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Strategic Management 4

Transforming Businesses: Changing the Business Model

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SM4-S411

Contents

SM4 Course Leader 1

Peter Murmann 1

Pre-Residential Activity list 2

Web Based Support 3

Course Structure 4

SM4 Calendar Dates Cohort A 4

SM4 Calendar Dates Cohort B 5

SM4 Calendar Dates Cohort C 6

SM4 Calendar Dates Cohort D 7

SM4 Calendar Dates Cohort E 8

Course overview 9

What the course is about 9

Transforming an organisation in decline 11

Strategic Management Year cross-cutting themes 13

Learning outcomes 14

The structure of Strategic Management 4 15

Refining the business model 15

Formulating a transformation strategy 17

Developing a plan for the implementation of transformational change 23

Protecting the organisation: identifying and interpreting weak signals 24

Assessment 28

Assessment policy 28

Assessment 1: Residential Problem Analysis 28

Assessment 2: Transformation Strategy Paper 31

Assessment 3: Final Project 33

Assessment 4: Peer Feedback 36

Assessment 5: Book Review 36

References 37

Readings 38

Transforming Businesses: Changing the Business Model 1

SM4 Course Leader

Peter MurmannPeter Murmann is the Academic Director of the Strategic Management Year. After being the inaugural course leader for SM1, he has taken over this role for SM4.

Before joining the AGSM as an Associate Professor in January 2006, he was on the faculty of Northwestern University’s Kellogg School of Management for eight years. He also served as a visiting professor at the Helsinki University of Technology as well as the Universities of Lille and Paris. Recently, he was a visiting scholar at the Harvard Business School.

Peter’s research is focused on the long-term development of firms and industries in different countries, investigating systematically how firms gain and lose competitive advantage. He conducted a comparative study of the early history of the synthetic dye industry, which was published by Cambridge University Press (2003) under the title Knowledge and Competitive Advantage: The Coevolution of Firms, Technology and National Institutions. The book won the Schumpeter prize and Kellogg School of Management Research prize. Peter is presently engaged in studying the evolution of service industries such as advertising and venture capital.

Born in Germany and raised in Austria, Peter completed his university studies in the U.S, receiving a BA in Philosophy from the University of California at Berkeley and then Masters and PhD degrees in Management and Organizations (1998) from Columbia University. He is a member of many scholarly societies and edits www.Economic-Evolution.net.

Peter periodically takes on consulting engagements in the for-profit (e.g. Boral) and not-for profit sectors (e.g. NSW Department of State and Regional Development).

2 Strategic Management 4

Pre-Residential Activity list

Strategic Management 4 – Pre-Residential Checklist Done

1 Read the Course overview.

2 Survey the course materials by writing out all the tools and frameworks that are in the readings. Ideally you will do all the readings before the residential. To obtain the full benefit of the residential you need at least to have absorbed readings: 1, 4, 5, 6, 10, 14 and 15 and completed the “What to do” exercises associated with them. We will use your responses to these exercises in the residential.

3 Read the cases and prepare answers to the questions that are attached to them.Day 1: Reading 18 - Orica Mining ServicesDay 4: Reading 19 - Gucci Group N.V. (A, B and C)

4 Prepare, with your team, a presentation of a strategic transformation.At the beginning of residential 4, each course team will give a 5-minute presentation that describes how an organisation has attempted to transform itself by changing its Business Model (Reading 1). The object of this exercise is to provide us with examples with which to ground our discussion. What you need to do is:• Choosean“organisation”thathasattemptedtochangeitsBusinessModel,

whether successfully or not;• Compareandcontrasttheorganisation’sBusinessModelbeforeandafterthe

change initiative;• CritiquethenewBusinessModel(thatis,explainwhyitwasagoodorbadidea).If you have any questions, do not hesitate to contact your residential leader directly or via the student experience office at [email protected].

5 Check whether you are scheduled to make your book review presentation (via eLearning).

6 Access, reflect on, and analyse your iPeer feedback from the course so far. There are sectionsinthe‘reflectivejournal’sectionofyourSMYLearningJournaltoguideyouranalysis.

7 Prepare for a discussion about the feedback on your ‘Leadership development progress&actionplanpaper’.


Web Based Support

In the Strategic Management Year we use an online environment called eLearning. We hope this online environment will stimulate the sharing of ideas and understandings around the content of this course.

All your assessment work (individual/group assessments, one-page outline and course evaluations) will be submitted through the eLearning website.

You will have access to introductory videos to the SM Year from the Academic Director and to the individual courses from the Course Leaders.

The eLearning website contains information about your Residentials (e.g. timetable, book review allocation, pre-residential activities) as well as your course materials and Residential slides which will be posted online after each Residential.

The MBA (Executive) current students’ website (http://agsm.edu.au) also provides administrative and academic information. On this website you will find assessment & examination policies, the SM Year student handbook, confidentiality agreements, etc.

eLearningTo access eLearning@AGSM MBA, go to http://telt.unsw.edu.au/ and select Login to UNSW Blackboard.

Login to the web Single Sign On (wSSO) using these details:Username: zNumberPassword: zPassShould you have any difficulties accessing your course online, please contact eLearning Coordinator on:Tel: +61 (02) 9931 9541Email: [email protected] For after hours supports contact IT Service Centre.Hours: Mon–Fri: 8am–9am; 5pm–8pm Sat–Sun: 11am–2pmTel: +61 (02) 9385 1333Email: [email protected]


Course Structure

SM4 Calendar Dates Cohort A

Week Date Activity Assessment

Week 1 12 September

Pre-reading and eLearning orientation

Week 2 19 September

Week 3 26 September

Week 4 3 OctoberResidential 4 days (4 – 7 October)

Book review (4 – 7 October)

Week 5 10 October

Week 6 17 OctoberResidential problem analysis (21 October – Friday)

Week 7 24 October

Final project outline on eLearning (Friday week 7)

Reviewyourteam’sFinalproject outlines (weekend week 7)

Week 8 31 October Teleconference Peer feedback (1 – 8 November)

Week 9 7 November

Transformation paper (8 November – Tuesday)

SM4 Course evaluation (8 – 15 November)

Final project (15 November – Tuesday)Week 10 14 November

All assessment submissions, unless otherwise stated, are via eLearning and due at 3pm EST on the due date.


SM4 Calendar Dates Cohort B


Week 1 19 September


Week 2 26 September

Week 3 3 October



Week 5 17 October

Week 6 24 OctoberResidential problem analysis (28 October – Friday)

Week 7 31 October



Week 8 7 November Teleconference Peer feedback (8 – 15 November)

Week 9 14 November



Final project (22 November – Tuesday)Week 10 21 November



SM4 Calendar Dates Cohort C


Week 1 26 September


Week 2 3 October

Week 3 10 October



Week 5 24 October

Week 6 31 OctoberResidential problem analysis (4 November – Friday)

Week 7 7 November




Week 9 21 November



Final project (29 November)Week 10 28 November



SM4 Calendar Dates Cohort D


Week 1 3 October


Week 2 10 October

Week 3 17 October



Week 5 31 October

Week 6 7 NovemberResidential problem analysis (10 November – Thursday)

Week 7 14 November




Week 9 28 November


SM4 Course evaluation (29 November – 6 December)

Final project (6 December)Week 10 5 December



SM4 Calendar Dates Cohort E


Week 1 10 October


Week 2 17 October

Week 3 24 October

Week 4 31 OctoberResidential 4 days (1 – 4 November)

Book review (1 – 4 November)

Week 5 7 November

Week 6 14 NovemberResidential problem analysis (18 November – Friday)

Week 7 21 November



Week 8 28 November TeleconferencePeer feedback (29 November – 6 December)

Week 9 5 December

Transformation paper (6 December – Tuesday)

SM4 Course evaluation (6 – 13 December)

Final project (13 December)Week 10 12 December



Course overview

What the course is aboutStrategic Management 4 is all about the need for an organisation to revisit and redefine its business model in response to, or in anticipation of, sustained poor performance.

The great Australian company BHP, in the late 90s, came perilously close to failing. By 1997 the Big Australian was on its knees, with its dividend in doubt and potentially its solvency at stake (Gottliebsen 2003 p. 110). In the 1998–1999 tax year, BHP posted a loss of A$2.31 billion, a record loss for an Australian company. By 2001 BHP had restored shareholder value and merged with Billiton.

One measure of BHP’s performance over the period from December 1995 to May 2001 is shown in Figure 1 where the Compound Return on $1 invested in BHP is compared with the returns generated from the same investment in Rio Tinto and the Australian Market over the same period. You can see from the graph that the performance of both BHP and Rio slumped in 1997, presumably due to the Asian financial crisis and the consequent drop in commodity prices. Rio quickly recovered from that but BHP took longer. We are interested in how BHP managed that turnaround and how organisations can protect themselves from similar poor performance relative to their peers.


Figure 1 The monthly compound returns for BHP, RIO Tinto and the Australian Market over the period December 1995 through to May 2001

Compound Returns on a $1 Investment

0

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01

BHP

Rio

Australian Market

Source: Share Price and Price Relatives data base, Centre for Research in Finance, Australian School of Business, University of New South Wales

The BHP example leads to the following questions:

• Howcananorganisationrespondtosustainedperformanceproblems?

• Whathastobedonetoimplementaturnaroundsuccessfully?

• Whatcananorganisationdotoprotectitselffromrapidanddisadvantageouschangesinitsexternalenvironment?

These are the questions we shall study in this course.

Maintaining profitable growth over an extended period is not easy. Consider the 100 companies that had the greatest market capitalisation on the ASX in 1986. By 2006 56 had been taken over, 6 had been liquidated, 17 had fallen from the top 100 and only 21 remained in the top 100. Nevertheless, some organisations decline and then manage a turnaround. BHP is not the only Australian example. Woolworths was close to insolvency in 1984; Orica’s share price dropped by 70% over a 4 year period in the late 90s before recovering; the Victorian Workcover Authority went from operating deficits to operating profits by redefining the nature of its business in the early 2000s. Knowing how to transform an organisation is a rare and valuable skill for a general manager. The existence of companies that buy troubled firms and turn them around implies that this skill is not


always available within an organisation. Knowing when to walk away from an organisation and let it die is also a rare and valuable skill.

One study (Schendel, Patton & Riggs 1976) looked at the turnaround strategies of more than 600 manufacturing firms in the USA over the period 1952–71, only 68 of which were successful. The study found that while environmental changes may affect performance, the majority of downturns were due to management actions (or inactions) and decisions. Management matters. It was the same when there was a successful turnaround:

“Turnarounds appear due much more to management actions than to favourable environmental events. This contrasts with the downturn phase where management inaction in response to unfavourable environmental events seems to dominate” (p.10)

One way of achieving a turnaround is by focusing on the operations while running the same business and serving the same customers with the same goods and services. In this case the turnaround is achieved by realigning the operations with the strategy. The experience of US manufacturers is that about half the turnarounds are of this operational kind (Schendel, Patton & Riggs 1976). Another way to turnaround an organisation is to transform it, that is, change its business model. If a transformation is undertaken in response to a performance decline and is successful, it is, of neccessity, a turnaround, howbeit one that is strategic in focus.

In this course we are interested in how to transform a business, first in response to performance problems. At the end of the course we shall look at ways an organisation can recognise the onset of environmental changes, allowing it to undertake a transformation proactively.

Transforming an organisation in declineOrganisation typically start small and simple and over time become larger and more complex. There is a natural life cycle that begins with start-up, continues through consolidation and growth, leading to maturity. At maturity an organisation has the option to renew its growth trajectory through a transformation of its business while it is not in immediate danger. If a mature organisation does not transform itself proactively its performance will eventually start to decline and any attempt at renewal will be reactive. The outcome can be a turnaround of the business or further decline until the organisation ceases to exist or is absorbed by a more successful one. A schematic representation of a life cycle of an organisation is given below in Figure 2 – ‘A’ represents the point where an organisation can no longer ignore the signals of failure and a reactive turnaround must be tried.


Figure 2 A schematic representation of the life cycle of an organisation

Source: Handy 1994

The organisational life cycle is the basis of the structure of the Strategic Management Year. The first course, Strategic Management 1, covered the detection and selection of business opportunities, the formulation of strategy. In Strategic Management 2, a congruence framework was used as a unifying concept to help in the assessment of the fit of an organisation’s architecture with the capabilities needed to deliever its external position. One of the consequences of an organisation’s moving through a life cycle is the need to continually revisit the alignment of its architecture: the way the work is organised, the way employees are motivated and rewarded, the culture that is encouraged. The different stages of growth bring with them different strategic, management and leadership challenges (Griener 1972). The previous course, Strategic Management 3, introduced growth strategies for both a business unit (BU) and a corporate. But growth strategies can contain the seeds of destruction (Avila, Mass & Turchan 1995).

If an organisation is in decline for reasons other than the poor implementation of a good strategy, Strategic Management 4 argues that it needs to revisit and redefine its business model in order to transform itself. In this course we shall learn how to formulate a transformation strategy. We shall also learn how to plan for the implementation of a transformation strategy, taking account of the personal agendas of the key players. Finally we shall learn how an organisation can protect itself against future changes in its environment through developing the capability to identify inflection points in its external and internal environments.

As a transformation involves a change in the business model, it will use the tools and framework that you have already studied this year. A new business opportunity will have to be identified, a suitable architecture for the new


business will have to be designed and its continuing success will have to be ensured through an appropriate growth strategy. Strategic Management 4 will integrate what has gone before and add new tools and frameworks that are relevant to the particular contingencies surrounding a transformation.

Strategic Management Year cross-cutting themesIn Strategic Management 4, we continue to explore the four cross-cutting themes of the Strategic Management Year:

Economic Logic Evaluation: Any attempt to transform a business will involve a change in the business model which has to make economic sense and be compelling. The contribution to this theme will be to revisit the concept of the business model, making it more detailed and specific, and then applying the expanded version of the model to any transformation strategy that is proposed.

Entrepreneurship: The tools and techniques used to transform a business can be applied to an entrepreneurial start-up. What will be particularly important for an entrepreneur is the ability to protect a start-up from threats to its performance. The ability to identify and interpret weak signals both outside and inside an organisation will be developed as will the ability to recognise and respond to subtle market transitions.

Leadership: A transformational change requires adaptive leadership which will be described. A framework for identifying appropriate leadership tools for different contingencies will be provided.

Decision Making: The formulation and implementation of a transformational strategy require effective strategic decision making by individuals and by teams. The course identifies common flaws in strategic decisions and ways of improving the decisions through careful framing and by taking steps to mitigate cognitive biases and limitations.


Learning outcomesWhen you have finished this course you will be able to:

• Recommendatransformationstrategyforanorganisation

• Developaplanfortheimplementationoftransformationchange

• Evaluateandmanagetherisksassociatedwithaproposedtransformationalchange

• Facilitateyourorganisation’sabilitytorenewitselfproactivelythroughidentifying and interpreting weak signals in both the external and internal environments

• Incorporatefeedbackonyourpreviousstrategyassignmentstoproduceamore compelling strategy document.


The structure of Strategic Management 4

The course is split into four sections, reflecting the questions prompted by the BHP experience:

• Refiningthebusinessmodel

• Formulatingatransformationstrategy

• Developingaplanfortheimplementationoftransformationalchange

• Protectingtheorganisation:identifyingandinterpretingweaksignals.

Refining the business modelWe revisit the business model for two reasons. First, the business model plays a central role in Strategic Management 4. Transforming a business means doing something differently. While you can turnaround an existing business by improving its operations, to transform a business you have to change at least one of its market, its product offering or its capabilities, that is, you have to change its business model.

The second reason is because in the information age companies are competing through innovations of their business model rather than through innovation of products. An explanation of the inevitability and importance of a new businesss model in the declining US auto industry is given in an article from the New York Times of 10 December 2008, which shown in Exhibit 1.

Exhibit 1: ‘While Detroit slept’, New York Times, 10 December 2008.

December 10, 2008

OP–ED COLUMNIST

While Detroit Slept

By THOMAS L. FRIEDMAN

As I think about our bailing out Detroit, I can’t help but reflect on what, in my view, is the most important rule of business in today’s integrated and digitised global market, where knowledge and innovation tools are so widely distributed. It’s this: Whatever can be done, will be done. The only question is will it be done by you or to you. Just don’t think it won’t be done. If you have an idea in Detroit or Tennessee, promise me that you’ll pursue it, because someone in Denmark or Tel Aviv will do so a second later.

Whydoibringthisup?BecausesomeoneinthemobilitybusinessinDenmarkandTel Aviv is already developing a real-world alternative to Detroit’s business model.


I don’t know if this alternative to gasoline–powered cars will work, but I do know that it can be done –– and Detroit isn’t doing it. And therefore it will be done, and eventually, I bet, it will be done profitably.

And when it is, our bailout of Detroit will be remembered as the equivalent of pouring billions of dollars of taxpayer money into the mail-order-catalogue business on the eve of the birth of eBay. It will be remembered as pouring billions of dollars into the CD music business on the eve of the birth of the iPod and iTunes. It will be remembered as pouring billions of dollars into a book-store chain on the eve of the birth of Amazon.com and the Kindle. It will be remembered as pouring billions of dollars into improving typewriters on the eve of the birth of the PC and the Internet.

What business model am I talking about? It is Shai Agassi’s electric car networkcompany, called Better Place. Just last week, the company, based in Palo Alto, Calif., announced a partnership with the state of Hawaii to road test its business plan there after already inking similar deals with Israel, Australia, the San Francisco Bay area and, yes, Denmark.

The Better Place electric car charging system involves generating electrons from as much renewable energy – such as wind and solar – as possible and then feeding those clean electrons into a national electric car charging infrastructure. This consists of electricity charging spots with plug-in outlets – the first pilots were opened in Israel this week – plus battery-exchange stations all over the respective country. The whole system is then coordinated by a service control center that integrates and does the billing.

Under the Better Place model, consumers can either buy or lease an electric car from the French automaker Renault or Japanese companies like Nissan (General Motors snubbed Agassi) and then buy miles on their electric car batteries from Better Place the way you now buy an Apple cellphone and the minutes from AT&T. That way Better Place, or any car company that partners with it, benefits from each mile you drive. G.M. sells cars. Better Place is selling mobility miles.

The first Renault and Nissan electric cars are scheduled to hit Denmark and Israel in 2011, when the whole system should be up and running. On Tuesday Japan’s Ministry of Environment invited Better Place to join the first government-led electric car project along with Honda, Mitsubishi and Subaru. Better Place was the only foreign company invited to participate, working with Japan’s leading auto companies, to build a battery swap station for electric cars in Yokohama, the Detroit of Japan.

What I find exciting about Better Place is that it is building a car company off the new industrial platform of the 21st century, not the one from the 20th – the exact same way that Steve Jobs did to overturn the music business. What did Apple understand first?One,thattoday’stechnologyplatformwouldallowanyonetotransfermusicindigital form to anyone else. You wouldn’t need CDs or record companies anymore. Apply simply took all those innovations and integrated them into a single music-generating, purchasing and listening system that completely disrupted the music business.

What Agassi, the founder of Better Place, is saying is that there is a new way to generate mobility, not just music, using the same platform. It just takes the right kind of auto battery – the iPod in this story – and the right kind of national plug-in network – the iTunes store – to make the business model work for electric cars at six cents a mile. The average American is paying today around 12 cents a mile for gasoline transportation, which also adds to global warming and strengthens petro-dictators.


Do not expect this innovation to come out of Detroit. Remember, in 1908, the Ford Model-T got better milage – 25 miles per gallon – than many Ford, G.M. and Chrysler models made in 2008. But don’t be surprised when it comes out of somewhere else. It can be done. It will be done. If we miss the chance to win the race for Car 2.0 because we keep mindlessly bailing out Car 1.0, there wil lbe no one to blame more than Detroit’s new shareholders: we the taxpayers.

Formulating a transformation strategyWhatwasBHP’sresponsetoitspoorperformance?In1997itsCEO,JohnPrescott, was replaced by an outsider, Paul Anderson. Through a strategy of ‘fix it or sell it’ Anderson stabilised BHP’s operations. He centralised the marketing function to increase the focus on the portfolio of a customer’s needs; he changed the culture from a paternalistic bureaucracy to collaborative, team-based norms. In short, he transformed the business. The resulting organisation has performed extremely well since then, up until the 2008 financial crisis. BHP was fortunate to appoint a CEO who was able to design and lead a transformation process successfully. A company that is unable to do the same ends up in the decline phase of the organisational life cycle.

BHP’s experience reflects what was observed by Schendel, Patton and Riggs (1976). They found that the key to a successful turnaround was explicit action by management; action to clarify the strategy and action to realign the organisation. In effecting the turnaround there was a clear ordering of priorities. The first thing that was done was to see that proper management was in place, even if that meant replacing the CEO and the top team. Then attention was focused on restoring short-term profitability. Finally, major and permanent changes were made to regain a growth momentum.

Suppose that the performance of your organisation has declined relative to its peers for a sustained period of time. The task is clear: reverse the downward spiral or work out how to exit the business gracefully. What is not clear is precisely how you can reverse the decline: what sort of response should be planned. In order to formulate an appropriate response to performance decline, we need to identify where the breakdown in alignment has occured.

The response to a perceived need for a transformation depends on what is causing the concern. If the threat comes from the external environment, either from the suppliers, the customers, the competition, substitutes or the technology, the organisation will have to reinvent its business model and itself, ensuring, of course, that it has an appropriate architecture to be able to deliver. If the threat comes from an inappropriate strategy, the organisation needs to reposition itself and revisit its congruence model to


ensure it can deliver the new position. If the threat comes from inadequate resources or capabilities, the internal alignment of the organisational architecture must be restored.

Decline follows a breakdown in alignmentIn Strategic Management 2 we saw how a neccessary condition for good performance is that all aspects of the organisation be aligned. The position taken in the market (the Business Strategy) needs to be aligned with the External Environment (External Alignment); the Business Strategy can be delivered only if it is aligned with the Organisational Capabilities (Strategic Alignment); the Organisational Capabilities need to be aligned with the Organisational Architecture and all the components of the Organisational Architecture should be aligned within themselves and between each other (Internal Alignment) – see Figure 3 below. Of course, the appropriate response to sustained deterioration in performance depends on which alignment is broken.

Figure 3 A framework for structuring an assessment of alignment from Strategic Management 2


The set of responses that are available when there is lack of alignment in one of three locations of alignment is shown in Table 1 below.

Table 1 A classification of the possible resonses to a substantial deterioration of performance

Loaction of misalignment Response Covered in

Internal Realign the organisational architecture SM2

Strategic(when a value proposition to a stakeholder group cannot be

delivered)

Realign the organisational architecture or Refocus by divesting businesses, customers and/or products

SM2SM3

External(when the industry remains

attractive)

(when the industry is no longer attractive)

Reposition within the industry by serving non-customersCreate a new, disruptive business model by serving a segment that is considered unattractive by the competitionReinvent the organisation by creating a new business model in a different industry

SM1

SM4

SM4

If there is a lack of internal alignment while the strategy is good, the appropriate response is to realign the components of the organisational architecture, especially its control systems and culture. You discussed how to do this in Strategic Management 2. An example of a successful realignment is Comet/Kwikasair, a business unit within TNT that was returning a margin of 1.2% of sales until it realigned its architecture with the help of the Dutch Post Office to achieve a return of 9%.

If there is internal alignment but an inability to deliver the positioning strategy, it may be the case that the organisation has become unfocused. For a corporate it may have underperforming assets that need to be divested, as was the case for Orica (CEO Forum Group 2003). In the case of a BU it may be that there are customers who are no longer profitable or goods and services that have low margins. In this case there is a need to refocus the ‘who’ and the ‘what’ of the organisation. A local example of this is a chemical distribution company that had been created by an entrepreneur who expanded the customer and product base without discipline. When the organisation employed a professional CEO in response to declining performance, his first task was to prune back the customer base and the products offered. Note that a refocus of the positioning strategy implies that the organisational architecture will have to be revisited to ensure that it is aligned with the new position.

If there is a lack of external alignment but the industry remains attractive, there is a need to reposition the organisation. This can be done by seeking to serve segments of non-customers with the help of the Blue


Ocean frameworks that you studied in Strategic Management 1 (Kim & Mauborgne 2005). A classical Australian example from the mid 80s is the transformation of Woolworths Supermarkets from a retailer of dry goods to a full service provider (‘The Fresh Food People’) (Turner & Crawford 1998). The Blue Ocean approach is incremental in that it frames the problem as one of finding attributes that are important to non-customers and difficult for the incumbents to copy. Another approach is to look for a disruptive business model.

One way to devise a disruptive business model is to target the least demanding segment of a market with a simple low cost offering (Christensen, Johnson & Rigby 2002), a strategy used to good effect by discount retailers. This strategy will be effective when the targeted segment is considered to be unattractive by the competitors. In this case the strategy is to remain in a given industry and even to use the current technology. A more dramatic innovation is to question the nature of the business and shift to a new business model in a new industry.

If the environment has changed so much that it is not feasible to continue operating in the industry, there is the option to close the doors and retire from the business or to reinvent the organisation through changing the business model, as was done by the Australian company British American Tobacco when it sidestepped into Amatil and then Coca-Cola Amatil. This response is the deepest of all the interventions and hence the riskiest. To minimise the risk, most organisations in this situation attempt to leverage underutilised strengths they already possess. Of course, when the business model is changed the position will change, the capabilities needed to deliver the position will be different and so the organisational architecture will have to be changed.

The Strategy Development Process reminds us of the importance of framingIf you reflect on the way we have structured the above discussion you will recognise that we have been following part of the Strategy Development Process that was introduced in ‘Thinking and writing in the Strategic Management Year’ (Figure 4). We have Analysed – identified the source of the breakdown in alignment, and Synthesized – proposed how to generate options.


Figure 4 The Strategy Development Process

Strategy Development

Process

Analyse

Synthesize Frame Recommend

Issue Unit of Analysis

Collect data

Generate Hypotheses

Generate Options

Evaluate Confirm

feasibility & assess

risks

The complete Strategy Development Process reminds us that we have to evaluate the options, choose a preferred one and confirm its feasibility. It also reminds us that in our analysis and generation of options, an appropriate framing is critical – the question you ask will determine the answer you get. Framing is an outcome of our mental models and can have an enormous and deleterious effect on the quality of the options. Framing is important in the solution of any problem. It is even more important in a crisis when time is of the essence and there is little room for mistakes. A turnaround process, as opposed to new product development, is not a ‘numbers game’.

So, be careful, cognitive biases lurk in the formulation process!When making plans, be aware of the fact that, as individuals, groups and organisations, we operate with pre-existing cognitive preferences, biases and limitations. We need to be aware that we all approach problems with cognitive biases that may affect the quality and appropriateness of our recommendations. In the case of BHP, the senior management had become overconfident in the organisation’s capabilities and strengths.


Finally, supplement a rational planning process with intuition and experiential learningThe reading by Mintzberg and Westley (2001) provides a timely reminder that there are limits to a rational approach to strategic planning. Intuition also plays a role, especially when the environment is complex and uncertain.

Developing a plan for the implementation of transformational changeHowdidPaulAndersongoabouttransformingBHP?PaulAndersonwasan outside appointment with a successful track record of turning around companies. His style was quite different to the old BHP style. He was inclusive and spent time after his appointment travelling to remote sites and talking to employees. One of the ways successful managers operate is to ensure that they have direct access to where the information is. In the case of Anderson, he took his wife with him on these trips and used her to gather information from the employees and their spouses. People were willing to be frank with her whereas they would not have been so frank with Anderson. (This particular strategy may not work in every situation!). Both the style he used, as well as the actions he took were important.

Anderson stated that his first priority was to restore confidence in the company with the employees and the shareholders. Anderson emphasised the need for teamwork and the creation of shareholder value. In an address to shareholders on 26 February 1999 he said:

‘The first priority will be to get alignment within the company and establish a workable management team. There is nothing I can do myself, we have to have a team that works together. The intent is to simplify the organisation, provide the organisational glue that pulls it together, set out clear accountabilities and responsibilities and above all to expedite decision-making. You will see a number of incremental actions – a new pace in the way we do business – a speed in bringing issues to a head.’

A transformation is a deep change and is characterised by the need to change long- held beliefs and behaviours, a conflict with the current way the business is run and a contest over resources. When it is a reactive transformation, there will be little time and few resources available and organisational depression and inertia to overcome. All of this means that we need to think about the implementation process carefully; about what it entails and how it will be managed.


Change initiatives differ in the extent to which they demand changes to behaviours and beliefs. If the change involves a restructure, for example, processes will change, as will roles and responsibilities, but not necessarily beliefs about the nature of the business. Such change can be mandated and is called ‘technical’. At the other extreme, a transformation requires a deep change in beliefs about the fundamental nature of the business and can only be successful if individuals are willing to change the way they think and work. Such change is referred to as ‘adaptive”. The reading by Heifetz and Laurie (1997) explains the difference between technical and adaptive change together with suggestions on how to lead an adaptive intervention.

Implementing a change initiative can be framed as running a business in its own right with its own Value Chain. One way of structuring an implementation plan is to use the framework of a Value Chain, highlighting the importance of understanding the background and needs (cognitive, physical and emotional) of the employees who will need to change. It also shows how important the leadership of the change initiative is, defining, directing and supporting all stages of the process.

The appropriate tools and style a leader might use should be contingent on the internal context: the degree of consensus about ends and means and the amount of time available. The course will provide frameworks to help in aligning leadership tools and style with the organisational realities.

Protecting the organisation: identifying and interpreting weak signalsWhydidBHPstumble?Theimmediatecausewasastringofpoorinvestment decisions, amplified by bad luck. Of course, strategic decisions are bets and not all of them will work as intended. In the case of BHP, they purchased Magna Copper at the height of the cycle when no-one knew that a rogue trader in Japan was manipulating the copper price. When the price fell by 35%, BHP’s investment decision looked to be poor. That could be forgiven. But BHP management was making a habit of approving poor investments: the HBI project, the Hartley platinum mine and smelter in Zimbabwe and the Beenup mineral sands project in the south of Western Australia were three more. To paraphrase Oscar Wilde, ‘to lose one strategic bet may be regarded as a misfortune; to lose more than one looks like carelessness’.

A deeper explanation is that BHP’s poor performance can be attributed to the fact that their culture had become dysfunctional. There was a belief that the ‘Big Australian’ was invincible. But in fact its processes for capital allocation, due diligence and risk management had been allowed


to deteriorate (see Exhibit 2) to the extent that the BHP Board seriously considered buying Telstra. If the culture encourages arrogance and myopia, the iceberg on the horizon will not be noticed, let alone taken into consideration in future plans.

Exhibit 2: ‘How to lose $13 billion without really trying’, The Australian Financial Review, 4 September 2000, pp. 1;26.


We have seen how to formulate and implement a transformational strategy in response to a performance crisis. However, what we should strive to do is to ensure that such a crisis does not occur, that our organisation can identify future changes before they occur and proactively respond to them. We would like our organisation to be able to reinvent itself before it is forced to.

A transformation strategy can only be formulated successfully if there is a capability within the organisation of reading subtle market and operational signals that hint at a future market transition. We shall learn how to scan the external environment, including customer behaviour, to be sensitive to transitions. Internally we shall use the du Pont framework, extended down into the operations, as a tool to identify appropriate interactive metrics (Simons, 1995) that will provide clues about impending changes when they are monitored at a suitably granular level.

Be adept at scanning the external environmentTo protect against a lack of foresight about the environment (a new, disruptive business model and poor exit decisions), an organisation needs the ability to scan the external context. To protect against a breakdown in internal capabilities (innovation process breakdown and lack of suitable talent), an organisation needs the ability to scan the internal environment and to update continually its congruence model.

Disruption from the technological and competitor environments can be mitigated in a systematic way, including the use of scenario planning. If environmental scanning is to become a capability of the organisation it will have to develop the skills to do so, devote resources to it, allocate responsibility for it and monitor the process. We shall read an account of how Cisco taps into the knowledge and networks of all its employees and partners in order to identify industry inflection points and future trends (Fryer & Stewart, 2008). By their own account, Cisco has been particularly successful in reading the external environment. Note that any scanning of the external environment must be strategic in nature and so take account of the competition. You will remember from Strategic Management 1 that Game Theory is a tool that can be used to facilitate this process.

Be adept at scanning the internal environmentScanning the external environment is only one way of staying ahead of the game. An organisation should also be continually scanning its internal environment, searching for early warning signals from key leading indicators that may provide clues about future customer behaviours. To identify the key leading indicators, we expand the ‘Profit Formula’ that


was part of the business model framework at the beginning of the course (Johnson, Christensen & Kagermann, 2008). We do this by extending a du Pont analysis down into the operations. This will allow us to identify appropriate interactive metrics that reflect the strategic imperatives the organisation is facing (Simons, 1995).

Continually monitor the congruence model for unintended consequences Why would an organisation do nothing until after their performance has declined?Afterall,somefirmsareabletoforeseeproblemsandrespondtothembeforetheyaffectperformance.Werethesignsnotobvious?Managers are intelligent and conscientious. How can they become myopic andunableorunwillingtoactproactively?Maybethepressuresofmeetingcurrentcustomerdemandsleavelittletimetoreflect?Maybetheyhavelostthe ability to innovate and to renew themselves. Maybe they believe that they can trade through their difficulties. In either case, these are only first- order explanations of behaviour. Like BHP the root causes of an inability to transform an organisation are likely to be deep in the architecture, the culture, the reward systems etc. We end the course by reemphasising the importance of the organisational architecture.

Finally we look deep inside the organisation at its congruence model to ensure that the architecture is not impeding the ability to be responsive and flexible. We protect against being blindsided by our biases by continually assessing and adjusting the organisation’s congruence model and its alignment. When assessing alignment, remember that in strategic management there is no ‘right way’. Every value we espouse, every bonus system we implement, every allocation of roles and responsibilities will have downsides. Successful organisations recognise the potential downsides and manage them proactively.


Assessment

All assessments, essays and project reports should conform to the standard assessment format detailed in the course overview and on the AGSM website. Inadequate documentation or careless presentation of assessment items may result in marks being deducted. Assessments must meet prescribed details of length, submission dates and any special provisions. All assessment submissions, unless otherwise stated, are via eLearning and due at 3pm EST.

Assessment policyThe assessment process plays two roles: it provides feedback to you on your progress, and is a means of testing and grading your performance. All information on assessment is provided in the Policies and Forms section of the AGSM website. Please refer to these policies for details on how to present your assignments.

http://www.asb.unsw.edu.au/currentstudents/agsmmba/academicinformation/assessmentsandexaminations/Pages/default.aspx

In order to pass this course, you must:

• Achieveanaggregate(overall)markofatleast50;

• Achieveapassforthefinalproject(Assessment3);and

• Passthepeerfeedbackandbookreviewexercises.

Assessment 1: Residential Problem Analysis (group submission)

Due: Check SM4 calendar for exact due date at the beginning of this document

Weight: 30%

Maximum length: 12 pages

During the Strategic Management 4 residential you will hear from a manager whose organisation is facing disruptive change. At the end of the residential, the residential teams will present suggestions for a transformation strategy, based on the external and internal realities. You will have the opportunity to ask the presenter for more details.

After the residential, your team will refine the suggestions and write up a recommendation for the outside presenter that will include a proposal for a new Business Model as well as a proposal for an appropriate organisational architecture to support the new business. The recommendations will use the frameworks and tools presented in Strategic Management 4, as well as those introduced in Strategic Management 1, Strategic Management 2 and Strategic Management 3.


Be sure to (re-)read ‘Thinking and Writing in the Strategic Management Year’ as you develop your arguments. This document has many useful tips. You will find it in the overview section of your Strategic Management 1 course binder (and on eLearning).

For details on formatting the assignment go to: http://www.asb.unsw.edu.au/currentstudents/agsmmba/academicinformation/assessmentsandexaminations/Pages/default.aspx

The assignments in the SM Year are designed so that you can demonstrate your ability to apply the course frameworks and tools to support managerial recommendations. There is no need to reference frameworks or tools covered in the SM Year course readings or class materials. All other frameworks or concepts you use should be referenced appropriately using the Harvard Referencing system (this includes frameworks or concepts covered in previous GDM courses). In addition, you should meticulously reference all data sources (for all types of data including numerical, interview, quotes from news articles, etc.) so that a reader can understand the logic of your analysis.

The assessment criteria for this assignment are provided on the following page. Please read them carefully.


Residential Problem Analysis assessment criteria

HIGH

DIS

TINC

TION

DIST

INCT

ION

CRED

ITPA

SSFA

IL

15%

Appr

opria

tene

ss o

f th

e re

com

men

datio

nNe

w Bu

sine

ss M

odel

is

com

pelli

ng a

nd li

kely

to c

reat

e va

lue

in a

su

stai

nabl

e wa

y.

New

Busi

ness

Mod

el is

wel

l ta

ilore

d to

the

orga

nisa

tion

and

its e

nviro

nmen

t

New

Busi

ness

Mod

el

is d

escr

ibed

in fu

ll.

Reso

urce

and

Cap

abili

ty

requ

irem

ents

of n

ew

Busi

ness

Mod

el id

entifi

ed.

Gene

ric re

com

men

datio

n gi

ven

whic

h co

uld

be m

ade

for a

ny o

rgan

isat

ion

Reco

mm

enda

tion

inap

prop

riate

20%

Real

istic

re

com

men

datio

nRe

com

men

datio

n is

feas

ible

and

re

alis

tic. F

easi

bilit

y of

reco

mm

enda

tion

just

ified

. Bo

th th

e in

tern

al a

nd

exte

rnal

dow

nsid

es o

f th

e re

com

men

datio

n ar

e no

ted

and

stra

tegi

es to

ov

erco

me

the

down

side

s ar

e pr

opos

ed

Reco

mm

enda

tion

is fe

asib

le

and

real

istic

. Fea

sibi

lity

of re

com

men

datio

n is

ju

stifi

ed. N

ew B

usin

ess

Mod

el is

com

pare

d to

cu

rrent

Bus

ines

s M

odel

. Th

e lin

ks b

etwe

en th

e ne

w Ar

chite

ctur

e, B

usin

ess

Mod

el

and

Fund

amen

tal O

bjec

tive

are

expl

aine

d

New

Busi

ness

Mod

el a

nd

prop

osed

Arc

hite

ctur

e ar

e fe

asib

le a

nd re

alis

tic g

iven

th

e cu

rrent

reso

urce

s an

d ca

pabi

litie

s

New

Busi

ness

Mod

el a

nd

prop

osed

Arc

hite

ctur

e ar

e fe

asib

le b

ut u

nrea

listic

gi

ven

reso

urce

and

ca

pabi

lity c

onst

rain

ts

Reco

mm

enda

tion

not

feas

ible

and

unr

ealis

tic

30%

Qual

ity o

f arg

umen

ts:

logi

c an

d in

tegr

atio

nRe

com

men

datio

n fu

lly ju

stifi

ed. A

ll da

ta

sour

ces

refe

renc

ed. A

ll cl

aim

s su

bsta

ntia

ted.

Al

l ass

umpt

ions

sta

ted

clea

rly.

Reco

mm

enda

tion

base

d on

co

here

nt lo

gica

l arg

umen

ts

with

som

e ju

stifi

catio

n

Reco

mm

enda

tion

base

d on

logi

cal a

rgum

ent w

ith

a re

ason

able

atte

mpt

at

just

ifica

tion

Reco

mm

enda

tion

base

d on

logi

cal a

rgum

ent

but e

vide

nce

to s

uppo

rt ar

gum

ents

is w

eak

Argu

men

tsa

ren’

tlog

ical

,ju

stifi

ed o

r int

egra

ted

20%

Orga

nisa

tion,

cla

rity

of e

xpre

ssio

nTh

e re

port

is w

ell

stru

ctur

ed a

nd w

ritte

n cl

early

Care

fully

and

logi

cally

or

gani

sed

and

clea

rly w

ritte

nGo

od o

rgan

isat

ion

and

cohe

renc

e an

d m

ostly

wr

itten

cle

arly

Littl

e at

tem

pt to

org

anis

e in

a lo

gica

l man

ner,

or la

ckin

g cl

arity

of

expr

essi

on

Diso

rgan

ised

/inco

here

nt

15%

Use

of c

once

ptua

l to

ols

and

fram

ewor

ks

to s

uppo

rt an

alys

is

Good

cho

ice

of to

ols

and

fram

ewor

ks fo

r th

e pr

oble

m. T

ools

and

fra

mew

orks

are

use

d in

an

insi

ghtfu

l and

com

pelli

ng

way.

Good

cho

ice

and

appl

icat

ion

of to

ols

and

fram

ewor

ks fo

r th

e pr

oble

m

Appr

opria

te a

pplic

atio

n of

to

ols

and

fram

ewor

ks, b

ut

poor

cho

ice,

lim

ited

rang

e or

too

man

y cho

sen

Inap

prop

riate

app

licat

ion

or in

terp

reta

tion

of th

e to

ols

and

fram

ewor

ks

No to

ols

or fr

amew

orks

us

ed in

ana

lysis


Assessment 2: Transformation Strategy Paper (individual submission)

Due: Week 9

Weight: 40%


You will be required to analyse a written case that describes an organisation that has decided to change its Business Model. The case will be provided at the residential.

The paper that you submit should recommend a detailed implementation process to the CEO.

You can, of course, use ideas from the whole of the SM Year. Please ensure that your recommendations are justified.

Be sure to (re-)read ‘Thinking and Writing in the Strategic Management Year’ as you develop your arguments. This document has many useful tips. You will find it in the learning technology section of your Strategic Management 1 course binder (and on eLearning).


The assessment criteria for this assignment are provided on the following page. Please read them carefully.


Transformation strategy paper assessment criteria

HIGH

DIS

TINC

TION

DIST

INCT

ION

CRED

ITPA

SSFA

IL

15%

Appr

opria

tene

ss o

f th

e re

com

men

datio

nRe

com

men

datio

n co

vers

al

l the

impo

rtant

asp

ects

of

the

impl

emen

tatio

n pr

oces

s an

d ta

kes

acco

unt o

f the

reso

urce

s an

d pe

ople

ava

ilabl

e

Reco

mm

enda

tion

is ta

ilore

d to

the

orga

nisa

tion

and

its

envi

ronm

ent

Reco

mm

enda

tion

take

s so

me

acco

unt o

f the

or

gani

satio

nal r

ealit

ies

Gene

ric re

com

men

datio

n gi

ven

whic

h co

uld

be

mad

e fo

r any

org

anis

atio

n

Reco

mm

enda

tion

inap

prop

riate

20%

Real

istic

re

com

men

datio

nCo

nsid

erat

ion

mad

e of

th

e do

wnsi

des

of th

e re

com

men

datio

n, a

nd

stra

tegi

es to

ove

rcom

e do

wnsi

des

are

prop

osed

Reco

mm

enda

tion

is

feas

ible

and

real

istic

an

d fe

asib

ility

of

reco

mm

enda

tion

is

just

ified

Reco

mm

enda

tion

is fe

asib

le a

nd

real

istic

giv

en th

e cu

rrent

reso

urce

s an

d ca

pabi

litie

s

Reco

mm

enda

tion

is

feas

ible

but

unr

ealis

tic

give

n re

sour

ce a

nd

capa

bilit

y con

stra

ints

Reco

mm

enda

tion

not

feas

ible

and

unr

ealis

tic

30%

Qual

ity o

f ar

gum

ents

: log

ic a

nd

inte

grat

ion

Reco

mm

enda

tion

fully

ju

stifi

ed. A

ll cl

aim

s su

bsta

ntia

ted.

All

assu

mpt

ions

sta

ted

clea

rly.

Reco

mm

enda

tion

base

d on

coh

eren

t, lo

gica

l ar

gum

ents

with

som

e ju

stifi

catio

n

Reco

mm

enda

tion

base

d on

logi

cal a

rgum

ent w

ith

a re

ason

able

atte

mpt

at

just

ifica

tion

Reco

mm

enda

tion

base

d on

logi

cal a

rgum

ent

but e

vide

nce

to s

uppo

rt ar

gum

ents

is w

eak

Argu

men

tsa

ren’

tlog

ical

,ju

stifi

ed o

r int

egra

ted

20%

Orga

nisa

tion,

cla

rity

of e

xpre

ssio

nTh

e re

port

is w

ell

stru

ctur

ed a

nd w

ritte

n cl

early

Care

fully

and

logi

cally

or

gani

sed

and

clea

rly

writt

en

Good

org

anis

atio

n an

d co

here

nce

and

mos

tly

writt

en c

lear

ly

Littl

e at

tem

pt to

org

anis

e in

a lo

gica

l man

ner,

or la

ckin

g cl

arity

of

expr

essi

on

Diso

rgan

ised

/inco

here

nt

15%

Use

of c

once

ptua

l to

ols

and

fram

ewor

ks to

su

ppor

t ana

lysis

Good

cho

ice

of to

ols

and

fram

ewor

ks fo

r th

e pr

oble

m. T

ools

and

fra

mew

orks

are

use

d in

an

insi

ghtfu

l and

co

mpe

lling

way

.

Good

cho

ice

and

appl

icat

ion

of to

ols

and

fram

ewor

ks fo

r the

pr

oble

m

Appr

opria

te a

pplic

atio

n of

to

ols

and

fram

ewor

ks, b

ut

poor

cho

ice,

lim

ited

rang

e or

too

man

y cho

sen

Inap

prop

riate

app

licat

ion

or in

terp

reta

tion

of th

e to

ols

and

fram

ewor

ks

No to

ols

or fr

amew

orks

us

ed in

ana

lysis


Assessment 3: Final Project (individual submission)

Due: Week 10

Weight: 30%


Building on the two individual papers from Strategic Management 1 (Strategy Formulation paper) and Strategic Management 2 (Strategy Implementation paper), develop a report that both formulates a strategy and designs an architecture to implement it for the organisation you have chosen. You should use the feedback you received on the earlier papers to improve your earlier arguments and presentation. The main aim of this assignment is for you to revise and combine your previous papers and to demonstrate that you can understand and incorporate the feedback.

You should use the same organisation you analysed in the Strategic Management 1 and Strategic Management 2 papers. If this is not possible please talk with your residential leader.

Final Project feedback

In order to receive feedback on your progress with this assignment, you will prepare a table that shows the main issues (at most four) identified in your earlier feedback and indicates how you plan to respond to those issues to combine your strategy formulation and implementation papers into an integrated, compelling report.

Submitting your 1-page outline on Friday of week 7 is a two-step process.

1. Upload your one-page outline onto eLearning (http://lms-blackboard.telt.unsw.edu.au) via the ‘assessment section’. Please make sure that you upload your one-page outline to the assessment called ‘one-page outline’ and not into the slot for the final project.

Please label your submission with ‘<Team No.>_<Cohort Letter>_Surname_FirstName.doc’ (e.g. 1_B_Porter_Michael.doc) and also be sure to include this same information in the top of your one-page summary document.

2. Please email your one-page outline to your team.


During the weekend of week 7 you should review the submissions from the rest of your team and provide feedback to them. Please organise the best way to provide this feedback (email, phone, eLearning). Give your team feedback on their 1-page table outlines, paying attention to the extent to which they have met the guidelines provided above. You may also like to refer to the marking grid for Assessment 3. When you have received feedback from your team on your outline, distill the feedback into a few key points. At the start of week 8 you will participate in a teleconference with your team and the residential leader to discuss the 1-page table outlines submitted. The residential leader will ask you to articulate the key feedback you have received from your team members, and also give you his/her own feedback on your table outline. Submission of your table outline and participation in the teleconference are a required part of the course, and will contribute to the Peer Feedback assessment. To pass the Peer Feedback assessment you must complete the online iPeer Team Feedback survey (which will be accessible in week 8), upload your table outline of responses to the earlier feedback and actively participate in the teleconference.

After the teleconference, you will revise your table in the light of your team’s comments and add it to your Final Project as an appendix. This appendix will not be counted towards the page limit of the submission.

Be sure to (re-)read ‘Thinking and Writing in the Strategic Management Year’ as you develop your arguments. This document has many useful tips. You will find it in the learning technology section of your Strategic Management 1 course binder (and on eLearning).


Given the amount of feedback already received and the time you have had to reflect on your submissions, the standards expected of the Final Project will be high.The assessment criteria for this assignment are provided on the following page. Please read them carefully.


Final Project Marking Grid

HIGH

DIS

TINC

TION

DIST

INCT

ION

CRED

ITPA

SSFA

IL

30%

Com

pelli

ng p

aper

Repo

rt pr

ovid

es a

n ap

prop

riate

and

real

istic

re

com

men

datio

n th

at is

co

mpr

ehen

sive

ly ju

stifi

ed.

Use

of fr

amew

orks

and

to

ols

are

robu

st a

nd h

ave

been

use

d in

sigh

tfully

.

Repo

rt de

liver

s an

ap

prop

riate

and

real

istic

re

com

men

datio

n. T

he li

nk

betw

een

the

Arch

itect

ure

and

the

Valu

e Pr

opos

ition

is

just

ified

as

is th

e lin

k be

twee

n th

e Va

lue

Prop

ositi

on a

nd th

e Fu

ndam

enta

l Obj

ectiv

e.

Miti

gatio

n st

rate

gies

for

the

pote

ntia

l dow

nsid

es

and

the

anal

ysis

of t

he

com

petit

ion

are

robu

st.

A co

mpl

ete

stra

tegy

ha

s be

en d

escr

ibed

and

th

e co

mpo

nent

s of

the

stra

tegy

are

link

ed to

tell

a un

ified

sto

ry. M

ost o

f th

e lin

ks a

re ju

stifi

ed.

Som

e an

alys

is o

f the

co

mpe

titio

n an

d so

me

miti

gatio

n st

rate

gies

ha

ve b

een

prov

ided

.

A co

mpl

ete

stra

tegy

ha

s be

en d

escr

ibed

. Th

e m

ajor

com

pone

nts

of a

goo

d st

rate

gy a

re

prov

ided

(Fun

dam

enta

l Ob

ject

ive,

Val

ue

Prop

ositi

on, R

esou

rces

an

d Ca

pabi

litie

s,

Arch

itect

ure)

.

A co

mpl

ete

stra

tegy

has

no

t bee

n de

scrib

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Assessment 4: Peer Feedback (individual submission)

Due: Week 8

Weight: This assignment is Pass/Fail only. You need to pass this assignment in order to pass the course.

You are required to give feedback on your own and other course team members’ contributions to teamwork on Strategic Management 4 via iPeer, the online peer feedback tool. The feedback survey will be available in week 8.

Rate the level of skill you have observed in each team member by using behavioural descriptors for each team competency. Be as honest and objective as you can. Please also provide observations of behaviours in the spaces provided.

You and each individual team member will get a summary of the feedback others in the team have given.

This assignment is Pass/Fail only. To pass the assignment you need to complete feedback for each member of your team, upload your table of issues to be addressed in your Final Project in week 7, and actively participate in the teleconference in week 8.

Assessment 5: Book Review (oral presentation)Weight: This assignment is Pass/Fail only. You need to pass this assignment in order to pass the course.

Those of you who have not already presented a book review will do so at residential 4. See the Strategic Management 1 course overview for details of the requirements for this assessment. This is a Pass/Fail assignment only. All students who satisfactorily complete a review will pass.


References

Avalia, J. A., Mass, N. J. & Turchan, M. P. 1995, ‘Is your growth strategy yourworstenemy?’,McKinsey Quarterly, no. 2, pp. 48–61.

CEO Forum Group 2003, ‘Efficiency, culture, strategy: three keys to the Orica turnaround’, CEO Forum interview with Malcolm Broomhead, CEO and Managing Director, Orica, viewed January 2009, <http://ceoforum.com.au>

Christensen, C. M., Johnson, M. W. & Rigby, D. K. 2002, ‘Foundations for growth: how to identify and build disruptive new businesses’, Sloan Management Review, vol. 43, no. 3, pp. 22–31.

Friedman, T. L. 2008, ‘While Detroit slept’, New York Times, 10 December.

Fryer, B. & Stewart, T.A. 2008, ‘Cisco sees the future’, Harvard Business Review, November, vol. 86, no. 11, pp. 72–79.

Gottliebsen, R. 2003, 10 best and 10 worst decisions of Australian CEOs, Penguin, Camberwell, Australia.

Greiner, L. E. 1972, ‘Evolution and revolution as organizations grow’, Harvard Business Review, July–August, pp. 37–46.

Handy, C. 1994, The empty raincoat, Random House, UK.

Heifetz, R. A. & Laurie, D. L., 2001, ‘The work of leadership’, Harvard Business Review, December, vol. 79, no. 11, pp. 131–141 (reprinted from 1997, Jan/Feb, vol. 75, no. 1, pp. 124–134).

Johnson, M. W., Christensen, C. M. & Kagermann, H. 2008, ‘Reinventing your business model’, Harvard Business Review, December, vol. 86, no. 12, pp. 50–59.

Kim, W. Chan & Mauborgne, R. 2005, ‘Blue Ocean strategy: from theory to practice’, California Management Review, vol. 47, no. 3, pp. 105–121.

Mintzberg, H. & Westley, F. 2001, ‘Decision making: it’s not what you think’, Sloan Management Review, vol. 42, no. 3, pp. 89–93.

Schendel, D., Patton, G. R. & Riggs, J. 1976, ‘Corporate turnaround strategies: a study of profit decline and recovery’, Journal of General Management, vol. 3, no. 3, pp. 3–12.

Simons, R. 1995, ‘Control in an Age of Empowerment’, Harvard Business Review, vol. 73, no. 2, March, pp. 80–88.

Sykes, T. 2000, ‘How to lose $13 billion without really trying’, The Australian Financial Review, 4 September, pp. 1; 26.

Turner, D. & Crawford, M. 1998, Change Power: capabilities that drive corporate renewal, Business and Professional Publishing, Warriewood, NSW.


Readings

Before starting the readings, re-familiarise yourself with the advice on reading the course materials in the Learning Technology section of the Strategic Management 1 Course Overview.

The readings are sequenced to follow the structure of the course:

• Refiningthebusinessmodel(Reading1)

• Formulatingatransformationstrategy(Readings2–9)

• Developingaplanfortheimplementationoftransformationalchange(readings 10 – 14)

• Protectingtheorganisation:identifyingandinterpretingweaksignals(Readings 15 – 17).

You should survey the course materials by reading the Course Overview and writing out all the tools and frameworks that are in the readings. To obtain the full benefit of the residential you need to have absorbed the following readings: 1, 4, 5, 6, 10, 14 and 15 and completed the “What to do” exercises associated with them. We will use your responses to these exercises in the residential. As well, you need to have read the cases (Reading 18 & Reading 19) and prepared answers to the questions that are attached to it.

Reading 1 Johnson, M.W., Christensen, C.M. & Kagermann, H. 2008, ‘Reinventing your business model’, Harvard Business Review, December, vol. 86, pp. 1–11.

Reading 2 CEO Forum Group 2003, ‘Efficiency, culture, strategy: three keys to the Orica turnaround’, CEO Forum interview with Malcolm Broomhead, CEO and Managing Director, Orica, viewed January 2009, <http://ceoforum.com.au>.

Reading 3 Olson, M.S., van Bever, D. & Verry, S. 2008, ‘When growth stalls’, Harvard Business Review, March, vol. 86, pp. 1–15.

Reading 4 Christensen, C.M., Johnson, M.W. & Rigby, D.K. 2002, ‘Foundations for growth: how to identify and build disruptive new businesses’, Sloan Management Review, vol. 43, no. 3, pp. 22–31.

Reading 5 Zook, C. 2007, ‘Finding your next core business’, Harvard Business Review, April, vol. 85, pp. 1–12.

Reading 6 Miller, D., Eisenstat, R. & Foote, N. 2002, ‘Strategy from the inside out: building capability-creating organizations’, California Management Review, vol. 44, no. 3, pp. 37–54.


Reading 7 Russo, J.E. & Schoemaker, P.J.H. 1990, ‘Winning frames’, in Decision traps: the ten barriers to brilliant decision-making and how to overcome them, Simon and Schuster, New York, Chapter 3, pp. 37–63.

Reading 8 Roxburgh, C. 2003, ‘Hidden flaws in strategy’, The McKinsey Quarterly, no. 2, pp. 26–39.

Reading 9 Mintzberg, H. & Westley, F. 2001, ‘Decision making: it’s not what you think’, Sloan Management Review, vol. 42, no. 3, pp. 89–93.

Reading 10 Heifetz, R.A. & Laurie, D.L. 1997, ‘The work of leadership’, Harvard Business Review, Jan/Feb, vol. 75, no. 1, pp. 124–134.

Reading 11 Kanter, R.M. 2003, ‘Leadership and the psychology of turnarounds’, Harvard Business Review, June, vol. 81, pp. 1–11.

Reading 12 Simons, R. 1994, ‘How new top managers use control systems as levers of strategic renewal’, Strategic Management Journal, vol. 15, no. 3, pp. 169–189.

Reading 13 Cialdini. R. B. 2001, ‘The science of persuasion’, Harvard Business Review, October, vol. 79, pp. 72–79.

Reading 14 Christensen, C.M., Marx, M. & Stevenson, H.H. 2006, ‘The tools of cooperation and change’, Harvard Business Review, October, vol. 84, no. 10, pp. 73–80.

Reading 15 Day, G.S. & Schoemaker, P.J.H. 2005, ‘Scanning the periphery’, Harvard Business Review, November, vol. 83, no. 11, pp. 135–148.

Reading 16 Fryer, B. & Stewart, T.A. 2008, ‘Cisco sees the future’, Harvard Business Review, November, vol. 86, pp. 1–9.

Reading 17 Sull, D.N. 1999, ‘Why good companies go bad’, Harvard Business Review, July–August, vol. 77, no. 4, pp. 42–52.

Reading 18 Eagleson, G. 2011. Orica Mining Services: Planning for the implementation of a new Business Model. Moving from a commodity player to a provider of solutions. AGSM Case.

Reading 19 Yoffie, D. B. and Kwak, M. 2000, “Gucci Group N.V. (A, B and C)”, HBS cases 701037, 701089,702479.

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