Perspectives on business strategy
Six classic perspectives on business strategy - Richard Rumelt, Michael Porter, Clayton Christensen, Gary Hamel, Rita Mc Grath, W. Chan Kim, Renée Mauborgne - Stormbal Consulting - v0.92 - Notes: Diederik Zunneberg
Richard Rumelt
There are three key building blocks to formulate effective strategies:
diagnosis;
guiding policy;
coherent actions.
Without a clear diagnosis, the guiding policy may lack relevance. Without a guiding policy, actions may lack direction. And without coherent actions, the strategy remains on paper and does not lead to results. A set of ambitions and a long list of priorities, do not equal a strategy. Strategy is about focussing on and addressing the most important and feasible challenges. Pinpoint what makes it hard to succeed. What is the 'hard nut to crack' ('the crux')?
Michael Porter
Strategy is about being different. Porter emphasises three key points: 1. being different, 2. activities, and 3. a unique mix of value. Make distinct choices and decisions to set the organisation apart from rivals. Carefully pick the activities an organisation performs. Create a unique mix of value that customers perceive as superior to competitors'. This value can combine product features like quality, price, convenience, or customer service. His Five Forces Framework analyses competitive forces in an industry to identify opportunities for competitive advantage.
Clayton Christensen
Strategy is about finding a way to create and capture value in a rapidly changing and uncertain environment (disruptive innovation). Key elements of his perspective on strategy are: 1. value creation, 2. value capture, 3. disruption, 4. adaptation to change, 5. resource allocation, 6. long-term perspective. Understand the needs and preferences of customers and develop products and services that meet these needs. Capture a portion of the value in the form of profits and advantage. Adapt to ever-changing market dynamics. Align resource allocation with strategic objectives. Take a long-term perspective.
Gary Hamel
Strategy is about gaining and maintaining a competitive advantage by continually challenging and reinventing the fundamental assumptions of an organisation's business model. Key elements: 1. competitive advantage, 2. challenging assumptions, 3. innovation, 4. continuous reinvention, 5. strategic intent, 6. decentralisation and empowerment, 7. ecosystem thinking. Willingness to disrupt the status quo and actively embrace change is essential for achieving and sustaining a competitive advantage in a rapidly evolving landscape. Challenge industry norms. Adapt your organisation. Set ambitious goals to mobilize. Involve employees. Consider the broader business ecosystem when developing strategy.
Rita McGrath
Strategy is not a one-and-done exercise. It's a continuous process of adaptation, renewal, and finding new opportunities in a rapidly changing world. Key elements: 1. transient advantages, 2. discovery-driven planning, 3. opportunistic and adaptive, 4. resource allocation, 5. innovation, 6. dynamic portfolio management. Embrace change and organisecontinuous adaptation. Focus on identifying and leveraging short-lived opportunities. Take calculated risks, test assumptions, and learn from failure. Be opportunistic and agile enough to pivot. Shift resources to align with strategy. Innovate business models, processes, and strategies. Manage portfolios, activities, and projects dynamically.
Chan Kim and Renée Mauborgne
The 'Blue Ocean' strategy framework focuses on creating new market spaces and uncontested market opportunities rather than competing in crowded markets. Key elements: 1. value innovation, 2. blue ocean, 3. red ocean vs. blue ocean, 4. value curve, 5. focus on buyer experience, 6. continuous innovation. Red oceans have intense competition within existing market spaces, often leading to price wars and diminishing profits. Look for blue oceans instead. Think beyond industry boundaries and find innovative ways to meet customer needs while achieving lower costs, ultimately leading to sustainable growth and competitive advantage.
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