

Indicators

should be identified that link to the company’s Purpose, indicators need to be monitored over time, and the company incentivized to

and metrics in line with Purpose.

significantly

strengthened simply by presenting to employees and stakeholders

Differentiation

between Social,

and

Governance (ESG) metrics and metrics

has

not

be

limited

incentives only. should

to

be

to

Institute capital allocation metrics

in

line

with

Purpose for decisions.

employees

who

monetary

Organizations

celebrate

offices

and

demonstrably

further the Purpose cause.

Behavioral

meet Purpose targets.

Environment,

Fix performance targets

Gauging and stimulating should

Performance

Purpose

Purpose

the metrics in standardized report.

DETAILS Key

wide Transformation initiatives.

KEY ACTIONS

Economics

can

be

used to entice employees to make Purpose part of their daily routine, such as energy saving or waste reduction.

maintained.

Purpose comes from within and likewise should lead to the type of metrics to be used to measure them, not vice-versa.

Purpose metrics should inform

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Purpose dictates metrics—these metrics should be easily understood across the board.

DAWGEN GLOBAL INSIGHTS I JULY / AUGUST 2021

Rethinking Performance metrics in line with Purpose pays off surprising dividends Performance Metrics – Case Examples

A

leading retail bank rethought its fundamental

proved profitable and the bank out-performed its

purpose;

peers in the industry.

its

relationship

with

society;

individual customers; and the way it should

identify, measure, and improve its Purpose-based performance.

The financial institution redesigned its incentive structure to improve customer outcomes which was part of their Purpose.

The bank made a symbolic shift by reducing the

Quality of Purpose, and the associated wide-range endeavors and actions that reinforce Purpose, ended up being more powerful than quantity.

In other sectors, monetary recompence is linked to achieving of Purpose metrics; like many energy companies now bind executive compensation to emissions that can be demonstrably reduced.

weightage of volume-based targets in employee evaluations since it deemed this shift critical to its Purpose. Although deemed symbolic, the shift

Staying true to the Purpose and making tough decisions pays off in the long run.

DAWGEN GLOBAL INSIGHTS I JULY / AUGUST 2021

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The final P warrants alignment of positions

& relationships with the Organizational Purpose OVERVIEW

DETAILS

The Positions and Engagement

Purpose should be built into the

not trust the company, they will

way

switch.

component emphasizes alignment of

extraneous

positions

and

company

communicates

information to and interacts with

Belief-based

consumers

and

relationships to be in consonance

the public.

with, and constantly deliver on,

Opinion of the customer-base

behavior

the Purpose the company has

matters

most

Research shows that 50% of

defined.

Genuine

Purpose

consumerism demands genuine to

companies. helps

align

customers’ opinion.

from

companies.

the people believed companies should be involved in at least one

Public can decipher an unauthentic act. Research shows that 2/3rds

social issue that has little to do with its business.

of the people may use a product

Built-in Purpose eradicates the

or service once but if they do

gulf between walk and talk.

KEY ACTIONS Customize external commitments and communications to Purpose.

Hard-wired Purpose makes company’s

Adjust extraneous positions in line

positions, communications, and

with Purpose.

external engagement coherent

Align affiliations—such as tradeassociation

membership—with

amplifications of the company’s business model.

Purpose.

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DAWGEN GLOBAL INSIGHTS I JULY / AUGUST 2021

An organization’s outside associations should also be in-line with its Purpose Positions & Engagement – Case Examples

O

ne of the biggest tech giant’s Purpose

extractive business also made an extensive review

statement is “to empower every person

of the support being extended by them to various

and every organization on the planet to

associations.

The company withdrew support to

achieve more.” The company decided to close its

a number of trade associations that were deemed

brick-and-mortar stores and move to digital retail

contrary to the company’s Purpose.

stores. However, the company did not fire its brickand-mortar store workers.

They were retrained

and now they carry on assisting customers from corporate facilities and remotely, delivering digital sales, training, and support.

A well-established food manufacturing company deploys its 150-year-old philanthropic foundation to contribute food expertise by partnering with employees in the communities in which they live and work.

One of the largest and established energy company that rethought its Purpose and divested from its

What is applicable within the company should apply beyond it too—the purpose should incorporate a sense of social responsibility and community development.

DAWGEN GLOBAL INSIGHTS I JULY / AUGUST 2021

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4 Schools of

Strategy 18

DAWGEN GLOBAL INSIGHTS I JULY / AUGUST 2021

There are countless Strategy frameworks these frameworks can be categorized into the 4 Schools of Strategy There are countless business frameworks on Corporate and Business Strategy that have developed over the years. The frameworks can be categorized into 4 schools of thought—i.e. 4 Schools of Strategy:

This

article

discusses

each

school in depth. As part of these discussions, we also review some established frameworks, like the BCG Experience Curve, Porter’s Five

Forces,

and

Capabilities-

Driven Strategy (CDS).

Additional topics touched upon

1

2

Position School, which

include

focuses on Competitive

Corporate

Strategy

Improvement, and others.

Strategy, Continuous

focuses on Operational

Adaption School, which focuses on Organizational Learning and Experimentation

4

Identity,

in

Execution School, which Excellence

3

Tension

Concentration School, which focuses on Core Competencies and Strategic Intent

A successful strategy blends takeaways from all 4 schools— one that has strong coherence among its market strategy, core capabilities, and portfolio of offerings.

DAWGEN GLOBAL INSIGHTS I JULY / AUGUST 2021

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The 4 Schools of Strategy Position, Execution, Adaption, & Execution— can be visualized by being mapped to a simple 2x2 matrix There are countless business frameworks on Corporate and Business Strategy that have developed over the years. The frameworks can be categorized into 4 schools of thought—i.e. 4 Schools of Strategy.

This framework of the 4 Schools of Strategy is captured on a 2x2 matrix. The 2 axes represent (x) the point of view on authorship and (y) time orientation.

Each School of Strategy represents a hypothesis around the nature of longterm success in a competitive environment.

Adaptation Act

quickly

and

creatively

in

response to events (organizational learning)

Position Exploit the high ground: create and hold a distinctive position (market-back strategy)

Execution Align people and processes for operational excellence (the quality movement)

Concentration Focus

on

your

current

business (private equity)

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core Source: The Right to Win, Mainardi, Booz & Company, 2010

DAWGEN GLOBAL INSIGHTS I JULY / AUGUST 2021

Here’s how specific models such as Porter’s Competitive Strategy, Blue Ocean Strategy, and Hamel & Prahalad’s Competing for the Future—map 4 Schools of Strategy – Examples Below, we have mapped some of

Position

the most well-known and widely

Michael

adopted Strategy frameworks

Strategy 1980

against the 4 Schools of Strategy landscape.

Porter

Ram Charan & Larry Bossidy Competitive

Bruce Henderson Essays 1966 W. Chan Kim & Renée Mauborgne

Adaptation Henry Mintzberg The Rise and Fall of Strategic Planning 1994 Tom Peters & Robert Waterman In Search of Excellence 1982

Blue Ocean Strategy 2005 Kenneth Andrews The Concept of Corporate Strategy 1971

Execution W. Edwards Deming Out of the Crisis 1986

Execution 2002 William

Abernathy

&

Robert

Hayes “Managing Our Way to Economic Decline” 1980 Michael Champy

Hammer

&

Reengineering

James the

Corporation 1993

Concentration Gary Hamel & C.K. Prahalad Competing for the Future 1994 Chris Zook Profit from the Core 2001

Each School of Strategy has something significant to offer strategists, as long they are adopted in a balanced manner.

Source: The Lords of Strategy, Kiechel; The Age of Heretics, Kleiner; Strategy Safari, Mintzberg

DAWGEN GLOBAL INSIGHTS I JULY / AUGUST 2021

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Next, let us examine the meanings behind the 2 axes the point of view on authorship and time orientation 4 Schools of Strategy – Axes The x-axis captures the point

At the left (many) are those

of view on authorship, while

who favor collective choice.

the

other words, strategic thinking is

y-axis

represents

time

orientation.

Point of Viewon Authorship (Many to Few) This dimension addresses the question

of

who

is

responsible for major strategy decisions.

In

Time Orientation (Future to Present)

installed among as many people

This

throughout the organization as

degree to which Strategy is seen

possible.

as present- or future-oriented.

At the right (few) are those who

At the top (future), we have those

favor

formulation.

who favor moving toward a long-

Strategy

is

term destination that may be

few—the

different from the organization’s

In

top-down

other

words,

developed

by

the

designated expert planners and senior

executives—while

the

rest of the organization is dedicated to execution of the Strategy.

dimension

captures

the

current position.

At the opposite end (present), we have those who favor letting the organization’s strategic direction emerge from its current state.

Organizations typically rotate from one School of Strategy to another over time.

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DAWGEN GLOBAL INSIGHTS I JULY / AUGUST 2021

It’s important to recognize that all 4 Schools of Strategy attempt to resolve the fundamental tension in Strategy 4 Schools of Strategy – Core Tension in Strategy All

4

Schools

of

Strategy

The reality that corporate identity is slow and difficult to change.

attempt to resolve the same core, underlying problem—the tension between 2 business realities.

There

are

2

conflicting

An

organization’s

identity

business realities that

is

must be addressed

operational

in Strategy:

relationships with others (e.g.

organizations

of

its

culture,

processes,

customers, partners, suppliers),

The reality that any advantage is transient.

All

comprised

and distinctive capabilities.

Its identity is built up gradually and

continuously

reinforced

through organizational practices

and

industries are vulnerable to

and conversations.

technology disruptions, shifting

This identity is incredibly difficult

capital flows, new regulatory

to shift—even when leadership

changes,

political

changes,

black swan events, and other unpredictable

shifts

in

the

business environment.

Just

as

startups

can

quickly

blossom into multi-billion-dollar companies, also true.

the

opposite

is

Many of the largest

companies of yesteryear are now failing or no longer in existence.

recognizes the The fundamental survival requires enabler of Strategy— identity. the source of Competitive Advantage—is a distinctive, coherent corporate identity.

DAWGEN GLOBAL INSIGHTS I JULY / AUGUST 2021

organization’s a change in

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The first school is Position, the most widely known and accepted,

based on Competitive Strategy driven largely by external forces and analyses School of Strategy – Position (Overview)

the organization in the market.

REPRESENTATIVE STRATEGIC THINKING

These early efforts by the “Position

Competitive

unassailable market position for

SCHOOL Position

School”

OVERVIEW

believed

successful

Strategy emerged through the

Porter

Strategy,

(Porter’s

Michael

Five

Forces,

Porter’s Value Chain)

Winners select favorable markets

comprehensive analysis of all

as defined by external forces.

critical factors:

MANAGEMENT FOCUS

• External markets

Competitive Strategy

• Internal capabilities

Blue Ocean Strategy, W. Chan Kim

DETAILS

• Customer and societal needs

& Renee Mauborgne

This typically, a SWOT exercise is

The

conducted as part of the Strategic

Strategy, Kenneth Andrews

The idea of Strategic Planning began

to

take

form

in

the

1960s, driven by an increased availability of data (e.g. costs, prices, performance metrics) and economic uncertainty.

From the process of Strategic Planning,

a

Strategy

developed. overarching

This plan

for

was

was

an

growth,

usually formalized in a business document the CEO.

and

endorsed

by

This Strategy Plan

aimed at creating a dominant, 24

Essays,

Bruce

Henderson

(Experience Curve, BCG GrowthShare Matrix)

Concept

of

Corporate

Planning session.

A breakthrough in the Position School was driven by the advent of

Bruce

Henderson’s

BCG

Experience Curve, which also led to the creation of the BCG Growth-Share Matrix.

Michael

Porter

later

brought

the Position School to a level of unprecedented

sophistication

through his Porter’s Five Forces and

Porter’s

frameworks.

Value

Chain

Over time, many business leaders became disenchanted with the notion of formal Strategic Planning—as it often didn’t lead to profitability.

DAWGEN GLOBAL INSIGHTS I JULY / AUGUST 2021

This BCG Experience Curve states that for each doubling of “experience,” there is a predictable reduction in costs School of Strategy – Position (Experience Curve in Fulfilling Demand) production volume), there is

Curve is that for each doubling

a predictable reduction in our

of “experience,” there is a

organization’s unit production

predictable reduction in our

costs—typically 20-30%.

organization’s unit production costs.

This

experience

in

fulfilling

demand remains important in

Generally,

the

production

of

many

industries,

particularly

any good or service shows the

those that are relatively stable,

BCG

cost-sensitive, competitive, and

Experience

Curve

effect.

The premise of the Experience

Experience Curve Marginal cost

The premise of the Experience

production-intensive.

Cumulative Volume

Curve is that for each doubling of “experience” (or accumulated

This Strategy framework also implies that a company with dominant market share could achieve a self-perpetuating cost advantage of competition.

DAWGEN GLOBAL INSIGHTS I JULY / AUGUST 2021

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In addition to experience fulfilling demand, there is also

experience gains through shaping demand School of Strategy – Position (Experience Curve in Shaping Demand) In

addition

fulfilling

to

demand,

experience there

is

Experience Curve

Experience at fulfilling demand Experience at shaping demand

shaping creating

demand—i.e. demand

for

in new

products and services.

The effects of the Experience Curve in

is

particularly

fast-paced

Marginal cost

also experience gains through

relevant

industries

that

require new product and offering

en

Cumulative Volume

u

od

Pr

releases.

g ct

n

tio

a er

We can visualize both types of curves in the chart on the right.

Experience in shaping demand is

represented

“jumps”

as

between

successive Experience

Curves (of demand fulfillment).

Each success Experience Curve represents a release of new product generation.

Experience in shaping demand differs from, but complements, experience at fulfilling demand.

For more information on the BCG Experience Curve, refer to this framework presentation: https://flevy.com/browse/flevypro/bcg-experience-curve-2745.

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DAWGEN GLOBAL INSIGHTS I JULY / AUGUST 2021

Porter’s Five Forces is a useful tool to evaluate

the competitiveness of an organization with respect to its rivals School of Strategy – Position (Porter’s Five 5 Forces)

It

is

important

for

the

existence of an enterprise to know its competition

The

Five

Forces

emphasizes

on

elements the

framework 5

that

critical

determine

competitiveness

and

and how its product or

attractiveness

service

against its rivals in the industry.

offerings

marketing

and

strategies

affect the market. Porter’s

of

a

business

with

a

SWOT

analysis

framework

According

the competitiveness of an organization with respect to its rivals.

help

SUPPLIER POWER

understand where a business fits in the industry landscape.

evaluate

INTERNAL RIVALRY

Porter’s Five Forces in conjunction

Five Forces is a powerful to

The 5 competitive forces are:

to

Dr.

THREAT OF NEW Porter,

ENTRANTS

understanding the competitive forces and the overall industry

BUYER POWER

structure are vital for strategic decision making and developing a robust competitive strategy.

DAWGEN GLOBAL INSIGHTS I JULY / AUGUST 2021

THREAT OF SUBSTITUTION

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The next school to look at is Execution the goal here is to focus inward in achieving Operational Excellence through Continuous Improvement School of Strategy – Execution (Overview)

SCHOOL

requires

Execution

OVERVIEW Success is driven by the alignment of

people,

processes,

and

technology to achieve Operational Excellence.

the

successful

implementation of an integrated

Brossidy

Business

System

Managing Our Way to Economic

that effectively and seamlessly

Decline, William Abernathy &

integrates 4 building blocks:

Robert Hayes

• Strategy Deployment

Reengineering the Corporation,

• Performance Management

Michael

Execution

• High Performance Work Teams

Operational Excellence

Operational Excellence is tied closely

to

on the belief that organizations

underlying focus is Continuous

should focus on Execution and

Improvement

Operational Excellence—i.e. an

organization

internal focus, instead of external,

the

as the case of the Position School.

empowering

deployment of better practices, processes, technologies, human capital, and products.

Achieving Operational Excellence

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James

management philosophies of Six Sigma and Lean Management. The

driven by the development and

&

operations-focused

The Execution School is founded

In other words, profitability is

Hammer

Champy

• Process Excellence

MANAGEMENT FOCUS DETAILS

Execution, Ram Charan & Larry

needs

throughout by of

the

focusing the

on

customer,

employees,

and

optimizing existing activities in the process.

REPRESENTATIVE STRATEGIC THINKING Out of Crisis, W. Edwards Deming (PDCA Deming Cycle) DAWGEN GLOBAL INSIGHTS I JULY / AUGUST 2021

Next, let’s look at the Adaption School through

Organizational Learning, we seek to respond quickly and creatively School of Strategy – Adaption (Overview)

SCHOOL

DETAILS

Adaption

The

OVERVIEW

in the 1990s through the thought

Achieve results through acting quickly and creatively in response to events.

• This approach, however, is Adaption

(and

Experimentation) School emerged leadership of Professor Henry Mintzberg.

Organizational Learning

Mintzberg called this strategic approach the Learning School.

Letting a thousand flowers bloom can also lead to a field full of weeds (consuming all of the available resources, while producing nothing of value).

Mintzberg’s strategic approach focused on discovering a more

MANAGEMENT FOCUS

inefficient and can be costly.

creative, experimental approach to executive decision making.

This is also an approach of “continuous

improvement”—in

that we experiment with new directions, discard one that don’t

Instead of focusing on analysis

work, and continuously adjust

and planning, executives should

and refine efforts to meet new

focus on experimenting with new

challenges.

directions.

Per Mintzberg, they

“let a thousand strategic flows bloom… [using] an insightful style, to detect the patterns of success in these gardens of strategic flowers, rather than a cerebral style that

REPRESENTATIVE STRATEGIC THINKING The Rise and Fall of Strategic Planning, Henry Mintzberg

favors analytical techniques to

In Search of Excellence, Tom

develop strategies in a hothouse.”

Peters & Robert Waterman

DAWGEN GLOBAL INSIGHTS I JULY / AUGUST 2021

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The last school is

Concentration

here, we focus and develop our core business School of Strategy – Concentration (Overview)

SCHOOL

Future,

should

Many adjacencies turn out to be

Concentration

focus on their Core Competencies

less profitable, as they actually

and use them to develop a long-

require very different sets of

range “strategic intent.”

capabilities.

OVERVIEW Success

through

development

on

focus

and

your

Core

Competencies.

Core Competencies and StrategicIntent

DETAILS The

Concentration

School

argued that the most effective strategy is to foster a set of Core Competencies, which are defined as bedrock skills and technological capabilities

(e.g.

hardware,

software, systems, biotechnology, financial engineering) that allow us to compete in distinctive ways.

Per Gary Hamel and C.K. Prahalad, as outlined in Competing for the

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A strategic intent is defined as: “An ambitious and compelling… dream

MANAGEMENT FOCUS

organizations

that

provides

the

energizes…

that

emotional

and

REPRESENTATIVE STRATEGIC THINKING

intellectual energy for the journey

Competing for the Future, Gary

to the future.“

Hamel & C.K. Prahalad

Capabilities-Driven Strategy (CDS)

Profits from the Core, Chris Zook

is a modern Strategy framework also based on a similar premise of

fostering

sustainable

Core

Competencies or Capabilities to develop a Competitive Advantage.

When following this school of thought,

many

organizations

Many private equity firms follow the Concentration School.

may fall into the trap of only growing through adjacencies— i.e. products or services that seem related to the existing core business.

DAWGEN GLOBAL INSIGHTS I JULY / AUGUST 2021

Hamel and Prahalad argue that in order to achieve success,

we must reconcile its purpose with its means through Strategic Intent School of Strategy – Concentration (Strategic Intent)

Strategic Intent is our company’s vision of what we want to achieve in the long term. A Strategic Intent has 4 attributes, as defined below.

1

Sense of direction.

Conveys a sense of the

3

that the company is

needs to be heading

differentiating itself

in order to compete

by staking out a new

successfully in the

competitive territory

future—and invites

where nobody else has

everyone to use their

one before.

creativity and initiative in

2

Emotional element. There is an

Injects

a sense of discovery

direction the company

the pursuit of that goal.

Sense of discovery.

4

emotional element that something employees will relate to and perceive as worthwhile.

DAWGEN GLOBAL INSIGHTS I JULY / AUGUST 2021

Sense of destiny.

Implies a sense of destiny that by achieving its objective, the company will make a meaningful difference in the lives of people.

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Another important theory, Capabilities-Driven Strategy (CDS), is a strategy to maximize “portfolio coherence” in our core competencies School of Strategy – Concentration (Capabilities-Driven Strategy) There are many benefits for an a

organization Corporate

to

develop

Strategy

built

upon its ability to develop sustainable capabilities.

This

Competitive Advantage

Value Creation

type of strategy is a known as

Executives,

Capabilities-Driven

employees

Strategy

managers, at

and

every

level

(CDS).

understand the way the company

A CDS is outward-looking. It

creates value for customers.

starts and end with customers.

It involves building up a portfolio

Capabilities System

of ideas, skills, and competencies

The engine of Value Creation

that are put together. Together,

is the system of 3-6 distinctive

it can enable the company to

capabilities that allow companies

consistently attract its primary

to deliver their Value Proposition.

customers.

A CDS is driven by 3 core components: • Value Creation

Product and Service Fit All products and services leverage the same capabilities system.

• Product and Service Fit • Capabilities System

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DAWGEN GLOBAL INSIGHTS I JULY / AUGUST 2021

DAWGEN GLOBAL INSIGHTS I JULY / AUGUST 2021

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