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DAWGEN GLOBAL INSIGHTS
DAWGEN GLOBAL INSIGHTS I JULY / AUGUST 2021
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INTRODUCTION TO OUR MONTHLY NEWSLETTER DAWGEN GLOBAL INSIGHTS
Welcome to Dawgen Global and our July 2021 to August 2021 edition of our Monthly NewsletterDawgen Global Insights. This Newsletter has been produced to provide you with an overview of our firm and the wide range of services offered by Dawgen Global entities, whether audit, accounting, tax or advisory services. Over the past 19 years, I can proudly say that Dawgen has significant experience and expertise that we draw upon, day after day, helping our clients to progress. Our Monthly Newsletter will demonstrate the strength of our firm and the unique and innovative approach we engender. This is communicated through client case studies on how our team have collaborated to help our clients succeed. This issue of Dawgen Global Insights explores several management tools and strategies including the Four (4) Schools of Strategy. The 4 Schools of Strategy—Position, Execution, Adaption, and Execution—can be visualized by being mapped to a simple 2x2 matrix. Each School of Strategy has something significant to offer strategists, as long they are adopted in a balanced manner. In this edition we also examine the Five (5) P’s of Purpose. Most of us have experienced a uniqueness in some organizations. They stand out, exude fervor and zeal. Their customers are pleased with the company, employees enjoy working there, and investors and shareholders take pride in being part of it. It is not their exceptional product or service rather the Purpose that makes organizations unique—their reason for existence and the resulting impact it makes on the world. In order to be genuine, Purpose has to be embedded in the organization’s DNA, which is not a trivial task. This presentation discusses the 5 Ps of Purpose that can help organizations entrench genuine Purpose in its core. I hope that you will find the information we provide in this Newsletter helpful.
Dawkins Brown
Executive Chairman Dawgen Global
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DAWGEN GLOBAL INSIGHTS I JULY / AUGUST 2021
TABLE OF CONTENT 04 5 Ps of Purpose
18 4 Schools of Strategy DAWGEN GLOBAL INSIGHTS I JULY / AUGUST 2021
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5 Ps of Purpose
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DAWGEN GLOBAL INSIGHTS I JULY / AUGUST 2021
An organization cannot
thrive without a Purpose Purpose should be embedded in the core for an organization to achieve long-term success
M
ost of us have experienced a uniqueness
In order to be genuine, Purpose has to be embedded
in some organizations. They stand out,
in the organization’s DNA, which is not a trivial task.
exude fervor and zeal. Their customers
This article discusses the 5 Ps of Purpose that can
are pleased with the company, employees enjoy
help organizations entrench genuine Purpose in its
working there, and investors and shareholders take
core. The 5 Ps identifies 5 core areas of focus:
pride in being part of it. It is not their exceptional product or service rather the Purpose that makes organizations unique— their reason for existence and the resulting impact it makes on the world.
1
Product Portfolio Strategy
2
People & Culture
3
Processes & Systems
4
Performance Metrics
5
Positions & Engagement
DAWGEN GLOBAL INSIGHTS I JULY / AUGUST 2021
Purpose has to be genuine and melded in the organization’s core.
5
Purpose entices the stakeholders to identify & happily associate with the company Most of us have experienced a uniqueness in some organizations.
T
hese organizations stand out, exude fervor and zeal. Their customers are pleased with the company, employees enjoy working there, and
investors and shareholders take pride in being part of it. It is not their exceptional product or service rather the Purpose that makes organizations unique—their reason
Companies that are authentic have mass appeal.
for existence and the resulting impact it makes on the world. Stakeholders identify with organizations that genuinely follow their Purpose. Leadership allocates resources inline with the Purpose. Employees keep the Purpose front and center while making decisions for the company. On the other hand, ingenuine Purpose may harm the reputation of the company by turning away the stakeholders. In order to be genuine, Purpose has to be embedded in the company’s DNA, which is no mean task. The “5Ps of Purpose Framework” shows how this can be successfully achieved.
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DAWGEN GLOBAL INSIGHTS I JULY / AUGUST 2021
The 5 Ps of Purpose enables companies to successfully entrench Purpose in the DNA of the company The 5 Ps offer a framework to assist companies entrench Purpose in a methodical, complete manner. The framework contributes to unlocking the source of value for the company and detect points of weakness. The 5 Ps are 5 areas of conduct and operations:
1
Product Portfolio Strategy
2
People & Culture
3
Processes & Systems
4
Performance Metrics
5
Positions & Engagement
Purpose can pay lots of dividends, but it has to be authentic and imbued
in
the
business model.
organization’s
The 5Ps emphasize the 5 key areas where Purpose needs to be entrenched for it to reverberate through the entire company and beyond. Source: More Than a Mission Statement, McKinsey, 2020
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The first P of the 5Ps of Purpose calls for aligning products and services with the Purpose of the company OVERVIEW
DETAILS
An organization’s Product / Service
The 1st step entails alignment of the business portfolio with the
Offerings
and
the
associated
company’s Purpose.
modalities of market and position
Companies already in existence may not be able to start afresh but
planning that best caters to the
they can surely reshape their business mix in a dynamic and resolute
target market ought to imbibe the
manner.
Purpose of the company in order to appeal to the stakeholders.
In step 2, the portfolio businesses are filled out with products or services that match the Purpose and the ones that do not are rooted out.
KEY ACTIONS Rethink product portfolio — for example pull out certain
Exhibiting Purpose in the
products, launch new products.
organization’s product / service offerings has to
Modify pricing in line with Purpose.
be approached with an
Re-evaluate portfolio and test rationale of individual assets
open mind in order to
in light of common criteria.
achieve product growth objectives.
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DAWGEN GLOBAL INSIGHTS I JULY / AUGUST 2021
Even established companies are able to reinvent their Purpose in light of the changing times and modify product offerings accordingly Product Portfolio Strategy – Case Example
A
n energy company in the extractive industries since it was founded 85 years ago has proved successfully that Purpose
can be reinvented. Being in the extractive business for such a long time has not restricted the company from reexploring what an energy company may look like in the transforming environment of the future. The company has significantly transformed its
planet.” In line with its Purpose, the company has divested from its petrochemicals businesses and plans to reduce its legacy oil and gas business by 40% by the year 2030. The company will instead augment its low-carbon energy businesses such as bioenergy, hydrogen, electric vehicle charging businesses, and aims to be a net-zero carbon emitter by the year 2050.
Purpose—“reimagining energy for people and
No matter how old, genuine Purpose enables reinvention in companies.
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The 2nd P underscores the significance of developing people and Organizational Culture that empower Purpose OVERVIEW
Attention to employee well-being
Stakeholders—especially
the
employees—are the bedrock for infusing Purpose in the culture of the company. The employee sentiment is a reality check for a
genuine
versus
superficial
Purpose.
DETAILS Infusing Purpose through people starts with hiring employees who identify with the company’s Purpose. Purpose should be kept in view while making HR decisions such
boosts
employee
KEY ACTIONS
enthusiasm,
which in turn gets reflected in
Orient recruiting, people
returns
development, and career
on
stocks—research
shows up to 3% more returns
pathways
in
line
than companies that do not focus
empower Purpose.
to
on employee well-being. Pursuit of meaningfulness in a job
Delineate Purpose KPIs,
should be encouraged rather than
give employees incentives
suppressed in employees.
to meet them, and make
Giving employees suitable means and instruments reinforced by a “speak up” culture to pinpoint gaps is essential to embedding Purpose.
them answerable. Enunciate the
and
desired
model
individual
mindsets and behaviors that express Purpose.
as HR development and career path development.
Happy stakeholders are the backbone
Research indicates that Employee
of the company – Genuine Purpose
Engagement is 4 times greater in companies driven by Purpose. 10
provides happy stakeholders. DAWGEN GLOBAL INSIGHTS I JULY / AUGUST 2021
Companies world wide are recognizing & enabling employees to find meaningfulness in jobs People & Culture – Case Examples
A
n example of employee well-being is a move to increase employee pay in the year 2019 by a large multinational on-line
payment company.
Not only that, the company
increased benefits and also made all employees its shareholders.
meaningfulness of her job. Another example in the People and Culture aspect of Purpose—Employee Engagement—was exhibited by a well-known electronic items retail company when its CEO invested heavily in employee training. The organization provided employees with heavy
Encouraging employees to find meaningfulness
discounts to buy the company’s products, use them,
in job and grasping an opportunity when it arises
and then recommend them to others. The company
was demonstrated by a senior executive of an
also formed ‘geek squads’ of employees who
energy company who later became the CEO.
choose, install, personalize, and support products
The CEO promoted an employee to lead the
that company sells.
Purpose engagement effort after she questioned
Meaningfulness drives employees to do extra for the company.
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The 3rd P entails finetuning processes and systems of the company to reflect and be geared towards achieving Purpose OVERVIEW
DETAILS
Operational initiatives, rewards,
Robust systems and practices are
has to be an all-encompassing
and governance procedures—the
the impetus of Purpose and they
exercise that should involve the
company counts on to establish
can be embedded regardless of
whole supply chain.
value and to fulfil its Purpose—
the sector the company operates
address the “how” of company’s
in.
business model.
Embedding
Embedding Purpose throughout the supply chain becomes a
Purpose
in
the
company systems and processes
source of strength in testing times.
KEY ACTIONS
Embedding Purpose in the process and systems should be planned bearing in mind the present as well as the future.
Adjust
operational
processes
to
achieve
Purpose-linked goals. Make
sure
behaviors
are in line with Purpose throughout
the
supply
chain. 12
DAWGEN GLOBAL INSIGHTS I JULY / AUGUST 2021
Purpose should not only reverberate throughout the company but also in outside partners Processes & Systems – Case Examples
A
tech giant provides a very good example of considering planning for embedding Purpose into its processes and systems. It had set itself
the goal of being carbon neutral and achieved it in 2012. The company now aims even higher—i.e., to use only
Genuine Purpose
renewable energy for its complete operations by the
rubs off on the
year 2030—becoming carbon negative. The company assesses an internal carbon fee on its business divisions
world.
and uses the funds from such assessments to further invest in carbon-reduction efforts within the company as well as worldwide. Another multinational retail corporation exemplifies infusing Purpose in its supply chain by aiming to reduce emissions up to one Gigaton throughout its supply chain by the year 2030. The company helped its suppliers reduce emissions in 6 identified categories by developing a platform that enables suppliers to chart their emission reductions. Suppliers come up with their own reduction goals based on the SMART principles – Specific, Measurable, Achievable, Relevant, and Time-limited. The progress on these goals has to be reported annually by the suppliers. The company recognizes and rewards top achievers. A leading global resource company showed the value of embedding Purpose in its processes when during the COVID-19 crisis it moved to support its small, local, indigenous suppliers by reducing payment terms period significantly. It recognized the vulnerability of its partners during a time of crisis and sought to play a part in supporting them.
This reverberation has
become mutual with time.
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The 4th P demands appraising achievement of Purpose through key performance indicators and metrics not only routine operations, but
OVERVIEW Purpose
also allocation decisions—such as
should
meticulously.
be
gauged
capital expenditures and Mergers
Since Purpose is
and Acquisitions—and company-
a customized feature its metrics have to be specific too. Off-theshelf metrics available in the industry will not portray a true picture.
is
Indicators
should be identified that link to the company’s Purpose, indicators need to be monitored over time, and the company incentivized to
and metrics in line with Purpose.
significantly
strengthened simply by presenting to employees and stakeholders
Differentiation
between Social,
and
Governance (ESG) metrics and metrics
has
not
be
limited
incentives only. should
to
be
to
Institute capital allocation metrics
in
line
with
Purpose for decisions.
employees
who
monetary
Organizations
celebrate
offices
and
demonstrably
further the Purpose cause. Behavioral
meet Purpose targets. Environment,
Fix performance targets
Gauging and stimulating should
Performance
Purpose
Purpose
the metrics in standardized report.
DETAILS Key
wide Transformation initiatives.
KEY ACTIONS
Economics
can
be
used to entice employees to make Purpose part of their daily routine, such as energy saving or waste reduction.
maintained. Purpose comes from within and likewise should lead to the type of metrics to be used to measure them, not vice-versa. Purpose metrics should inform
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Purpose dictates metrics—these metrics should be easily understood across the board.
DAWGEN GLOBAL INSIGHTS I JULY / AUGUST 2021
Rethinking Performance metrics in line with Purpose pays off surprising dividends Performance Metrics – Case Examples
A
leading retail bank rethought its fundamental
proved profitable and the bank out-performed its
purpose;
peers in the industry.
its
relationship
with
society;
individual customers; and the way it should
identify, measure, and improve its Purpose-based performance. The financial institution redesigned its incentive structure to improve customer outcomes which was part of their Purpose. The bank made a symbolic shift by reducing the
Quality of Purpose, and the associated wide-range endeavors and actions that reinforce Purpose, ended up being more powerful than quantity. In other sectors, monetary recompence is linked to achieving of Purpose metrics; like many energy companies now bind executive compensation to emissions that can be demonstrably reduced.
weightage of volume-based targets in employee evaluations since it deemed this shift critical to its Purpose. Although deemed symbolic, the shift
Staying true to the Purpose and making tough decisions pays off in the long run.
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The final P warrants alignment of positions
& relationships with the Organizational Purpose OVERVIEW
DETAILS
The Positions and Engagement
Purpose should be built into the
not trust the company, they will
way
switch.
component emphasizes alignment of
extraneous
positions
and
company
communicates
information to and interacts with
Belief-based
consumers
and
relationships to be in consonance
the public.
with, and constantly deliver on,
Opinion of the customer-base
behavior
the Purpose the company has
matters
most
Research shows that 50% of
defined.
Genuine
Purpose
consumerism demands genuine to
companies. helps
align
customers’ opinion.
from
companies.
the people believed companies should be involved in at least one
Public can decipher an unauthentic act. Research shows that 2/3rds
social issue that has little to do with its business.
of the people may use a product
Built-in Purpose eradicates the
or service once but if they do
gulf between walk and talk.
KEY ACTIONS Customize external commitments and communications to Purpose.
Hard-wired Purpose makes company’s
Adjust extraneous positions in line
positions, communications, and
with Purpose.
external engagement coherent
Align affiliations—such as tradeassociation
membership—with
amplifications of the company’s business model.
Purpose. 16
DAWGEN GLOBAL INSIGHTS I JULY / AUGUST 2021
An organization’s outside associations should also be in-line with its Purpose Positions & Engagement – Case Examples
O
ne of the biggest tech giant’s Purpose
extractive business also made an extensive review
statement is “to empower every person
of the support being extended by them to various
and every organization on the planet to
associations.
The company withdrew support to
achieve more.” The company decided to close its
a number of trade associations that were deemed
brick-and-mortar stores and move to digital retail
contrary to the company’s Purpose.
stores. However, the company did not fire its brickand-mortar store workers.
They were retrained
and now they carry on assisting customers from corporate facilities and remotely, delivering digital sales, training, and support.
A well-established food manufacturing company deploys its 150-year-old philanthropic foundation to contribute food expertise by partnering with employees in the communities in which they live and work.
One of the largest and established energy company that rethought its Purpose and divested from its
What is applicable within the company should apply beyond it too—the purpose should incorporate a sense of social responsibility and community development.
DAWGEN GLOBAL INSIGHTS I JULY / AUGUST 2021
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4 Schools of
Strategy 18
DAWGEN GLOBAL INSIGHTS I JULY / AUGUST 2021
There are countless Strategy frameworks these frameworks can be categorized into the 4 Schools of Strategy There are countless business frameworks on Corporate and Business Strategy that have developed over the years. The frameworks can be categorized into 4 schools of thought—i.e. 4 Schools of Strategy:
This
article
discusses
each
school in depth. As part of these discussions, we also review some established frameworks, like the BCG Experience Curve, Porter’s Five
Forces,
and
Capabilities-
Driven Strategy (CDS). Additional topics touched upon
1
2
Position School, which
include
focuses on Competitive
Corporate
Strategy
Improvement, and others.
Strategy, Continuous
focuses on Operational
Adaption School, which focuses on Organizational Learning and Experimentation
4
Identity,
in
Execution School, which Excellence
3
Tension
Concentration School, which focuses on Core Competencies and Strategic Intent
A successful strategy blends takeaways from all 4 schools— one that has strong coherence among its market strategy, core capabilities, and portfolio of offerings.
DAWGEN GLOBAL INSIGHTS I JULY / AUGUST 2021
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The 4 Schools of Strategy Position, Execution, Adaption, & Execution— can be visualized by being mapped to a simple 2x2 matrix There are countless business frameworks on Corporate and Business Strategy that have developed over the years. The frameworks can be categorized into 4 schools of thought—i.e. 4 Schools of Strategy. This framework of the 4 Schools of Strategy is captured on a 2x2 matrix. The 2 axes represent (x) the point of view on authorship and (y) time orientation.
Each School of Strategy represents a hypothesis around the nature of longterm success in a competitive environment.
Adaptation Act
quickly
and
creatively
in
response to events (organizational learning)
Position Exploit the high ground: create and hold a distinctive position (market-back strategy)
Execution Align people and processes for operational excellence (the quality movement)
Concentration Focus
on
your
current
business (private equity)
20
core Source: The Right to Win, Mainardi, Booz & Company, 2010
DAWGEN GLOBAL INSIGHTS I JULY / AUGUST 2021
Here’s how specific models such as Porter’s Competitive Strategy, Blue Ocean Strategy, and Hamel & Prahalad’s Competing for the Future—map 4 Schools of Strategy – Examples Below, we have mapped some of
Position
the most well-known and widely
Michael
adopted Strategy frameworks
Strategy 1980
against the 4 Schools of Strategy landscape.
Porter
Ram Charan & Larry Bossidy Competitive
Bruce Henderson Essays 1966 W. Chan Kim & Renée Mauborgne
Adaptation Henry Mintzberg The Rise and Fall of Strategic Planning 1994 Tom Peters & Robert Waterman In Search of Excellence 1982
Blue Ocean Strategy 2005 Kenneth Andrews The Concept of Corporate Strategy 1971
Execution W. Edwards Deming Out of the Crisis 1986
Execution 2002 William
Abernathy
&
Robert
Hayes “Managing Our Way to Economic Decline” 1980 Michael Champy
Hammer
&
Reengineering
James the
Corporation 1993
Concentration Gary Hamel & C.K. Prahalad Competing for the Future 1994 Chris Zook Profit from the Core 2001
Each School of Strategy has something significant to offer strategists, as long they are adopted in a balanced manner. Source: The Lords of Strategy, Kiechel; The Age of Heretics, Kleiner; Strategy Safari, Mintzberg
DAWGEN GLOBAL INSIGHTS I JULY / AUGUST 2021
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Next, let us examine the meanings behind the 2 axes the point of view on authorship and time orientation 4 Schools of Strategy – Axes The x-axis captures the point
At the left (many) are those
of view on authorship, while
who favor collective choice.
the
other words, strategic thinking is
y-axis
represents
time
orientation.
Point of Viewon Authorship (Many to Few) This dimension addresses the question
of
who
is
responsible for major strategy decisions.
In
Time Orientation (Future to Present)
installed among as many people
This
throughout the organization as
degree to which Strategy is seen
possible.
as present- or future-oriented.
At the right (few) are those who
At the top (future), we have those
favor
formulation.
who favor moving toward a long-
Strategy
is
term destination that may be
few—the
different from the organization’s
In
top-down
other
words,
developed
by
the
designated expert planners and senior
executives—while
the
rest of the organization is dedicated to execution of the Strategy.
dimension
captures
the
current position. At the opposite end (present), we have those who favor letting the organization’s strategic direction emerge from its current state.
Organizations typically rotate from one School of Strategy to another over time.
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DAWGEN GLOBAL INSIGHTS I JULY / AUGUST 2021
It’s important to recognize that all 4 Schools of Strategy attempt to resolve the fundamental tension in Strategy 4 Schools of Strategy – Core Tension in Strategy All
4
Schools
of
Strategy
The reality that corporate identity is slow and difficult to change.
attempt to resolve the same core, underlying problem—the tension between 2 business realities. There
are
2
conflicting
An
organization’s
identity
business realities that
is
must be addressed
operational
in Strategy:
relationships with others (e.g.
organizations
of
its
culture,
processes,
customers, partners, suppliers),
The reality that any advantage is transient. All
comprised
and distinctive capabilities. Its identity is built up gradually and
continuously
reinforced
through organizational practices
and
industries are vulnerable to
and conversations.
technology disruptions, shifting
This identity is incredibly difficult
capital flows, new regulatory
to shift—even when leadership
changes,
political
changes,
black swan events, and other unpredictable
shifts
in
the
business environment. Just
as
startups
can
quickly
blossom into multi-billion-dollar companies, also true.
the
opposite
is
Many of the largest
companies of yesteryear are now failing or no longer in existence.
recognizes the The fundamental survival requires enabler of Strategy— identity. the source of Competitive Advantage—is a distinctive, coherent corporate identity.
DAWGEN GLOBAL INSIGHTS I JULY / AUGUST 2021
organization’s a change in
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The first school is Position, the most widely known and accepted,
based on Competitive Strategy driven largely by external forces and analyses School of Strategy – Position (Overview)
the organization in the market.
REPRESENTATIVE STRATEGIC THINKING
These early efforts by the “Position
Competitive
unassailable market position for
SCHOOL Position
School”
OVERVIEW
believed
successful
Strategy emerged through the
Porter
Strategy,
(Porter’s
Michael
Five
Forces,
Porter’s Value Chain)
Winners select favorable markets
comprehensive analysis of all
as defined by external forces.
critical factors:
MANAGEMENT FOCUS
• External markets
Competitive Strategy
• Internal capabilities
Blue Ocean Strategy, W. Chan Kim
DETAILS
• Customer and societal needs
& Renee Mauborgne
This typically, a SWOT exercise is
The
conducted as part of the Strategic
Strategy, Kenneth Andrews
The idea of Strategic Planning began
to
take
form
in
the
1960s, driven by an increased availability of data (e.g. costs, prices, performance metrics) and economic uncertainty. From the process of Strategic Planning,
a
Strategy
developed. overarching
This plan
for
was
was
an
growth,
usually formalized in a business document the CEO.
and
endorsed
by
This Strategy Plan
aimed at creating a dominant, 24
Essays,
Bruce
Henderson
(Experience Curve, BCG GrowthShare Matrix)
Concept
of
Corporate
Planning session. A breakthrough in the Position School was driven by the advent of
Bruce
Henderson’s
BCG
Experience Curve, which also led to the creation of the BCG Growth-Share Matrix. Michael
Porter
later
brought
the Position School to a level of unprecedented
sophistication
through his Porter’s Five Forces and
Porter’s
frameworks.
Value
Chain
Over time, many business leaders became disenchanted with the notion of formal Strategic Planning—as it often didn’t lead to profitability.
DAWGEN GLOBAL INSIGHTS I JULY / AUGUST 2021
This BCG Experience Curve states that for each doubling of “experience,” there is a predictable reduction in costs School of Strategy – Position (Experience Curve in Fulfilling Demand) production volume), there is
Curve is that for each doubling
a predictable reduction in our
of “experience,” there is a
organization’s unit production
predictable reduction in our
costs—typically 20-30%.
organization’s unit production costs.
This
experience
in
fulfilling
demand remains important in
Generally,
the
production
of
many
industries,
particularly
any good or service shows the
those that are relatively stable,
BCG
cost-sensitive, competitive, and
Experience
Curve
effect.
The premise of the Experience
Experience Curve Marginal cost
The premise of the Experience
production-intensive.
Cumulative Volume
Curve is that for each doubling of “experience” (or accumulated
This Strategy framework also implies that a company with dominant market share could achieve a self-perpetuating cost advantage of competition.
DAWGEN GLOBAL INSIGHTS I JULY / AUGUST 2021
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In addition to experience fulfilling demand, there is also
experience gains through shaping demand School of Strategy – Position (Experience Curve in Shaping Demand) In
addition
fulfilling
to
demand,
experience there
is
Experience Curve
Experience at fulfilling demand Experience at shaping demand
shaping creating
demand—i.e. demand
for
in new
products and services. The effects of the Experience Curve in
is
particularly
fast-paced
Marginal cost
also experience gains through
relevant
industries
that
require new product and offering
en
Cumulative Volume
u
od
Pr
releases.
g ct
n
tio
a er
We can visualize both types of curves in the chart on the right. Experience in shaping demand is
represented
“jumps”
as
between
successive Experience
Curves (of demand fulfillment). Each success Experience Curve represents a release of new product generation. Experience in shaping demand differs from, but complements, experience at fulfilling demand.
For more information on the BCG Experience Curve, refer to this framework presentation: https://flevy.com/browse/flevypro/bcg-experience-curve-2745. 26
DAWGEN GLOBAL INSIGHTS I JULY / AUGUST 2021
Porter’s Five Forces is a useful tool to evaluate
the competitiveness of an organization with respect to its rivals School of Strategy – Position (Porter’s Five 5 Forces)
It
is
important
for
the
existence of an enterprise to know its competition
The
Five
Forces
emphasizes
on
elements the
framework 5
that
critical
determine
competitiveness
and
and how its product or
attractiveness
service
against its rivals in the industry.
offerings
marketing
and
strategies
affect the market. Porter’s
of
a
business
with
a
SWOT
analysis
framework
According
the competitiveness of an organization with respect to its rivals.
help
SUPPLIER POWER
understand where a business fits in the industry landscape.
evaluate
INTERNAL RIVALRY
Porter’s Five Forces in conjunction
Five Forces is a powerful to
The 5 competitive forces are:
to
Dr.
THREAT OF NEW Porter,
ENTRANTS
understanding the competitive forces and the overall industry
BUYER POWER
structure are vital for strategic decision making and developing a robust competitive strategy.
DAWGEN GLOBAL INSIGHTS I JULY / AUGUST 2021
THREAT OF SUBSTITUTION
27
The next school to look at is Execution the goal here is to focus inward in achieving Operational Excellence through Continuous Improvement School of Strategy – Execution (Overview)
SCHOOL
requires
Execution
OVERVIEW Success is driven by the alignment of
people,
processes,
and
technology to achieve Operational Excellence.
the
successful
implementation of an integrated
Brossidy
Business
System
Managing Our Way to Economic
that effectively and seamlessly
Decline, William Abernathy &
integrates 4 building blocks:
Robert Hayes
• Strategy Deployment
Reengineering the Corporation,
• Performance Management
Michael
Execution
• High Performance Work Teams
Operational Excellence
Operational Excellence is tied closely
to
on the belief that organizations
underlying focus is Continuous
should focus on Execution and
Improvement
Operational Excellence—i.e. an
organization
internal focus, instead of external,
the
as the case of the Position School.
empowering
deployment of better practices, processes, technologies, human capital, and products. Achieving Operational Excellence
28
James
management philosophies of Six Sigma and Lean Management. The
driven by the development and
&
operations-focused
The Execution School is founded
In other words, profitability is
Hammer
Champy
• Process Excellence
MANAGEMENT FOCUS DETAILS
Execution, Ram Charan & Larry
needs
throughout by of
the
focusing the
on
customer,
employees,
and
optimizing existing activities in the process.
REPRESENTATIVE STRATEGIC THINKING Out of Crisis, W. Edwards Deming (PDCA Deming Cycle) DAWGEN GLOBAL INSIGHTS I JULY / AUGUST 2021
Next, let’s look at the Adaption School through
Organizational Learning, we seek to respond quickly and creatively School of Strategy – Adaption (Overview)
SCHOOL
DETAILS
Adaption
The
OVERVIEW
in the 1990s through the thought
Achieve results through acting quickly and creatively in response to events.
• This approach, however, is Adaption
(and
Experimentation) School emerged leadership of Professor Henry Mintzberg.
Organizational Learning
Mintzberg called this strategic approach the Learning School.
Letting a thousand flowers bloom can also lead to a field full of weeds (consuming all of the available resources, while producing nothing of value).
Mintzberg’s strategic approach focused on discovering a more
MANAGEMENT FOCUS
inefficient and can be costly.
creative, experimental approach to executive decision making.
This is also an approach of “continuous
improvement”—in
that we experiment with new directions, discard one that don’t
Instead of focusing on analysis
work, and continuously adjust
and planning, executives should
and refine efforts to meet new
focus on experimenting with new
challenges.
directions.
Per Mintzberg, they
“let a thousand strategic flows bloom… [using] an insightful style, to detect the patterns of success in these gardens of strategic flowers, rather than a cerebral style that
REPRESENTATIVE STRATEGIC THINKING The Rise and Fall of Strategic Planning, Henry Mintzberg
favors analytical techniques to
In Search of Excellence, Tom
develop strategies in a hothouse.”
Peters & Robert Waterman
DAWGEN GLOBAL INSIGHTS I JULY / AUGUST 2021
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The last school is
Concentration
here, we focus and develop our core business School of Strategy – Concentration (Overview)
SCHOOL
Future,
should
Many adjacencies turn out to be
Concentration
focus on their Core Competencies
less profitable, as they actually
and use them to develop a long-
require very different sets of
range “strategic intent.”
capabilities.
OVERVIEW Success
through
development
on
focus
and
your
Core
Competencies.
Core Competencies and StrategicIntent
DETAILS The
Concentration
School
argued that the most effective strategy is to foster a set of Core Competencies, which are defined as bedrock skills and technological capabilities
(e.g.
hardware,
software, systems, biotechnology, financial engineering) that allow us to compete in distinctive ways. Per Gary Hamel and C.K. Prahalad, as outlined in Competing for the
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A strategic intent is defined as: “An ambitious and compelling… dream
MANAGEMENT FOCUS
organizations
that
provides
the
energizes…
that
emotional
and
REPRESENTATIVE STRATEGIC THINKING
intellectual energy for the journey
Competing for the Future, Gary
to the future.“
Hamel & C.K. Prahalad
Capabilities-Driven Strategy (CDS)
Profits from the Core, Chris Zook
is a modern Strategy framework also based on a similar premise of
fostering
sustainable
Core
Competencies or Capabilities to develop a Competitive Advantage. When following this school of thought,
many
organizations
Many private equity firms follow the Concentration School.
may fall into the trap of only growing through adjacencies— i.e. products or services that seem related to the existing core business. DAWGEN GLOBAL INSIGHTS I JULY / AUGUST 2021
Hamel and Prahalad argue that in order to achieve success,
we must reconcile its purpose with its means through Strategic Intent School of Strategy – Concentration (Strategic Intent)
Strategic Intent is our company’s vision of what we want to achieve in the long term. A Strategic Intent has 4 attributes, as defined below.
1
Sense of direction. Conveys a sense of the
3
that the company is
needs to be heading
differentiating itself
in order to compete
by staking out a new
successfully in the
competitive territory
future—and invites
where nobody else has
everyone to use their
one before.
creativity and initiative in
2
Emotional element. There is an
Injects
a sense of discovery
direction the company
the pursuit of that goal.
Sense of discovery.
4
emotional element that something employees will relate to and perceive as worthwhile.
DAWGEN GLOBAL INSIGHTS I JULY / AUGUST 2021
Sense of destiny. Implies a sense of destiny that by achieving its objective, the company will make a meaningful difference in the lives of people.
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Another important theory, Capabilities-Driven Strategy (CDS), is a strategy to maximize “portfolio coherence” in our core competencies School of Strategy – Concentration (Capabilities-Driven Strategy) There are many benefits for an a
organization Corporate
to
develop
Strategy
built
upon its ability to develop sustainable capabilities.
This
Competitive Advantage
Value Creation
type of strategy is a known as
Executives,
Capabilities-Driven
employees
Strategy
managers, at
and
every
level
(CDS).
understand the way the company
A CDS is outward-looking. It
creates value for customers.
starts and end with customers. It involves building up a portfolio
Capabilities System
of ideas, skills, and competencies
The engine of Value Creation
that are put together. Together,
is the system of 3-6 distinctive
it can enable the company to
capabilities that allow companies
consistently attract its primary
to deliver their Value Proposition.
customers. A CDS is driven by 3 core components: • Value Creation
Product and Service Fit All products and services leverage the same capabilities system.
• Product and Service Fit • Capabilities System
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DAWGEN GLOBAL INSIGHTS I JULY / AUGUST 2021
DAWGEN GLOBAL INSIGHTS I JULY / AUGUST 2021
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