Leg 10. From Cardiff to Gothenburg

Transcription

1 The Strategy 05. Strategy Limitations Eleonora Escalante MBA-MEng, Strategic Corporate Advisory Services 1

2 OUTLINE. The Strategy 01 Introduction to Strategy (BOS) 02 Strategy Insights 03 Strategy in the Context of Industry Strategy Evolution 05 Strategy Limitations 06 Summary and Conclusions Eleonora Escalante MBA-MEng, Strategic Corporate Advisory Services 2

3 OUTLINE. The Strategy 01 Introduction to Strategy (BOS) 02 Strategy Insights 03 Strategy in the Context of Industry Strategy Evolution 05 Strategy Limitations 06 Summary and Conclusions We are here! Eleonora Escalante MBA-MEng, Strategic Corporate Advisory Services 3

4 4 Which are the most relevant limitations of the Strategy-Shift? ❻ Sequence of the BOS and 4 Actions Framework (ERRC) are not holistic The base of BOS is Value Innovation from a perspective Cost-Buyer Value ❹ ❷ Lacks of Purpose beyond economic returns ❸ ❺ Buyer Utility Map is not integral Timing: Lacks Sense of Balance between short and long term ❶ To be Stuck in the Middle is difficult.

5 5 ❶ 1. The base of Strategy is the premise of Value Innovation, defined from the perspective of Costs and Buyer-Value. Let s understand the origin of the concept of Value Innovation according to Kim and Mauborgne. Do you remember the Porter s Buyer Value and low-cost drivers explained during Leg 6 (from Hong Kong to Auckland)? VALUE = Utility - Price For the customer Maximize Buyer If we wish to maximize Value VALUE for the Customer Either we Maximize UTILITY or decrease our PRICE We Focus on Utility Drivers PROFIT = Price - Cost For the firm If we wish to maximize PROFIT for the Firm Either we Maximize PRICE or Reducing Reduce our COSTS Costs We focus on Cost Drivers Kim & Mauborgne Value Innovation Porter s Base Value for Generic Strategies

6 6 ❷ Stuck in the Middle 2. To be Stuck in the Middle is difficult. Even in conditions of s Market Spaces. Porter Generic Strategies Kim and Mauborgne have given us the tools to design Bundled Integrated Cost Leadership & Differentiation products-services. This is a Stuck in the Middle Strategy from the point of view of competitive advantage. Why to design a stuck in the middle product if the new blue ocean permit you to raise your buyer value unlimited? Even in s (where there is no competition at entrance), it is extremely hard to find the balance between low-cost and differentiation. And when you find it, you have attracted new competitors to your new, and end up competing in pure low cost or pure differentiation.

7 13June ❸ 3. Buyer Utility Map is not integral The buyer utility levers in this matrix are too limited. Utility levers can be modified and extended depending on the customer s context, country and stage of development. In addition we may have to add a new ethics utility lever (always). The six stages of Buyer Experience Cycle have to expand to seven or eight: Recycle and Legacy The Circular Economy Model will modify these levers and stages in the future.

8 8 ❹ 4. Sequence of the BOS and Four Actions Framework are not holistic A commercially viable idea Analysis doesn t stop with a Sequence of Blue Strategy Index The 4 actions approach: Eliminate, Reduce, Raise, Create is not holistic. It doesn t promote recycle or legacy (for example), and it doesn t provide a set of holistic instructions either. A holistic approach means to create products and services, taking care of something totally in all aspects (healthy and balanced mind, body and spirit) A Holistic Strategy is developed by thinking about the business as a whole, its place in the broader economy and society, and in the lives of its customers. It attempts to develop and maintain multiple perspectives on the company's commercial activities.

9 13June ❺ 5. Lacks of Purpose beyond economic returns There are several layers of purpose in our life. It depends of the individual person. Some find purpose by helping others, meanwhile others find purpose by leaving a legacy of impact. But any type of strategy (either blue ocean, generic, etc.) needs to address the search for meaning. The human being is searching for meaning. In consequence, all products and services of every industry must be aligned to a clear meaning that is to keep the planet environment and resources, and help others in need to raise their quality of life. If our strategies are not aligned to the purpose of awe and transcendence by keeping the planet and helping others, we are not doing beautiful strategies, and in consequence, we are not building beautiful businesses.

10 10 ❻ 6. Timing: Lacks Sense of Balance between short and long term People mindsets are established in relation to time. Time is more than money. The past, present and future are key decision factors in each of us, when it comes to our business choices and productservice strategies. The Strategy has to become dynamic over time to keep the sense of balance between short and term goals. In consequence, whenever we use a Strategy, we have to be aware that if successful, timing is as important as everything else (all frameworks). Sometimes we have to wait for 30 to 40 years (a generation shift) to introduce a blue ocean strategy right and righteously. The sense of balance when applying Strategy happens only when we pursue a Holistic Strategy.

11 11 We are done. We hope to deliver the summary and conclusions tomorrow. For all the global futboleros, we wish you to enjoy the World Football Cup Opening Ceremony tomorrow. Alejandro Guillermo Lozano Artolachipi We did it! Leg 10 is almost done. Alex Guillermo Lozano Artolachipi, my love, it seems we are inside a Shark Tank again? Thank you!