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Strategy (12)

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by Larry Pendergrass, Principal

Tenet #10: Strategy is dynamic. Adjust as necessary, but with caution.

In this, my 10th and final blog on Ten Tenets of Strategy, I posit a last thought: the savvy business person will put in place people and processes to scan the industry and market, to generate awareness and then respond in a timely way to these changes to keep their strategy effective.

These ten tenets were gained through years of personal experience and discussions with key thought leaders and are offered as guidance for the development of your strategy.

  1. Your core competency is not your strategy.
  2. Compete on core capabilities, your set of business processes integrated throughout your value chain.
  3. Make hard choices. Decide what you will not do.
  4. Focus on customer outcomes. Design your strategy through the customers’ eyes.
  5. Analyze and design for the industry forces.
  6. Understand and analyze the landscape of possible customer outcomes.
  7. Know your competitors and their strategies profoundly.
  8. Diversify around your core capabilities.
  9. Balance the stakeholders.
  10. Strategy is dynamic. Adjust as necessary, but with caution.
For time and the world do not stand still. Change is the law of life. And those who look only to the past or the present are certain to miss the future. 

-John F. Kennedy
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by Larry Pendergrass, Principal

Tenet #9: Balance the stakeholders.

In my opinion, if you wish to build a company for the long term, you must balance the stakeholders; I like the term maximizing stakeholder value. I see 5 stakeholders: your shareholders, your customers, your employees, your suppliers and the society in which you do business. Any one of these can shut down your business, and any one of them can make a powerful partner to create a long term differentiated and defensible business.

In this blog, I discuss the ninth of my Ten Tenets of Strategy. These tenets were gained through years of personal experience and discussions with key thought leaders and are offered as guidance for the development of your strategy.

  1. Your core competency is not your strategy.
  2. Compete on core capabilities, your set of business processes integrated throughout your value chain.
  3. Make hard choices. Decide what you will not do.
  4. Focus on customer outcomes. Design your strategy through the customers’ eyes.
  5. Analyze and design for the industry forces.
  6. Understand and analyze the landscape of possible customer outcomes.
  7. Know your competitors and their strategies profoundly.
  8. Diversify around your core capabilities.
  9. Balance the stakeholders.
  10. Strategy is dynamic. Adjust as necessary, but with caution.

Balancing the stakeholders may seem more tactical than strategic, but the reason this tenet is on the list is the vital impact it has on your strategy, and how crucial it is to weave throughout your entire core capability.

The term “shareholder value” is relatively new, having been attributed to both Alfred Rappaport (Professor Emeritus at the Kellogg Graduate School of Management, Northwestern University, in 1986) and to Jack Welsh (former CEO of General Electric). Of course, the concept of the responsibility of management and the board of directors toward increased returns to investors is certainly as old as civilization. But the obsession of corporations on increasing shareholder value is said to have begun with Jack Welsh in a speech he made in 1981 called “Growing fast in a slow-growth economy”. Other business historians point to contemporaries of Jack Welsh and Alfred Rappaport, such as T. Boone Pickens as the source of today’s fixation on shareholder value as the sole responsibility of management and the board.

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by Larry Pendergrass, Principal

Tenet #8: Diversify around your core capabilities. 

In this blog, I have offered Ten Tenets of Strategy. These tenets were gained through years of personal experience and discussions with key thought leaders and are offered as guidance for the development of your strategy.

  1. Your core competency is not your strategy.
  2. Compete on core capabilities, your set of business processes integrated throughout your value chain.
  3. Make hard choices. Decide what you will not do.
  4. Focus on customer outcomes. Design your strategy through the customers’ eyes.
  5. Analyze and design for the industry forces.
  6. Understand and analyze the landscape of possible customer outcomes.
  7. Know your competitors and their strategies profoundly.
  8. Diversify around your core capabilities.
  9. Balance the stakeholders.
  10. Strategy is dynamic. Adjust as necessary, but with caution.

Let’s turn now to the eighth of these Tenets:

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by Larry Pendergrass, Principal

Tenet #7: Know your competition and their strategy… well.

My last blog entry, Ten Tenets of Strategy –Tenet #6, I espoused the value of fully understanding the landscape of possible customer outcomes. There is a wide array of possible customer outcomes that will produce a successful strategy. Of course, this situation is dynamic as industry forces change, as new competitors emerge and as customer demands increase. The landscape of possible customer outcomes will shift, and as a result, market share shifts to those firms that have accurately assessed these changes and their ability to respond to them. You need to be vigilant in watching the changing landscape of possible customer outcomes. And yet, the core of what you deliver to your customer, the core that results in your business processes and corporate strategy will need to be relatively stable. So much of what you build in your value chain will be based on this competitive picture. Large investments will be made and will be difficult to change.

This idea is part of the Ten Tenets of Strategy I have presented in the Blog space. These tenets were gained through years of personal experience and discussions with key thought leaders and are offered as guidance for the development of your strategy.

  1. Your core competency is not your strategy.
  2. Compete on core capabilities, your set of business processes integrated throughout your value chain.
  3. Make hard choices. Decide what you will not do.
  4. Focus on customer outcomes. Design your strategy through the customers’ eyes.
  5. Analyze and design for the industry forces.
  6. Understand and analyze the landscape of possible customer outcomes.
  7. Know your competitors and their strategies profoundly.
  8. Diversify around your core capabilities.
  9. Balance the stakeholders.
  10. Strategy is dynamic. Adjust as necessary, but with caution.

It is probably appropriate at this point to make a distinction between corporate and product strategy. Although much of what I have discussed in my recent blogs can be applied to both corporate and product strategy, your product strategy (which may vary from one product line to the next) will need to be more agile than your corporate strategy. This need for agility is especially important in technology industries, in which technology inflection point can change the whole game and market share can change hands essentially overnight. Your product strategy will need to move with these inflection points, where as your corporate strategy may not.

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by Larry Pendergrass, Principal

In my last blog entry, Ten Tenets of Strategy –Tenet #5, I advised company leaders to look first at the industry forces when designing their strategy. Depending upon those forces, they may decide to design their core capabilities (the integrated set of processes throughout the value chain that deliver a unique and valued customer outcome) in very different ways. For example, for a consumer electronics supplier, the power of the customer (the retail store owner controlling shelf space) may be dominant. This situation needs to be addressed in any strategy. Addressing it may require setting up processes, relationships and deals to assure excellent shelf space access for products. Alternatively, a higher-risk strategy may be to attempt to deliver only exciting new products that the retail store owner must have. Apple’s iPhone strategy is a famous example of the latter. This strategy takes the typical power out of the hands of the store owner and places it back in the hands of the product provide, changing the forces, changing the game. In any case, addressing these industry forces needs to result in conscious decisions about the strategy.

Recently through this blog, I have offered Ten Tenets of Strategy. These tenets were gained through years of personal experience and discussions with key thought leaders and are offered as guidance for the development of your strategy.

  1. Your core competency is not your strategy.
  2. Compete on core capabilities, your set of business processes integrated throughout your value chain.
  3. Make hard choices. Decide what you will not do.
  4. Focus on customer outcomes. Design your strategy through the customers’ eyes.
  5. Analyze and design for the industry forces.
  6. Understand and analyze the landscape of possible customer outcomes.
  7. Know your competitors and their strategies profoundly.
  8. Diversify around your core capabilities.
  9. Balance the stakeholders.
  10. Strategy is dynamic. Adjust as necessary, but with caution.
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by Larry Pendergrass, Principal

In my previous blog, Ten Tenets of Strategy –Tenet #4, I urged you to focus on creating a unique customer outcome delivered through your set of business processes. This will produce a defensible strategy, setting you apart from your competition. Of course, this customer outcome must be of value to your customers. From this, the rest of your objectives, activities and value delivery plans should flow.

Over the last few weeks and through this blog, I have offered Ten Tenets of Strategy, gained through years of personal experience and discussions with key thought leaders. These Ten Tenets are offered as guidance for the development of your strategy.

These Ten Tenets are :

  1. Your core competency is not your strategy.
  2. Compete on core capabilities, your set of business processes integrated throughout your value chain.
  3. Make hard choices. Decide what you will not do.
  4. Focus on customer outcomes. Design your strategy through the customers’ eyes.
  5. Analyze and design for the industry forces.
  6. Understand and analyze the landscape of possible customer outcomes.
  7. Know your competitors and their strategies profoundly.
  8. Diversify around your core capabilities.
  9. Balance the stakeholders.
  10. Strategy is dynamic. Adjust as necessary, but with caution.
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by Larry Pendergrass, Principal

In my previous blog, Ten Tenets of Strategy –Tenet #3, I encouraged you, as a company leader, to make the hard choices and argued that deciding what you will not do is as important as deciding what you will do. The cost of not making these hard calls is often hidden: it is found in the cost of lost opportunities and in the lack of alignment in the organization. It can result in confused customers and in ways for the competition to gain a foothold in your most important areas.

Through this blog I offer Ten Tenets of Strategy, gained through years of personal experience and discussions with key thought leaders. These Ten Tenets are offered as guidance for the development of your strategy.

  1. Your core competency is not your strategy.
  2. Compete on core capabilities, your set of business processes integrated throughout your value chain.
  3. Make hard choices. Decide what you will not do.
  4. Focus on customer outcomes. Design your strategy through the customers’ eyes.
  5. Analyze and design for the industry forces.
  6. Understand and analyze the landscape of possible customer outcomes..
  7. Know your competitors and their strategies profoundly.
  8. Diversify around your core capabilities.
  9. Balance the stakeholders.
  10. Strategy is dynamic. Adjust as necessary, but with caution.

 Here is more detail on the fourth of these Tenets:

Tenet #4: Focus on customer outcomes. Design your strategy through the customers’ eyes.

The only attributes that really produce long-term success for any business are those that result in visible and valuable differences to its customers. Your strategy is defined by the unique customer outcome you are trying to deliver through your set of business processes. This strategy should be defensible, it should set you apart from your competition, and most of all, it must be of value to your customers. From this strategy, the rest of your objectives, activities and value delivery plans should flow. Other methods for building a business exist and may work for a while. But to build a sustainable business, you must formulate your strategy through your customers’ perception of your value to them.

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by Larry Pendergrass, Principal

In my last blog, Ten Tenets of Strategy –Tenet #2, I argued that a company’s long-term defendable differentiation is its set of core capabilities, the set of business processes that are integrated throughout its value chain to deliver a unique customer outcome. This is not the same as a core competency. For example, designing low noise circuits is a competency. But the collection of tools, processes and policies that allow the company to deliver new products in half the time of its competition is a capability. Capabilities are focused on delivering a valued customer outcome, and are much harder to copy than a core competency.

Through this blog, I offer Ten Tenets of Strategy, gained through years of personal experience and discussions with key thought leaders. These Ten Tenets are offered as guidance for the development of your strategy.

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By Larry Pendergrass, Principal

As I stated in my previous blog Ten Tenets of Strategy – Introduction and Tenet #1, there is no absolute right strategy for your firm. But there may be one that is a best fit considering all other constraints. Determining the “best fit strategy” is a matter of understanding the industry forces, trends in the marketplace, your competitors’ strategies, your firm’s strengths and weaknesses and the passion that drives your value-creation engine. With these assets and constraints in mind, your firm can set a direction and build competencies for a business that can be defended and expanded upon over the long term.

Through years of personal experience and discussions with key thought leaders, I have crystalized the following Ten Tenets as guidance for the development of your strategy.

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By Larry Pendergrass, Principal

The right strategy, even in a mediocre industry can make you a winner. And the wrong one can make your life unbearable. Far more important than any specific service or product you offer is how you choose to compete. Strategy is the collection of decisions that you make that defines your firm’s unique value to the customer. It determines how you will return value to your stakeholders. And it is at least as much about what you will not do, as it is about what you will do.

Corporate strategy can include high level choices such as whether to compete on cost, performance or customer intimacy, which segments of the market to pursue, what parts of the value chain to emphasize and many other critical decisions. Product or service strategy is one step more detailed, encompassing choices on which products and services you offer and how to outmaneuver the competition with specifics about those offerings.

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By: Scott S. Elliott, Principal and Founder

Many people are skilled at handling and filing paper. I have never been one of them. I tend to misfile important documents, lose them, stack them on an ever-expanding "inbox", spill coffee on them and - usually - not be able to find them when I need to. So, when it became possible to go paperless in the last decade or so - I jumped on it!

 Now, when I receive anything written or typed on paper, I follow this simple process:

  

Is it something I need to save?

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 Dr. Scott S. Elliott, Principal and Founder

Every technology business is different. There is no prescribed strategy that works for all businesses - not even for similar businesses within a narrow class. Every one has a different set of Value Propositions, opportunities and constraints. How can we design and analyze the best strategy?

One set of tools that works very well to brainstorm and develop a strategy is mind-mapping software. There are robust, commercial packages such as Mind Manager from MindJet, and a lot of open-source packages such as FreeMind and XMind. you can find a nice listing on Wikipedia here

http://en.wikipedia.org/wiki/List_of_mind_mapping_software.

These packages make it easy to start from a central node or idea, then add branches around the node to fill-out related ideas, causes and effects, etc. Of course you can do this by hand on a white board or on paper, but the software reformats the chart on-the-fly and makes room for more branches. Also you can edit, move and order branches at will, as shown in this simple cause-effect example using XMind.

Corporate Headquarters:

TechZecs, LLC
1730 Kearny Street,
Suite F-3
San Francisco,  California
94133 USA

Principal and Founder

Dr. Scott S. Elliott
Telephone: +1.415.830.5520
Email: scott.elliott@techzecs.com
           info@techzecs.com

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