Strategy dilemmas

Strategy dilemmas

# 1: Outside-in vs. Inside-out. # 2: Trying things out vs. Planning. # 3: Creative thinking vs. Analytical thinking. # 4: Creativity vs. Efficiency. # 5: Continuous change vs. Revolutionary change. # 6: Collaboration vs. Competition. # 7: Inclusive / involving vs. Exclusive / isolating. # 8: Company perspective vs. Business unit perspective. # 9: Self management vs. Hierarchical management. # 10: Shape markets vs. Adapt to markets. # 11: Long term focus vs. Short term focus. # 12: Globalization vs. Localization.

Strategy dilemma # 1 Outside-in vs.

Inside-out

Question Every company claims to be customer-focused.

Why do you think so few are able to pull it off?

Answer Companies get skills-focused instead of customer-needs focused.

Jeff Bezos

http://www.businessweek.com/magazine/content/08_17/b4081064880218_page_2.htm

Do all of innovations come from inside of the firm, where we develop the new ideas internally and execute them ourselves?

Or do we systems set up so that the ideas we execute can come from anywhere, and some of our own ideas end up being brought to market by someone else? http://timkastelle.org/blog/2011/12/ten-tensions-in-innovation-revised/

Further inspiration http://www.slideshare.net/frankcalberg/customer-needs http://www.slideshare.net/frankcalberg/pestel http://www.scribd.com/doc/36349465/Capital

Strategy dilemma # 2 Trying things out vs.

Planning

Experiments require short-term experiments require short-term losses for long-term gains

losses for long-term gains. http://hbr.org/2010/04/column-why-businesses-dont-experiment/ar/1

http://www.innovationmanagement.se/2011/11/15/unlearn-your-mba/, minute 11.

The “discovery� model reflects what a company is like in its start-up phase. In this period management is likely to be relatively informal, and even vague about how work should get done and to what end.

Google began life using the discovery model, and to some extent still does. http://www.ft.com/cms/s/0/6ce11196-35f3-11df-aa43-00144feabdc0.html

When pharmaceutical companies conduct clinical trials to test the safety and efficacy of their drugs as part of the process for obtaining regulatory approval, some patients receive the drug and others some standard existing treatment or a sugar pill (placebo).

A comparison of the two sets of results tells us whether the drug improves patients’ symptoms and has side effects.

Many potential changes in your organizations can be subjected to a similar experiment: implement the change in some places, but not in others, and compare performance in the two groups to learn whether the change is effective. http://blogs.hbr.org/2014/10/experiment-with-organizational-change-before-going-all-in/

Strategy dilemma # 3 Creative thinking vs.

Analytical thinking

Creative approach: From few to many possibilities

Idea Idea

Idea Smelling Thinking

Idea

Observing

Hearing

Idea

Reading Communicating

Idea Idea

Idea

The abductive logic is oriented towards the future, what you imagine may be possible.

To innovate, stop using the 2 words ”prove it”. http://youtu.be/txhBTi1STn8 http://youtu.be/e7pk8DOtsYw

Research by Marius Usher shows that when people made choices based only on instinct, they made the right call up to 90% of the time.

http://blogs.hbr.org/hbr/nayar/2013/05/listening-to-your-inner-voice.html

Analytic approach: From many to few possibilities

Analysis

Analysis

Result Analysis

Analysis Analysis

Question When it comes to innovation, what is the biggest challenge that you see organizations facing?

Roger Martin It is the dominance of analytical thinking which holds that unless something can be proven by way of deductive or inductive logic, it is not worthy of consideration or investment. No new idea in the world has been proven before being tried. So as long as analytical thinking is allowed to dominate, innovation is deeply and profoundly challenged. http://www.innovationexcellence.com/blog/2012/06/15/balancing-intuition-with-analysis/

The inductive and deductive logic is based on the past experiences.

Focus is on proving things. http://youtu.be/txhBTi1STn8 http://youtu.be/e7pk8DOtsYw

Further inspiration http://www.slideshare.net/frankcalberg/creativity-exercises http://www.slideshare.net/frankcalberg/creativity-and-innovation-6546087

Strategy dilemma # 4 Creativity vs.

Efficiency

Industrial firms thrive on reducing variation (manufacturing errors);

Creative firms thrive on increasing variation (innovation).

Reed Hastings http://hbr.org/2014/01/how-netflix-reinvented-hr/ar/1

To be creative Think outside the box.

To be efficient Stick to your knitting.

Explore what you don’t know.

Exploit what you know.

Anticipate future customer needs.

Meet current customer needs.

Allow freedom and flexibility.

Demand accountability.

Avoid process and encourage unstructured interaction.

Impose process and structure.

Govindarajan, Vijay & Trimble, Chris: 10 Rules for Strategic Innovators, p. 5.

http://www.vijaygovindarajan.com/2006/03/strategy_as_transformation.htm

Strategy dilemma # 5 Continuous change vs.

Revolutinary change

Toyota implements a million new ideas a year, and most of them come from ordinary workers. (Japanese companies get a hundred times as many suggestions from their workers as U.S. companies do.) Most of these ideas are small - making parts on a shelf easier to reach, say - and not all of them work.

But cumulatively, every day, Toyota knows a little more, and does things a little better, than it did the day before. http://www.newyorker.com/talk/financial/2008/05/12/080512ta_talk_surowiecki

”Kai” = Change. ”Zen” = Good.

Continuous change

Revolutionary change

Proactive Change

Continous improvement

Creative destruction

Reactive Change

Adapt / adjust

Turn around

Strategy dilemma # 6 Collaboration vs. competition

Santander went into partnership with Funding Circle. The bank recognized that a segment of its customer base wanted access to peer-to-peer lending and acknowledged that it would be costly to build a world-class offering from scratch. http://www.mckinsey.com/insights/strategy/strategic_principles_for_competing_in_the_digital_age

Sharing information and expertise is a great way to build trust with your competitors. http://blogs.hbr.org/2014/02/use-co-opetition-to-build-new-lines-of-revenue/

Strategy dilemma # 7 Inclusive / involving vs.

Exclusive / isolating

How should companies react to creative external people?

Active

Passive

Resist

Enable

Actively restrain what creative customers do with product / service.

Actively facilitate what creative people do with product / service.

Discourage

Encourage

Ignore what creative customers do with product / service.

But don’t actively facilitate.

Degree of positive attitude towards customer innovation http://www.slideshare.net/IanMcCarthy/when-customers-get-clever-managerial-approaches-to-dealing-with-creative-consumers

Executives at organizations that are experimenting with more participatory modes of strategy development cite two major benefits: Benefit # 1 Improving the quality of strategy by pulling in diverse and detailed frontline perspectives that are typically overlooked but can make the resulting plans more insightful and actionable.

Benefit # 2 The second is building enthusiasm and alignment behind a company’s strategic direction. https://www.mckinseyquarterly.com/Strategy/Strategy_in_Practice/The_social_side_of_strategy_2965

Further inspiration https://delicious.com/frankcalberg/crowdsourcing http://www.slideshare.net/frankcalberg/rethinking-recruitment-8077077

Strategy dilemma # 8 Company perspective vs.

Business unit perspective

Wal-Mart stores established its digital business away from corporate headquarters to allow a new culture and new skills to grow.

http://www.mckinsey.com/insights/strategy/strategic_principles_for_competing_in_the_digital_age

In the long run, internal competition causes every participant to lose.

When leaders look for ways to encourage cooperation and generate common goals, they become more successful. http://blogs.hbr.org/cs/2013/02/how_poor_leaders_become_good_l.html

Strategy dilemma # 9 Self management vs.

Hierarchical management

Few participants

Many participants

Closed decision process

Open decision process

Use of crowdsourcing / social media

Further inspiration http://www.slideshare.net/frankcalberg/3-ways-of-organizing http://www.slideshare.net/frankcalberg/good-leadership

Strategy dilemma # 10 Shape markets vs.

Adapt to markets

Adapting is preferable when key sources of value creation are relatively stable or outside the company’s control.

https://www.mckinseyquarterly.com/Strategy/Strategic_Thinking/Making_the_most_of_uncertainty_1128

To put things simply, when it faces very high levels of uncertainty about variables it can influence, shaping makes most sense.

https://www.mckinseyquarterly.com/Strategy/Strategic_Thinking/Making_the_most_of_uncertainty_1128

A shaping strategy is best in unpredictable environments that you have the power to change.

In new or young high-growth industries where barriers to entry are low, innovation rates are high, demand is very hard to predict, and the relative positions of competitors are in flux, a company can often radically shift the course of industry development through some innovative move. http://blogs.hbr.org/cs/2012/09/know_which_strategy_style_is.html

A shaping strategy embraces short or continual planning cycles.

Flexibility is paramount, little reliance is placed on elaborate prediction mechanisms, and the strategy is most commonly implemented as a portfolio of experiments. http://blogs.hbr.org/cs/2012/09/know_which_strategy_style_is.html

Strategy dilemma # 11 Long term focus vs.

Short term focus

Short term

Long term

Dynamic

Fire extinguishing

Proactive

Static

Inactive

Further inspiration http://www.slideshare.net/frankcalberg/time-15259416

Strategy dilemma # 12 Globalization vs.

Localization

Further inspiration http://www.slideshare.net/frankcalberg/globalization-and-localization

Thank you for your interest. For further inspiration and personalized services, please feel welcome to visit http://frankcalberg.com Have a great day.