JWI 540, Strategy, Week7 Summary, 8/19/12
************************************
This week I learned more about what strategy is, how the game is played and the strategic levers to pull to gain competitive advantage.
1. The end goal - Play to Win
**********************************
Know your competitors. Understand their styles. Know their plays. Anticipate their next moves. Operate proactively rather than reactively. Define your strategy to win.
2. What is strategy? (Jack Welch video, Week7)
**********************
It is the big Aha that defines the core value proposition of the business, sets the business apart from competitors in the marketplace and makes customers love and choose it over other choices. It is a living, breathing game and an approximate course of action at a given time.
Every firm needs a clear cut definition of what the Aha is.
Michael Dell has an Aha at Dell - he delivers a Low cost, On time, Service oriented product. He and Wal-Mart are not afraid of commoditization. Commoditization for most of us is evil - we want to get rid of it, find innovative products, get away from commodities. They think different and relish commodities. They know how to take advantage of the situation - through great delivery, clear strategy, execution. They don't have a very sophisticated strategy. They don't make it very complex. Just Make it well, provide value, and deliver customer needs - when they want it, exactly how they want it.
The strategy must be defined by the leaders and cannot be delegated especially when a firm is in crisis. eg. Lou Gerstner took charge of strategy at IBM in 1990s and asked the rest of IBM to help with execution.
2. Role of the strategy team
*********************************
Those at the top who are leading the strategy definition for a firm must continually find new strategic options for the firm and come up with new ways of winning. Depending on the kind of game being played in the industry, anticipate the competitor's next moves, and adjust the company's strategies accordingly.
3. PARTS framework for analysis of strategy in any industry
*********************************************************************
Helps define game-changing levers to manipulate as part of strategy (Brandenburger, Nalebuff, 1997).
(i) Players:
************
Competitors, Suppliers, Customers, Complementors are all players in the game.
Who are the participants who take actions to create value ? Who are the established and rising players ?
Ultimately who has a chance to be one of the game's big winners?
Do players team up ? Or is it every man to himself ?
Can the number of players change, by encouraging a firm to join or leave the game ?
(ii) Added Value
********************
Keep score in the industry.
How does a player add value- high performance, reliable, timely, cost-effective ?
Amazon: wider inventory, convenience of internet => shifted the game; all players had to adapt a new definition of added value.
(iii) Rules
************
What can and cannot be done in a strategic game.
Legal rules: Regulators or legal entities set the rules.
Unwritten rules that are industry standard: Adapt to the existing rules of the game - note the unwritten rules between customers, employees, others.
To add higher value, can you find existing rules you might break ? and new rules you want to put in place ?
Think who makes the rules - what would it take for your firm to become the one who sets them ?
Then Generate new ways of thinking and playing in your industry.
Put rivals on the defensive with a full-court press.
(iv) Tactics
*************
Methods a firm uses to gain better position on the strategy game board - to score points with stakeholders, suppliers, customers.
Borders adopted strategic commitment to total customer experience - created generous loyalty program; opened in-store cafes; customers can relax & browse mags. Increase customer's perceived value of what Borders offers without increasing perceived cost of a book. Move below the value equivalence line - perceived cost is lower than its perceived value
(v) Scope
*************
Boundaries of the game in the industry.
Is this a stand-alone game ? or is it linked to other games ?
Could you gain an advantage if you provided the link ?
Game of location - gain prime retail locations in malls.
Game of merchandising - get strolling customers to make impulse purchases.
Amazon - single location, browse without wandering aisles !
It is all about finding a unique way for the firm and playing to win !
Dr DP
************************************
This week I learned more about what strategy is, how the game is played and the strategic levers to pull to gain competitive advantage.
1. The end goal - Play to Win
**********************************
Know your competitors. Understand their styles. Know their plays. Anticipate their next moves. Operate proactively rather than reactively. Define your strategy to win.
2. What is strategy? (Jack Welch video, Week7)
**********************
It is the big Aha that defines the core value proposition of the business, sets the business apart from competitors in the marketplace and makes customers love and choose it over other choices. It is a living, breathing game and an approximate course of action at a given time.
Every firm needs a clear cut definition of what the Aha is.
Michael Dell has an Aha at Dell - he delivers a Low cost, On time, Service oriented product. He and Wal-Mart are not afraid of commoditization. Commoditization for most of us is evil - we want to get rid of it, find innovative products, get away from commodities. They think different and relish commodities. They know how to take advantage of the situation - through great delivery, clear strategy, execution. They don't have a very sophisticated strategy. They don't make it very complex. Just Make it well, provide value, and deliver customer needs - when they want it, exactly how they want it.
The strategy must be defined by the leaders and cannot be delegated especially when a firm is in crisis. eg. Lou Gerstner took charge of strategy at IBM in 1990s and asked the rest of IBM to help with execution.
2. Role of the strategy team
*********************************
Those at the top who are leading the strategy definition for a firm must continually find new strategic options for the firm and come up with new ways of winning. Depending on the kind of game being played in the industry, anticipate the competitor's next moves, and adjust the company's strategies accordingly.
3. PARTS framework for analysis of strategy in any industry
*********************************************************************
Helps define game-changing levers to manipulate as part of strategy (Brandenburger, Nalebuff, 1997).
(i) Players:
************
Competitors, Suppliers, Customers, Complementors are all players in the game.
Who are the participants who take actions to create value ? Who are the established and rising players ?
Ultimately who has a chance to be one of the game's big winners?
Do players team up ? Or is it every man to himself ?
Can the number of players change, by encouraging a firm to join or leave the game ?
(ii) Added Value
********************
Keep score in the industry.
How does a player add value- high performance, reliable, timely, cost-effective ?
Amazon: wider inventory, convenience of internet => shifted the game; all players had to adapt a new definition of added value.
(iii) Rules
************
What can and cannot be done in a strategic game.
Legal rules: Regulators or legal entities set the rules.
Unwritten rules that are industry standard: Adapt to the existing rules of the game - note the unwritten rules between customers, employees, others.
To add higher value, can you find existing rules you might break ? and new rules you want to put in place ?
Think who makes the rules - what would it take for your firm to become the one who sets them ?
Then Generate new ways of thinking and playing in your industry.
Put rivals on the defensive with a full-court press.
(iv) Tactics
*************
Methods a firm uses to gain better position on the strategy game board - to score points with stakeholders, suppliers, customers.
Borders adopted strategic commitment to total customer experience - created generous loyalty program; opened in-store cafes; customers can relax & browse mags. Increase customer's perceived value of what Borders offers without increasing perceived cost of a book. Move below the value equivalence line - perceived cost is lower than its perceived value
(v) Scope
*************
Boundaries of the game in the industry.
Is this a stand-alone game ? or is it linked to other games ?
Could you gain an advantage if you provided the link ?
Game of location - gain prime retail locations in malls.
Game of merchandising - get strolling customers to make impulse purchases.
Amazon - single location, browse without wandering aisles !
It is all about finding a unique way for the firm and playing to win !
Dr DP
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