This book is sold on the condition that it may not be lent, resold, leased or otherwise circulated, in trade or otherwise, without the prior consent of the publisher in any binding form or cover other than in which it is published and without a similar condition including this condition to be imposed on the subsequent purchaser. Tony Grundy (alternative guru – author) 71 Gary Hamel and S K Prahalad (major gurus) 77 Charles Handy (a leading guru – and from the UK) 80.
List of illustrations
Introduction
What have the strategy gurus got to tell us?
10 Key tenets from the Business Strategy Gurus
A view of strategy as a management concept from the perspective of gurus and the need for creativity and innovative appreciation, not just analysis. An in-depth study of Champney's Health Resort and the relevance of strategy gurus.
A taster of the gurus
What is strategy?
Where there is a major limitation, there is some non-obvious way to get around it. For more on the 'woven plan' see the section on 'Blackadder' as a guru in Chapter 3.).
From the not so cunning plan to the ‘cunning plan’
2 Mounting the cell phone antenna (near the parking lot (with an anti-radioactive suit)). 10 Contacting the Pentagon to obtain high resolution/enlarged pictures of the car park (either by Blackbird spy plane or spy satellite).
Understanding the external environment
After 'SWOT' analysis, Porter's five forces are one of the most prominent techniques taught in MBA courses. Porters five forces: to explore changes in industry structure and dynamics (for example from low to high rivalry, from low bargaining power of buyers to medium bargaining power).
A scenario for the football premiership – 2002/3
PEST analysis: to explore changes in the wider industry context and their impact. For example, in the mid-1990s, the author realized Porter's five forces of the strategy consulting industry.
Understanding competitive advantage
OREITHER
Competitive Advantage (1985) may have been more of a jargon breakthrough than an intellectual advance. The idea of "competitive advantage" already existed implicitly in economics, but Porter's brilliance was that he essentially turned an economic idea into an everyday, attractive management idea.
Strategic options and decision-making
These scores are only as good as 'the cunning plan' - implying a high degree of creativity rather than mere analysis. In practice, strategy tends to move through different states of degree of form and logic, as we will see in the section in Chapter 3 on Grundy - 'The Strategy Mix' (Figure 11).
Implementation
While gurus describe strategic decision-making as typically emergent, (Mintzberg 1994), messy (Braybrooke and Lindblom (1963), and incremental (Quinn 1980), the use of the strategic options grid gives top managers at least some clarity on future direction. ., the Strategic Options Network (Grundy 2002) therefore brings together (in practical terms) the disparate knowledge of a number of gurus.
Learning and control
Conclusion
Key strategic concepts
The key concepts
This is the overall ability of a company to compete (Ulrich and Lake 1990). The concept related to HR competencies and strategy). These are the political (and regulatory), economic, social and technological forces that influence its wider environment (Ansoff 1965). Concept related to growth drivers.).
THREE
The business strategy gurus
Igor Ansoff (a major guru)
While this is a caveat, extensive research on the relative success of diversification suggests, perhaps surprisingly, that diversification of this type does not necessarily reduce performance—provided the firm leverages its core competencies. Diversification is therefore not necessarily a fatal move - to some extent, indeed, diversification is.
THREATSOPPORTUNITIES
Surprisingly, Ansoff's gap analysis has all but disappeared from mainstream corporate strategy literature and is probably only used by about 20 percent of companies in practice. As mentioned above, Ansoff is diametrically opposed to Mintzberg in his approach to strategic management.
Chris Argyris
Argyris' concern about "strategy as learning" brings him close to Senge (1992), who wrote about "The Learning Organization." More on the process school front, he gives a good account of the cognitive and political forces shaping emergent/incremental strategies.
Christopher Bartlett and Samantha Ghoshal (major gurus)
G Bennett-Stewart
The Quest for Value', HarperCollins, New York, 1991 - This is a very clear account of how to plan for shareholder value creation and how to evaluate and manage the cost of capital.
Blackadder
Boston Consulting Group
Relative market growth' is only one dimension of attractiveness, ignoring the PEST factors and Porter's five forces. Relative market share' is only one variable of competitive positioning (you also need to consider: brand, product quality, service, responsiveness, unit cost, etc.).
Cliff Bowman
The weakest position is low perceived utility value and high relative price - a symptom of a company that has become complacent and lost itself. It is even more difficult if you have a high perceived utility value, but the relative price is also very high.
Braybrooke and Lindblom
A Strategy of Decision', New York, Free Press, 1963 - how organizations intervene in the strategic decision-making process.
Campbell A and Goold (major gurus – despite being in the UK)
Campbell and Goold then continued this work by extensive empirical research into synergies – within groups. One of their main concepts is "parental advantage" - very simply it asks what the business parent is really good at, rather than just a competitive advantage primarily.
Alfred Chandler (a major guru)
A De Geus
Eliyahu Goldratt
1 ‘The Goal’ North River Press, Great Barrington Mass, 1985 – A novel based on eliminating the constraints one by one (actually in a particular project). 2 “Theory of Constraints,” North River Press, Great Barrington, Mass, 1990 – A more conventional management text explaining the basis for these colors.
Robert Grant
The Resource-Based Theory of Competitive Advantage', California Management Review pp How acquiring a unique set of resources is the key to competitive advantage.
Tony Grundy
6 "Exploring Strategic Financial Management" (1998b) - sister book to Johnson and Scholes' "Exploring Corporate Strategy" - linking strategic and financial analysis. 12 "Value-Based HR strategy", Butterworth Heinnemann, (2003 forthcoming) - a complete set of tools for managing HR strategy - and for shareholder value.
Gary Hamel and S K Prahalad (major gurus)
Hamel and Prahalad's Competing for the Future is an accessible, imaginative book that you must read. 4 'Competing for the Future', Harvard Business School Press Boston, Mass 1994 - imagining and creating the future rules of the game.
Charles Handy
1 'Understanding Organisations', Penguin, 1976 – a systematic account of generic organizational structures and how they function (still used on some MBA courses). 2 'The Empty Raincoat', Hutchinson, London, 1994 - a provocative version of the 'virtual organisation' where a core workforce is surrounded by outsourced (mainly home) workers.
P Haspeslagh and D Jemison
Gerry Johnson and Kevin Scholes (UK gurus)
Rosebeth Moss Kanter (a major guru)
Kaplan and Norton (major gurus)
You need to identify your own high-level balanced scorecard headings - relevant to your industry, organization and strategic agendas (maximum five). The Balanced Score-Card – Measures that Drive Performance' (Kaplan RS. & Norton DP), Harvard Business Review, pp. 71-90, January-February 1992.
Kurt Lewin
P Lorange and J Roos
Strategic Alliances', Blackwell, Cambridge, Mass, 1992 - a complete account of the dependencies, dynamics and pitfalls of strategic alliances.
McTaggart, Kontes and Mankins
The Value Imperative' (McTaggart JM, Kontes PW and Mankins MC), The Free Press, Macmillan, 1994 - provides an accessible and informative guide to the strategic, financial and organizational implications of shareholder value management.
Henry Mintzberg (a major guru)
His seminal book The Rise and Fall of Learning Strategies (1994) argues that conventional planning processes are inadequate for the more fluid decision-making process characteristic of most organizations. 5 'Strategy Safari' (Mintzberg H, Ahlstrand B and Lampel J), The Free Press, New York, 1998 – a humorous account by Mintzberg (and co-authors) of the various schools of strategic management.
Ian Mitroff
Typically, a series of assumptions in the danger zone can be used to draw a story line for a future that is significantly different from the present. Mitroff's questioning of the assumption set of managers also links to Hamel and Prahalad's (1994) emphasis on rethinking 'mind-set', and also to the author's own work on Porter's sixth (lack of) competitive force – the industry mindset.
Kenichi Ohmae
Competing for the Future' essentially applied Ohmae's three-cornered model in the context of the future rather than just the present. The Mind of the Strategist', New York, McGraw-Hill, 1982 - this is still in print and is one of the best and simplest introductions to strategic management.
R T Pascale (a major guru)
Pascale's most important connections are with Peters (and Waterman 1982) and of course with Senge 1990 (on systems thinking).
Tom Peters (a major guru)
Peters used the success of this later book to build a platform for worldwide Peter's workshops to spread the 'Thriving On Chaos' doctrine. 2 'Thriving On Chaos', Alfred A Knopf, New York 1988 - Peters goes on to suggest that disruption of the status quo can actually be useful.
Nigel Piercy
The grid was developed in the author's own writings and is in daily use at: CGNU, HSBC, Microsoft, Royal Bank of Scotland, Standard Life and Tesco.
Michael E Porter (a major guru)
In its modern form it's called "the business model" - to indicate that it's specific to a particular company - Porter's above headings (such as inbound logistics) aren't very helpful. 2 “Competitive Advantage,” The Free Press, Macmillan, New York, 1985 – Porter's Generic Strategies and the Value Chain.
J B Quinn
In his study of strategic decision making in large corporations there was ample evidence of logical growth at work. Strategies for Change – Logical Growth by Richard D Irwin, Illinois 1980 – is a research-based description of patterns in strategic decision-making.
Alfred Rappaport
Rappaport's own definitions of value and cost drivers are actually much more tangible and much closer to directly generating the financial numbers themselves. In Creating Shareholder Value, The Free Press, New York 1986, Rappaport provides a comprehensive treatment of the role of value and cost drivers in generating shareholder value.
Peter Senge (a major guru)
Also, Senge's idea of "system thinking" is useful in developing scenarios (Wack 1985), as well as developing Porter's (1985) value chain into something more customized and interactive - the Business Value System (Grundy 2002). The Fifth Discipline – The Art and Practice of the Learning Organization,” Century Business, 1990 – which is a patchwork of ideas about how organizations are interactive systems with learning and feedback loops.
A Slyvosky
J C Spender
E Stalk
Sun Tzu (a major guru, now deceased)
Michael Porter's 'Competitive Advantage' is an obvious candidate, being a guru who is in Sun Tzu mode. But many of Sun Tzu's military anecdotes/lessons are also reminiscent of Mintzberg's emergent strategy and process school.
David Ulrich (a major guru)
P Wack
But it is also helped considerably by using Mitroff's uncertainty-importance network, as also used by Shell (see Figure 13). Wack (and his former Shell colleagues including De Geus (1988) – many of whom have now become strategy academics) have close links with Hamel and Prahalad (1994) ('Competition for the Future'), Argyris ( dual learning 1991 ), and Senge (1990) (the learning organization/systems thinking).
Jack Welch (a major guru)
George Yip
FOUR
Champney’s health resort and the business strategy gurus
Background
Strategic analysis
If you said to them 'what does Champney's mean?' - the answer was, they didn't think about it.". I said 'the next person who writes a memo will be fired' - it was unbelievable, we didn't write a single memo for two months.
Strategic choice
As Lord Thurso reflects (interview, 2000): thinking about the future "The guy in charge must always be mentally in the future." The guy at the top is probably the only person who spends his time thinking six to nine months ahead of the business.
EXERCISE
The first thing is one, with the doors closed, with the phone off, staring at this ceiling, going "what-if" in my mind...".
Champney’s – options for competitive strategy
This kind of reflection must be done in some specially created thinking or 'helicopter space' (and time) (for strategic thinking (Mintzberg). By leaving Champney's leaders in suspense for a month, he probably prolonged the pain of uncertainty.
Champney’s – Options for organisational structure
At Champney it's: 'Nowhere else makes you feel so good' - and that should apply to the staff too." Coming now to Champney's turnaround process, Lord Thurso had a number of options for communicating his strategy.
Champney’s strategic breakthroughs
So Lord Thurso was able to then carry out his plan to obtain enough investment to reposition Champney's as an excellent health resort. We have now told the story of Champney's strategic change (Johnson and Scholes) - but primarily from the company's point of view.
Implementing the strategic breakthroughs
Lord Thurso tells us about the practicalities of achieving the necessary culture change – another breakthrough strategy – to radically change old behavior patterns (1997 interview), indicating that changes of this nature can take a long time (Johnson and Scholes, Welch): . In turn, this difficulty was then reduced as Lord Thurso's programs to improve customer service and change attitudes began to bite.
A summary of Champney’s strategic change breakthroughs
We will now summarize Champney's strategic breakthroughs (Johnson and Scholes), which then provided the vehicle to turn strategic thinking into reality (Grundy – 'Strategic project management'). Later, we expand on the first bullet point above, strategic programs, by examining some options for Champney's competitive strategy (Porter) that have been thought about in the past.
Key lessons from the Champney’s case
This included (at Champney) the key appointments of a new finance director and wealth manager – and the acquisition of Champney's frontline staff. There are invariably more options that can be addressed through strategic thinking than most managers usually think (Ohmae).
Champney’s – Some options for competitive strategy
Also, Champney's traditional positioning may (one day) not quite match customer demand. The range of options that can be generated for Champney's highlights the need to think much more broadly about 'options' through strategic thinking than is conventionally done (Grundy).
Organisational strategy – Options
Each of these options can then be mixed with others through a mix-and-match process; For example, Champney's could run alternative treatment sessions during one-day sessions for professional, stressed people (with their partners), delivered through an alliance (Lorange and Roos) with a luxury hotel group. The finance director could have been provided on a loan basis for the first nine months to solve Champney's problems.
Reflections on the Champney’s case
The role of the HR manager can be part-time, subsumed into that of the General Manager – supported by an external HR consultancy. Here we see the conventional structure thus semi-dissolving, with a number of leaders managing fluid, strategic projects rather than making the assumption that for every value-creating activity there must be a role, therefore there must be an incremental person, and therefore there must be a cost.
Case postscript
Finally, Champney's underlined the need to create a joint sense of personal and business need to do strategic thinking.
Summary of key points
FIVE
Marks & Spencer and the business strategy gurus
Marks & Spencer – The position mid-1990s
That left home furnishings, children's clothing, men's and women's shoes, financial services and other products generating perhaps about 20 percent of the profit. Also, over 80 (actually 87) percent of the activities were then located in a single country – the UK.
Marks & Spencer – Recipes for success
Around these core competencies, M&S's supplier relationships and innovation were clustered, which were also key sources of competitive advantage (Grant). Once again, the history of M&S' attitude towards non-M&S cards has been symptomatic of a dual competitive strength and weakness.
Marks & Spencer – The position 1997 – 2001
4 M&S's global expansion (perhaps predictably) faltered, with a return to investment in territories such as Germany. Sir Richard had overseen the success of M&S in the early to mid 1990s but now admitted (Money Programme, 2000) that it is. million £ million £ million £ million £ million.
