the guardian masterclass - strategic transformation

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  • The Guardian One-Day MBA MasterclassStrategic Transformation

    Professor George YipAssociate Dean, Executive Programmes

  • Imperial means Intelligent BusinessImperial College Business School 2

    Strategic Objective

    Business Model

    What is Strategy

  • Imperial means Intelligent BusinessImperial College Business School 3

    EXECUTIVE STRATEGIC OBJECTIVE(example of one)

    STRATEGIC MOVES(example of one)

    EXECUTION(example of one)

    Chief Executive Diversify Create new line of business

    Select and start up new business, appoint general manager

    General Manager Make the new business a success

    Develop appealing new products

    Set up new product development unit, appoint unit manager

    New Product Development Unit Manager

    Run the unit well, including delivering successful new products

    Put in the right processes, systems and workers

    Monitor processes, systems and workers

    Cascade of objectives, strategic moves and execution

  • Imperial means Intelligent BusinessImperial College Business School 4

    All strategies need to be executed

    Not the same as operational execution

    Strategy execution new, different situation (Lexus)

    Operational execution same situation (perhaps better but not different)

    Some strategies are more difficult to execute than others, depending on

    Extent of stretch in strategic objectives

    Fit with current business model

    Change capabilities of organization

    Implementation capabilities of organization

    Defining strategy execution

  • Imperial means Intelligent BusinessImperial College Business School 5

    Source: Laurent Mirabeau and Steve Maguire, From Autonomous Strategic Behavior to Emergent Strategy, Strategic Management Journal 35 (2014), pp. 1202-1229.

    Intended versus emergent strategy

  • Imperial means Intelligent BusinessImperial College Business School 6

    Product launch

    Acquisitions

    Market development

    Related diversification

    Strategic decisions

    Strategies evolve and inform strategic decisions, which in turn consolidate strategic direction

    Evolving strategic direction

    Source: Johnson, Whittington and Scholes, Exploring Strategy.

    Strategic direction from prior decisions

  • Imperial means Intelligent BusinessImperial College Business School 7

    EnvironmentalChange

    PHASE 1Incremental

    Change

    PHASE 2Strategic

    Drift

    PHASE 3Flux

    PHASE 4Transformational

    Change or Demise

    Amou

    nt o

    f cha

    nge

    Time

    Source: Gerry Johnson and Kevan Scholes

    The problem of strategic drift

  • Imperial means Intelligent BusinessImperial College Business School 8

    Individual cognitive limits

    Steady as you go

    Core rigidities

    Organizational culture

    Lagged performance effects

    Past success: The Icarus Paradox

    Source: Gerry Johnson

    Why strategic drift?

  • Imperial means Intelligent BusinessImperial College Business School 9

    When the rate of change inside the company is exceeded by the rate of change outside the company, the end is near.

  • Imperial means Intelligent BusinessImperial College Business School 10

  • Imperial means Intelligent BusinessImperial College Business School 11

    When it goes bankrupt

    When it loses money, consistently

    When it loses market share

    When sales go down

    BUT BY NOW IT IS TOO LATE to avoid trauma for the company, shareholders, employees, customers, partners and managers.

    11

    How to tell when your business needs strategic transformation

  • Imperial means Intelligent BusinessImperial College Business School 12

    Look for the following indicators:

    A new technology or product form introduced into your industry

    By someone else

    Which your top managers refuse to regard as significant (e.g., motorcycles, personal computers, coffee, music downloads, Apple iPhone, etc.)

    How to anticipate the need for strategic transformation

  • Imperial means Intelligent BusinessImperial College Business School 13

    Sales and profits good.BUT the most innovative/fashionable/desirable customers desert you.e.g. Cadillac, Nissan in U.S. in 1990s

    Customer loyalty and retention declines The smartest employees do not join you Your company is worth more broken up

    How to anticipate the need for strategic transformation (cont.)

  • Imperial means Intelligent BusinessImperial College Business School 14

    State owned until 1982 BA = Bloody Awful Rules for flight attendants New advertising campaign Product innovations

    No. 1 among world business travellers

    14

    Transformation of British Airways

  • Imperial means Intelligent BusinessImperial College Business School 15

    Develop the Organization

    Achieve Mobilization

    Create the Vision

    Build the Measures

    Construct an Economic Model

    Align Physical Infrastructure

    Achieve Market Focus

    Invent New Businesses

    Change Rules Through Information Technology

    Create Reward Structure

    Build Individual Learning

    Redesign Work Architecture

    Transforming the organisation

  • Imperial means Intelligent BusinessImperial College Business School 16

    Conclusion

    A strategy is a journey not a destination.

    The best strategy ideas are the outcome of a creative process strongly grounded in deep knowledge and understanding of both the external and the internal environment.

    The best strategies are successfully executed.

  • Imperial means Intelligent BusinessImperial College Business School 17

    Manuel Hensmans, Gerry Johnson and George Yip, Strategic Transformation: Changing While Winning, Basingstoke, England: Palgrave Macmillan, 2013.

    Gerry Johnson, George Yip and Manuel Hensmans, Achieving Successful Strategic Transformation, MIT Sloan Management Review, Spring 2012, pp. 25-32.

    Gerry Johnson and George S. Yip, Transforming Strategy, Business Strategy Review, 18/1 Spring 2007, pp. 11-15.

    (g.yip@imperial.ac.uk)

    References

  • The Guardian One-Day MBA MasterclassStrategic TransformationSlide Number 2Cascade of objectives, strategic moves and executionDefining strategy executionIntended versus emergent strategySlide Number 6The problem of strategic driftSlide Number 8Slide Number 9Slide Number 10Slide Number 11Slide Number 12Slide Number 13Slide Number 14Slide Number 15ConclusionReferencesSlide Number 18

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