Gerry Chng's Library tagged HBR →  View Popular

tangible evidence

The mission is a brief statement, typically one or two sentences, that defines why the organization exists, especially what it offers to its customers and clients.

The vision is a concise statement that defines the mid- to long-term (three- to 10-year) goals of the organization.

formulate a “big, hairy, audacious goal (BHAG)” that challenges even well-performing organizations to become much better.

Finally, the values (often called core values) of a company prescribe the attitude, behavior, and character of an organization.

strategic analysis of the company’s external and internal situation

Often this is described as a PESTEL analysis, encompassing political, economic, social, technological, environmental, and legal factors.

summarize the conclusions from the external and internal analyses in a classic SWOT matrix, assessing the ability of internal attributes and external factors to help or hinder the company’s achievement of its vision

Managers can draw upon an abundance of models and frameworks as they formulate the strategy. Michael Porter’s original competitive advantage framework, for example, presented the strategy decision as a choice between whether to provide generic low-cost products and services or more differentiated and customized ones for specific market and customer segments. The Blue Ocean approach, popularized by W. Chan Kim and Renée Mauborgne, helps companies search for new market positions by creating new value propositions for a large customer base. Resource-based strategists (including those in the core competencies school) emphasize critical processes—such as innovation or continual cost reduction—that the company does better than competitors and can leverage into multiple markets and segments. Clay Christensen has identified how new entrants can disrupt established markets by offering an initially less capable product or service at a much lower price to attract a large customer base not targeted by the market leaders.

In our original conception of the strategy map and the balanced scorecard, we encouraged companies to select initiatives independently for each objective. We came to realize, however, that by doing so, companies would fail to benefit from the integrated and cumulative impact of multiple, related strategic initiatives. Achieving an objective in the customer or financial realm generally requires complementary initiatives from different parts of the organization, such as human resources, information technology, marketing, distribution, and operations. Also, stand-alone cross-unit initiatives often have no clear owner or home in the organization. Starved for resources and lacking clear accountability for execution, the strategic initiatives wither away, thwarting the strategy’s execution.

assigning a senior executive to lead each strategic theme

Companies will get the biggest bang for their buck when they focus their business process management, total quality management, lean management, Six Sigma, and reengineering programs on processes directly related to the objectives on their strategy maps and scorecards. The goal is to align near-term process improvements with long-term strategic priorities.

Managers need to deconstruct each strategic process to identify the critical success factors and metrics that employees can focus on in their daily activities.

Managers also must identify the resources required to implement their strategic plan.

time-driven activity-based costing (TDABC)

meetings that review the performance of operating departments and business functions and address problems that have arisen or persist.

strategy management meetings that review balanced scorecard performance indicators and initiatives to assess progress and identify barriers to strategy execution

Too many companies are expending enormous energy simply to reproduce the cost and quality advantages their global competitors already enjoy.

Strategies based on imitation are transparent to competitors who have already mastered them.

created an obsession with winning at all levels of the organization and then sustained that obsession

strategic intent envisions a desired leadership position and establishes the criterion the organization will use to chart its progress.

strategic intent is more than simply unfettered ambition.

Strategic intent captures the essence of winning.

Strategic intent is stable over time.

Strategic intent sets a target that deserves personal effort and commitment.

Strategic intent gives employees the only goal that is worthy of commitment: to unseat the best or remain the best

Many companies are more familiar with strategic planning than they are with strategic intent. The planning process typically acts as a “feasibility sieve.” Strategies are accepted or rejected on the basis of whether managers can be precise about the “how” as well as the “what” of their plans. Are the milestones clear? Do we have the necessary skills and resources? How will competitors react? Has the market been thoroughly researched? In one form or another, the admonition “Be realistic!” is given to line managers at almost every turn.

With a fresh set of problems confronting managers at the beginning of every planning cycle, focus often shifts dramatically from year to year.

strategic plans reveal more about today’s problems than tomorrow’s opportunities.

The important question is not “How will next year be different from this year?” but “What must we do differently next year to get closer to our strategic intent?”

On the other, the planning format, reward criteria, definition of served market, and belief in accepted industry practice all work together to tightly constrain the range of available means.

While strategic intent is clear about ends, it is flexible as to means—it leaves room for improvisation.

top management establishes the criterion against which employees can pretest the logic of their initiatives. Middle managers must do more than deliver on promised financial targets; they must also deliver on the broad direction implicit in their organization’s strategic intent.

Strategic intent implies a sizable stretch for an organization.

This forces the organization to be more inventive, to make the most of limited resources.

As with strategic intent, top management is specific about the ends (reducing product development times by 75%, for example) but less prescriptive about the means.

reinvent

For a challenge to be effective, individuals and teams throughout the organization must understand it and see its implications for their own jobs.

Create a sense of urgency

Develop a competitor focus at every level through widespread use of competitive intelligence

Give the organization time to digest one challenge before launching another.

Establish clear milestones and review mechanisms

Four approaches to competitive innovation are evident in the global expansion of Japanese companies. These are: building layers of advantage, searching for loose bricks, changing the terms of engagement, and competing through collaboration.

their competitors’ most significant costs savings came not from lower hourly wages but from better work methods invented by employees.

What some call competitive suicide—pursuing both cost and differentiation—is exactly what many competitors strive for.³

in the early stages of a war for global markets, successful new competitors work to stay below the response threshold of their larger, more powerful rivals. Staking out underdefended territory is one way to do this.

The essence of strategy lies in creating tomorrow’s competitive advantages faster than competitors mimic the ones you possess today.

The objective is not to find a corner of the industry (or niche) where larger competitors seldom tread but to build a base of attack just outside the market territory that industry leaders currently occupy.

An organization’s capacity to improve existing skills and learn new ones is the most defensible competitive advantage of all.

Instead, they must fundamentally change the game in ways that disadvantage incumbents: devising novel approaches to market entry, advantage building, and competitive warfare.

But Canon dramatically reduced the barriers to entry by changing the rules of the game.

Your management team must be absolutely clear about which attributes of service the business will compete on.

easy communication and action

First, costs and prices almost always decline; second, your competitive position determines your options; third, customers and profit pools don’t stand still; and fourth, simplicity gets results.

There was an implicit agreement that a partner would teach a junior professional the ropes and guide her development within the organization.

More important, though, professional services are people businesses

much of a PSF’s attraction used to be its guild model of mentor and apprentice.

They won’t tolerate packaged mentorship; instead they want concrete, hands-on feedback from a senior professional who takes a personal interest in their careers.

They notice who is assigned to whom, who gets the sexy projects, and who seems to be advancing.

Ask an associate what kind of work she wants to do, where her passions lie, what skills she wants to develop.

A players, relatively small in number, will never make up for the solid citizens, regardless of how good the A players are.

Solid citizens differ from stars in that they usually stay on staff longer and thus build up institutional knowledge

tracks the development of its associates by keeping a running record of their different growth needs and of the content of their assignments.

one of the biggest problems in these firms is the underutilization of talent.

let your junior professional shadow someone senior.

If you fail to nurture this talent, you will lose the heart and soul of your firm, as well as the very people you recruited to give you an edge in a hypercompetitive world.

PSFs live and die by their intellectual capital.

It is the threat of entry, not whether entry actually occurs, that holds down profitability.

consumers tend to be more price sensitive if they are purchasing products that are undifferentiated, expensive relative to their incomes, and of a sort where product performance has limited consequences.

Substitute products or services limit an industry’s profit potential by placing a ceiling on prices.

Isolates are completely detached

By knowing and doing nothing, these types of followers passively support the status quo

these types of followers passively support the status quo

Their attitudes and behaviors attract little or no notice from those at the top levels of the organization as long as they do their jobs, even if only marginally well and with zero enthusiasm

Unwittingly, they impede improvement and slow change

Unwittingly, they impede improvement and slow change

Bystanders observe but do not participate

They may go along passively when it is in their self-interest to do so, but they are not internally motivated to engage in an active way

But unlike isolates, they are perfectly aware of what is going on around them; they just choose not to take the time, the trouble, or, to be fair, sometimes the risk to get involved

silent but productive bystander followers can be useful to managers who just want people to do as they are told—but they will inevitably disappoint those bosses who want people to actually care about the organization’s mission

Participants are engaged in some way

They were driven by their own passions (ambition, innovation, creation, helping people)—not necessarily by senior managers

When it comes to participant followers, and to the other engaged follower types described later in this article, leaders need to watch them overall and pay particularly close attention to whether their subordinates are for or against them

Activists feel strongly one way or another about their leaders and organizations, and they act accordingly

Activists who strongly support their leaders and managers can be important allies, whether they are direct or indirect reports

Those activists who are as loyal as they are competent and committed are frequently in the leader or manager’s inner circle—simply because they can be counted on to dedicate their (usually long) working hours to the mission as their superiors see it.

Diehards are prepared to go down for their cause—whether it’s an individual, an idea, or both

They exhibit an all-consuming dedication to someone or something they deem worthy