The strategic thinking of contemporary businesses has been built upon a platform of militant strategists since 400BC when Sun Tzu wrote the Art of War. Sun Tzu hinted at indirect business strategies when he proclaimed that winning without fighting is the highest of skill on the warfield. Sun Tzus thoughts about the factor of terrain, in todays business landscape, translates to markets, industry structures, value propositions, and Porters Five Forces. Sun Tzu preached to know and attack the enemys strategy. In Sun Tzus Art of War, he spoke about five fundamental factors in military strategy and each of these factors can be directly translated to terms of business strategy.
In the strategy development process, it is critical to develop a clear and definitive understanding of the market place. The market environment can be analyzed by conducting the PEST analysis framework, which focuses on the political, legal, economic, socio-demographic, cultural, and technology elements that are existent in the market. Conducting a market study allows us to capture the market environment, the market dynamics, and the trends outlook. By first analyzing the market, we can form fact-based strategic options and recommendations that feed into the strategy development. A market is driven by both supply and demand side analyses that affect the market, which is comprised of goods and services.
Quite a few businesses are disappointed with the results of strategy development efforts. There are a couple close permutations of the same strategy development challenge: developing and obtaining buy-in into new ideas. A common complaint regarding strategy development is the lack of creativity. Management teams are often stuck in their ways and there is a a lack of acceptance for innovative suggestions.
As aforementioned, in evaluating the market, both supply and demand analysis need to be evaluated, which includes understanding all the following areas. Create a diagram of the market force landscape. Do segment analysis, including segment definition, deriving segment volumes, and segment characterization. Identify all points of integration. Analyze buyer behavior, which includes purchase criteria, developing the customer value chain, identifying the points of purchase, and characterizing customer loyalty. Understand all the major players and know their market shares, split by overall and by product group, core competencies and characteristics, and market positioning. The innate structure of both the supply chain and value chain should be whiteboarded and challenged. Identify market trends across the areas of socio-environmental trends, supply trends, and demand trends. Know the historical and emerging trends in the market.
Bower places the emphasis of the strategic planning and budgeting process is in the focus of the strategy development process. RAP based strategy planning and budgeting is a bottoms up driven way to identification and selection of core business opportunities. Organizational context is comprised of governance and the org structure, basis of performance measures and incentives, and managements beliefs and strategic frames. Bower defines strategic intent as the observable and communicated corporate strategy. Bowers set of beliefs is called the Resource Allocation Process RAP business framework. Within the Resource Allocation business framework, when we look at market context, we are evaluating the demands of the primary customer base,in addition to technology development. Capital market context is also analyzed, which includes demands and influence of capital providers, including financial institutions.
Business strategy development has evolved through several key stages since the early 1900s. Strategy development started with a focus on financial planning in the 1950s, moving to long-term business planning in the 1960s, to strategic planning in the 1970s and ultimately to a focus on strategic management in the present day. Changes to strategic mindset represent a changing landscape, new business leaders, and emergence of disruptive technologies and changes. A lot of competitive strategy is also hinged on ideas in the 1970s, where the focus of what business leaders devote their efforts to was around thinking strategically to beat competition and the business frameworks of alternative strategies, portfolio analysis, and the BCG Growth Share Matrix were actively used for the first time. In the current day, the strategic development theme is on integrating strategic planning and execution with a stress on the primary notions of core competencies, strategy planning and execution, and balance scorecard analysis.
Experience proves strategy development is a creative process. When we begin the strategy development process, executives must generate insights, involving making sense of incomplete data, seeing beyond the cold hard facts and generating unconventional insights. In coming up with a strategic response, the business often must solve new business issues and connect unconnected dots. As management evaluates alternative strategic options, we must shape and adapt our conventional perspectives by coming up with new products. If a simple PowerPoint would do the trick in strategy development, then there would not be much opportunities for winning in the competitive market place.
In current thinking, there are a couple schools of thinking around strategy management. Henry Mintzberg proposes for an organization, bottom-ups approach to drive the strategy development process that adheres to organizational configuration. In organizational configuration, the organization takes on behaviors based on adoption to contexts. Henry Mintberg also advocates a transformation of business processes, where management recognizes the need and has the ability to manage complete business operations transformation.
Creativity is about thinking proactively, not reactively. There are numerous obstructions to thinking creatively, including a dependence on the known and replicating past experiences. proactive thinking hopes for deviating from past experiences or procedures. Creative thinking is not a natural process for human beings. To come up with creative ideas, we must evaluate an existing issue from different perspectives. Even after a solution to a problem is found, the business must still dig into other approaches brought up. We must generate as many alternative approaches as we can to solve an existing problem if we want to deliver a creative recommendation. Groupthink and a discomfort with uncertainty often prevent innovative thinking in the strategy development environment.
The strategic thinking of modern business organizations has been shaped by militant strategists since the beginning of organized warfare. Sun Tzu spoke about indirect corporate strategies when he said that winning without fighting is the acme of skill on the warfield. Sun Tzus thoughts about the factor of terrain, in todays business landscape, translates to markets, industry structures, value propositions, and Porters Five Forces. Sun Tzu wrote the Art of War, which has been adopted into a business strategy book. In Sun Tzus Art of War, he wrote about several fundamental factors in military strategy and each of these factors relates to a popular concept of business strategy.
Source: http://blasite.com/2011/10/hbs-training-course-strategy-development-in-the-face-of-competition/
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