Harvard Business Review – Strategy

After an long day of classes at the current business school I am attending  I was willing to find a book which would grant me the possibility to consolidate my lessons learned throughout the semester. Along that research I came across the Harvard Business Review Must Reads Boxed Set a series of books that is  sold as “The definitive collection of ideas and best practices for aspiring and experienced leaders alike”. In essence I believe that this collection is  a best of compilation of their articles accumulated throughout the years.

Building Your Company Vision

Interesting read written by the authors of “Build to Last: Successful Habits of Visionary Companies”,  you learn that a well conceived vision has two elements: core ideology and envisioned future. Core ideology defines the enduring characters of the organization and the core values (principles) and core purpose (reason of being) of that org. and has the goal to guide and inspire not to differentiate.

I noted that it is important to not confuse core ideology itself with core-ideology statements and not to be confused with core competence. Concerning the envisioned future, the concept of BHAGs (Big, Hairy, Audacious Goals) (ex: NASA) is an interesting tool to serve as a unifying focal point of effort. It should comprehend two parts: 10-30 year goals + vivid descriptions of who it would be like to achieve these goals. Note do not confuse core purpose and BHAGs and core ideology with envisioned future.

Reinventing Your Business Model

We learn that most companies can’t pull off new growth that business models innovation can bring because of lack of definition of the dynamics’, processes and understanding of their strengths and limitations. A great point it to understand when you should think about changing your business model is to first understand it thanks to your customer value proposition, profit formula, key resources and processes.

Then you should identify if a new model should be needed: when you can tap into large group of clients, new technology is available, to fend-off low-end disrupters and responding to competition. The final point I found most interesting is to remind yourself that it takes patience to create an lucrative business models (~4x).

Blue Ocean Strategy

What stood out in this “Blue Ocean” Strategy chapter of the book was that in most cases blue oceans are created from within a red ocean and it is the incumbents that often create blue oceans usually within their core business.

Blue Oceans can create long lasting brands if done correctly and should never be used as an benchmark tool against the competition. To be successful with this strategy you should pursue differentiation and low cost/greater value simultaneously.  Blue Ocean is created where there is favorable effect between cost structure and value proposition. Strategy is also achieved if only the whole system (price, cost activities) are properly aligned.

The Secrets to Successful Strategy Execution

For successful execution most people think about structural change but according to their research decision rights and information are far more important (and should be focused on first). A lot of the reasons managers fail to execute is because they didn’t have a clear sense of their respective roles and responsibilities.

Furthermore the link between performance and reward was weak. Following this, information flow is important to travel across organizational boundaries for helping field and line employees understand how their choices affect the companies bottom line and because Important information about the competitive environment should reach the headquarters quickly. Once made decisions should be rarely second-guessed. So to conclude, four elements managers can use to improve strategy execution are decision rights, information, structure and motivators.

Transforming Corner-Office Strategy into Frontline Action

Successful companies employ what is called a strategic principle. To create an effective one it should force trade-offs between competing resources, test the strategic soundness of particular decisions and set clear boundaries. Furthermore you should test its endurance, communicative power and ability to promote and guide action. Strong leaders create powerful strategic principles.

Four situations that strategic principles are powerful are when there is decentralization, rapid growth, technological change and institutional turmoil. The chapter also contained some questions you could ask to test the potential of your principle.

Turning Great Strategy into Great Performance

Last but not least I learned that there is often a large gap between strategy and performance. Nevertheless some companies have been very successful at strong planning and execution thereby reducing the gap. Some rules suggest that for execution you should to keep it simple, challenge assumptions, “speak the same language”, discuss resource deployment early, identify priorities, continuously monitor performance.

What doesn’t surprise many people is that multiyear results rarely meet projections. But what surprised me is that strong management can close this strategy-performance gap with “only” proper planning and execution. If you manage to create tight links between strategies, plans and performance you can often experience a cultural multiplier effect in your organization.

*Please note that “What is Strategy?”, “The Five Competitive Forces That Shape Strategy”, “Using the Balanced Scorecard as a Strategic Management System”, “Who Has the D? How Clear Decision Roles Enhance Organizational Performance” have been skipped as they have either been reviewed in school or irrelevant to me.

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