the ppi Essay

Are you sure you have a strategy? Donald C. Hambrick

Key learning from an article by Donald C.
Hambrick and James W. Fredrickson from the Academy of Management Executive
James W. Fredrickson magazine 2001 Volume 15, No.4.

Strategic threads and not Strategy!
• “Our strategy is to be the low-cost provider.”
• “We’re pursuing a global strategy.”
• “The company’s strategy is to integrate a set of regional acquisitions.”
• “Our strategy is to provide unrivaled customer service.” • “Our strategic intent is to always be the first-mover.”
• “Our strategy is to move from defense to industrial applications.” Frameworks for analysing strategic situations
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Five forces analysis,
Core competencies,
Hyper-competition,
The resource-based view of the firm,
Value chains, and a host of other helpful, often powerful, analytic tools.

• Missing, however, has been any guidance as to what the product of these tools should be—or what actually constitutes a strategy.

• When executives call everything strategy, and end up with a collection of strategies, they create confusion and undermine their own credibility.
They especially reveal that they don’t really have an integrated conception of the business.
• How does knowing that their firm is pursuing an
“acquisition strategy” or a “first-mover strategy” help the vast majority of managers do their jobs or set priorities?

Strategy
• Strategy is derived from the Greek strategos, or “the art of the general.”
• Business generals, whether they are CEOs of established firms, division presidents, or entrepreneurs, must also have a strategy— a central, integrated, externally oriented concept of how the business will achieve its objectives. Without a strategy
• time and resources are easily wasted on piecemeal, disparate activities;
• mid-level managers will fill the void with their own, often parochial, interpretations of what the business should be doing; and the result will be a potpourri of disjointed, feeble initiatives. Examples of lacking a coherent strategy
Sears
• Once a towering force in retailing, Sears spent
10 sad years vacillating between an emphasis on hard goods and soft goods, venturing in and out of ill-chosen businesses, failing to differentiate itself in any of them, and never building a compelling economic logic.

Strategy
• A strategy consists of an integrated set of choices, • but it isn’t a catchall for every important choice an executive faces.

What is included and excluded from strategy
The key is not in following a sequential process, but rather in achieving a robust, reinforced consistency among the elements of the strategy itself. It is not a linear process. •
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Strategic Analysis

Industry Analysis
Customer/marketplace trends
Environmental forecast
Competitor analysis
Assessment of internal strengths, weaknesses, resources

Strategy

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Mission

Fundamental
Purpose
Values

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Objectives
Specified
Targets

Mission and objectives stand apart from and guide strategy.

The central integrated, externally oriented concept on how we will achieve our objectives Choices about internal organizational arrangements are not part of strategy Supporting
Organisational
Arrangements

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Structure
Process
Symbols
Rewards
People
Activities
Functional policies and profiles The elements of Strategy
• Arenas: where will we be active?
• Vehicles: how will we get there?
• Differentiators: how will we win in the marketplace?
• Staging: what will be our speed and sequence of moves?
• Economic logic: how will we obtain our returns? Where will we be active?
• Which product categories?
• Which market segments?
• Which geographic areas?
• Which core technologies?
• Which value-creation stages?
Arenas

What will be our speed and sequence of moves?
• Speed of expansion?
• Sequence of iniatives?

Staging

How will we obtain our returns?
• Lowest costs through scale advantages?
• Lowest costs through scope and replication advantages?
• Premium prices due to

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