A strategy formulation process results in the strategy, plan or solution to be implemented. These are just three of the main disadvantages of using solution-oriented logic in formulating strategies.
Formulating a Division Strategy
Scenarios based on actual experiences in companies that will remain unnamed demonstrate the application of the logic-based solution and its impact on the execution of the strategy formulation process. The above scenario can be modified in many ways and still have many of the same limitations.
Formulating a Product Strategy
The ability to define the desired competitive position depends on knowing the desired outcomes of the customers in the customer set. As a result of this phenomenon, organizations often fail to fully capture customer desired outcomes. It is important to understand the difference between desired outcomes and solutions and the role they play in the strategy formulation process.
The capture of desired outcomes in the format mentioned above is essential for the formulation of breakthrough strategies and solutions. The desired outcomes corresponding to five of the initially mentioned solutions are included in the outcomes we captured. Solutions and desired outcomes clearly play different roles in the execution of an effective strategy formulation process.
Customers Do Not Know What They Want’’
We have achieved the desired results in improving product development, manufacturing and ordering processes and in formulating distribution, pricing and marketing strategies. In general, from external customers, we have collected the desired results for dozens of companies, products and services, and from internal customers we have captured the desired results in many operational, support and management processes. Customers may not know what solution they want, but they know what desired results they want to achieve.
Creating solutions that meet customer desired outcomes is the responsibility of those trying to create value.
Customer Requirements Change Quickly Over Time’’
Define the Mission
A medical company may be working on improving the cardiac pacing process or improving the surgical process. A manufacturer of two-way radios or cell phones may be developing the process of two-way communication. A storage device manufacturer may be developing the process of storing and retrieving information.
A clear, agreed mission statement must be in place before the process can proceed successfully.
Define the Customers
Accepting a solution in the mission statement can prevent the discovery of a breakthrough strategy or solution or prevent the discovery of an emerging market. However, this only applies if the organization knows what process or processes it is trying to develop as it moves into the emerging market. The Internet has evolved the process of obtaining information, of distributing information, of business and other processes.
It may be more important to satisfy the desired results for one type of customer than it is to satisfy the desired results for another.
Uncover the Customers’ Desired Outcomes
Medical device manufacturers must now consider hospital administrators' desired outcomes when formulating their business and product strategies. In addition to defining the customers to include in the strategy formulation process, the organization must also decide what weight to give each customer in the customer set. As a customer's weight decreases, the importance of that customer's stated desired outcomes decreases relative to the desired outcomes of the other customers.
As a result, they play a lesser role in the creation and evaluation of any proposed strategy or solution.
Prioritize the Customers’ Desired Outcomes
Research was conducted to determine the importance of each desired outcome and the actual level of satisfaction. With this knowledge, the desired outcomes are prioritized based on which provide the greatest degree of opportunity for the organization to create customer value. We use what we call the Probability Calculus to determine which desired outcomes are important and which are unsatisfied.
The calculation takes into account the importance (I) of each desired outcome and the difference between the importance (I) and satisfaction (S).
Define the Constraints Imposed on the Solution
Importance and satisfaction data are often collected from multiple target segments as defined in the sample design. If a desired outcome has an importance value of 9 and a satisfaction value of 2, its corresponding opportunity is calculated as (9⫹(9⫺2)) or 16. Statisticians from businesses around the world have recognized that opportunity calculation is effectively enabled by an organization to quantify opportunity areas.
However, it should be noted that organizations have the option of prioritizing results based on importance alone, if they wish.
Define a Predictive Metric for Each Desired Outcome
Define and Choose the Target Segment
For example, formulating a business or product strategy involves choosing a segment of end users, purchasing decision makers, and internal business managers. Each of them must represent the segments targeted by the strategy or solution to be devised. When the organization selects which specific segments to target, the importance and satisfaction values assigned to the desired outcomes by individuals representing those segments are used to prioritize the desired outcomes.
Prioritize the Predictive Metrics
By using the Opportunity Calculation, the major opportunities for the target segment are uncovered and documented. A detailed explanation of the methods used to prioritize predictive metrics can be found in Appendix B.
Set the Target Values That Define the Desired Competitive Position
We will again define the actions that need to be taken to ensure the successful implementation of this process.
Create and Document the Alternative Solutions
Individuals don't need to waste their time and effort generating ideas and features that don't deliver value. Once functions are defined for the top metrics, specific characteristics are selected by the organization for inclusion in an overall concept. For example, an organization might create Alternative Concept 1 by deciding that it wants to include Feature 4 for Metric 1, Feature 2 for Metric 2, Feature 8 for Metric 3, and so on, until features covering the top 30 metrics are available. selected.
Once the first concept is determined, the same method is used to construct Alternative Concept 2, Alternative Concept 3, and so on; only different features are selected to be included in the alternative concepts.
Evaluate the Potential of Each Solution
A score in this range is typically achieved when an organization successfully applies solution-based logic techniques to the strategy formulation process. This method requires an organization to assess the ability of a proposed strategy or solution to achieve the ultimate target value for each metric. The use of this method enables an organization to determine how much better one concept is over another and to what extent the theoretically perfect concept has been created.
It enables an organization to implement only those strategies and solutions that will create the most value for the organization and its customers.
Combine, Improve and Re-evaluate Solutions
For example, the highest scoring solution may have a weakness that is identified when the concepts are evaluated. Its weaknesses are identified when it is determined that the highest scoring solution did not score as well as another concept on a specific metric. The idea is to then take the feature from the lower scoring concept and determine if it can be included or modified to be included in the higher scoring concept.
If the feature can be included in the highest-scoring concept, the highest-scoring concept is improved by eliminating one of its weaknesses.
Ensure the Constraints and Desired Competitive Position Are Achieved
The only way another concept can score better than the highest scoring concept on a specific metric is if it contains a feature not currently found in the highest scoring concept. The second method used to improve the highest scoring solutions involves overcoming conflicts that specific solutions may have with different desired outcomes. The theory is based on research carried out by Genrich Altshuller, who worked in the patent office of the Russian Navy in the 1940s.
The best solution at this point in the process does not always allow the organization to achieve the target values that have been set for each predictive metric.
Test the Highly Valued Solutions for Feasibility
It must now be verified that the proposed solutions respect the constraints imposed on the solution and meet or exceed the target values that define the desired competitive position. If not, then the organization must decide whether to repeat steps 10 to 12 or to modify the limits set or the target values that have been set. When an organization is faced with this scenario, it must decide whether or not to spend more time and effort to create features that will enable the achievement of target values.
As a general rule of thumb, we do not leave the iterative improvement phase of this process until a solution is formulated that satisfies at least 50% of the customer's desired outcomes better than the existing strategy or solution.
Select the Optimal Solution
The optimal solution is the one solution that meets the greatest number of important desired outcomes, respects the stated constraints, and enables the organization to achieve its desired competitive position. Unlike most strategy formulation processes, using this process allows an organization to determine when the optimal solution has been created. As a result, the user knows when to stop the iterative concept creation process and proceed with implementation.
Based on post-project evaluations, organizations using this advanced strategy development process agree that the optimal strategy or solution has been selected more than 90% of the time.
Prepare for Implementation
The effective execution of the CD-MAP process requires solid input and adherence to the steps that define the integrity of the process. The steps that define the effective execution of the CD-MAP process have been defined. It is important to obtain team commitment to the results of each step of the process.
At this session, the facilitator presents the results of the market research and segmentation analysis to the team.
FORMULATING A DIVISION STRATEGY AT SOUTHCORP
The first case study describes how this process was used to formulate an overall business strategy for Southcorp, formerly a division of Gadsden Rheem. The second case study describes how this process was used to assist Cordis Corporation, now a division of Johnson & Johnson, in defining a strategy to develop and market a new line of angioplasty balloon products. The third case study describes how this process was used by Pratt & Whitney, a division of United Technologies, to formulate a strategy aimed at improving its manufacturing operation.
Southcorp management estimates that 7% of that increase could be directly attributed to the implementation of the strategy resulting from this process.
FORMULATING A PRODUCT STRATEGY AT CORDIS CORPORATION
Once all the data was available and analyzed, the team used the data as a basis for formulating an overall division strategy. The team defined predictive metrics for each desired outcome and established the relationships between the metrics and the desired outcomes. Once all the data was available and analyzed, the team used the data as guidance in formulating an overall product strategy.
The team created a series of product concepts that address metrics that predict value delivery.
FORMULATING AN OPERATING STRATEGY AT UNITED TECHNOLOGIES
This ensures that the desired outcomes that are most important and least satisfied are given the highest priority. The predictive metrics appear at the top and the desired results appear in the left column. Note that the high-priority predictive metrics define the activities that complement, reinforce, and optimize the satisfaction of the key desired outcomes.
Ultimately, all individuals in a cluster are there because they value the importance of the desired outcomes in the same way. It also allows an organization to develop unique offerings that target segment-specific desired outcomes. The predictive statistics values in the twenty desired outcome matrix are multiplied.