Chapter 4 Focus on the Big Picture,

not the NumbersTeam 1: Alec Wegmann, Mark Beal, Adrienne Collins, Jessica Drummond, Mike Sanchez, Spencer Thomas Mario Santos, & Chad Hensley

Lengthy industry analysis Tactics to increase market shares, capture

new segments, and cut costs A full budget it almost invariably attached Produced by people in various parts of the

company, often with conflicting agendas.

Typical Red Ocean Strategy Plan

Often these plans do not contain strategy at all

Rather a compilation of tactics that individually make sense, but collectively do not add up to a clear unified direction.

These “Typical” Strategies don’t make sense

another way to define strategy focuses on creating a set of measurements for 4

strategic perspectives

Balanced Scorecard (mgt 3370)

conceptually unclear model with too many details

The problem:

By drawing an effective strategy canvas, a company and it’s managers can focus on the big picture rather than emersion in numbers, jargon, and operational details.

Focusing on the BIG PICTURE

First, it shows the strategic profile of the industry

Second, it shows the strategic profile of current and potential competitors.

Finally, it shows the company’s strategic profile, or value curve.

As stated before in Chp. 2, a Strategic Profile needs to have focus, divergence, and a compelling tagline.

Strategy Canvas Accomplishes (3) things

Maps out what will separate you from your competition

Red Ocean strategy→Blue Ocean strategy requires a strong leader or a crisis.

Four steps to complete the Strategy Canvas.

The Strategy Canvas

Find out what the current positioning of the strategy is.

EFS (European Financial Services) suffered from ill-defined strategy.

ISQS 3344 (Flamm)

Step 1: Realizing Current Strategy

EFS’s Problem=No Defined Strategy◦ Management from Europe, North America, Asia,

and Oceania convened and could not agree on its competitive advantage

◦ It was the belief that regions and demographics contributed to different strategies

“European Financial Services” (EFS) and its Competitive Strategy

Contradictions in competitive strategies◦ Website advanced but slow

Comparison with Clearskies◦ Focused, original strategy◦ Moving away from red ocean◦ Strategy canvas very different from competitors

and EFS (evidence of a blue ocean)

Awakening to Current Strategy

A team needs to be sent into the field, putting managers face-to-face with what they must make sense of: how people use or don’t use their products or services.

A company should never outsource its eyes. There is simply no substitute for seeing for yourself.

Step 2: Visual Exploration

He is hailed as a business visionary for his realization that the providers of financial information also needed to provide online analytics to help users make sense of the data.

Michael Bloomberg

Using business intelligence software called WebFOCUS from Information Builders, Brinker restaurants can calculate sales by shift and by restaurant to determine optimal labor costs.

From there, managers can decide how many employees are needed at any given site and time, and adjust workforce levels accordingly, on a day-by-day basis, to reflect demand.

The managers were sent into the field for 4 weeks to explore the 6 paths to creating blue oceans.

Each manager was to interview and observe 10 people involved in corporate foreign exchange.

EFS Example

The managers concluded that customers valued speedy confirmation of transactions most.◦ Not account relationship managers, like the

managers first hypothesized.

Then each team had to propose a new strategy with 6 new value curves.

EFS’s Findings

could be helpful in brainstorming new ideas

SWOT Analysis (mgt 3370)

Part a: Teams present their newly redrawn strategy canvases◦ draw your canvas based on insights from field

observations◦ show new ideas to a variety of people

Ex: EFS teams presented their new canvases to noncustomers, customers of competitors, and current customers, and corporate executives.

Step 3: Visual Strategy Fair

Part b: Get feedback on alternative strategy canvases from customers, competitor’s customers, and noncustomers

get invitees to explain what they like and dislike about the different value curve proposals

Ex: Teams presented their curves, judges picked their favorites and gave feedback

Step 3: Visual Strategy Fair

Part c: After collecting feedback, determine the optimal new strategy ◦ should be based criteria you have found that will

create a successful strategy Ex: following the strategy fair, the teams

were able to come up with a final value curve that reduced costs, focused on factors important to the customer, and had a compelling tagline

Step 3: Visual Strategy Fair

Step 3: Visual Strategy Fair

After future strategy is set, the last step is to communicate it in a way that can easily be understood by any employee

A visual layout helps show where the company currently stands and which areas it may need improvement in

Step 4: Visual Communications

Eliminate-Reduce-Raise- Create Grid : The case of EFS

Eliminate

Relationship management

Raise

Ease of use Market CommentarySecurityAccuracySpeed

Reduce

Account executivesCorporate dealers

Create

ConfirmationTracking

A visual strategy creates more cohesion among the business and its entities.◦ Easier communication◦ Uniformed business

Visualizing Strategy at the Corporate Level

Value Innovation Program Center◦ Development Teams of various business units◦ 40 inch LCD TV◦ SGH T-100

Samsung Electronics

Pioneer-Migrator-Settler Map Pioneers (Blue Ocean)

◦ Offers unprecedented value◦ Value curve diverges from competition◦ Most powerful source of profitability growth

Settlers (Red Ocean)◦ “Me too” businesses◦ Value curve similar to the industry norm◦ Not a big contributor to future growth

Migrators◦ In between the two◦ Extends value curve◦ Offer improved value, not innovative value

Evaluating Your Company’s Portfolio Plot current & planned portfolio’s on a PMS

map Valuable exercise in visualizing future

performance Portfolio consisting mainly of settlers

◦ Low growth trajectory◦ Conformed to benchmarking, imitating, and price

competition

Portfolio with a lot of migrators◦ Not exploiting growth potential◦ Are marginalized by value-innovating company’s

The Goal for Management Shift the balance of future portfolio’s

◦ Towards pioneers◦ Path to profitable growth

Balance the portfolio of businesses◦ Between profitable growth & cash flow◦ Settlers

Frequently today’s cash generators (Provides liquidity)

◦ Pioneers Large growth potential (Investment with high return) Require cash at outset

PMS Map

Strategic planning should be more about collective wisdom building than top-down or bottom-up planning

Building the big picture is more important than number crunching exercises

A creative element is necessary, along with motivational techniques to invoke willing commitment, rather than bargaining to produce negotiated commitment

Overcoming Limitations of Strategic Planning

Building the process around a picture address many of managers’ discontents with existing strategic planning and yields much better results

“The soul never thinks without an image” Aristotle

Overcoming Limitations of Strategic Planning

Focusing on the big picture◦ -Visualizing a company’s current strategic position

and charting its future strategy

Drawing your strategy canvas◦ 1. Realizing Current Strategy◦ 2. Visual Exploration◦ 3. Visual Strategy Fair◦ 4. Visual Communication

Overview

Visualizing Strategy at the Corporate Level◦ Using the Strategy Canvas◦ Using the PMS Map

Overcoming the Limitations of Strategic Planning

Overview