Prof. Datuk Dr.

John Antony Xavier FEB 2014

I see and I forget, I hear and I remember, I do and I understand

Confucius

Understanding of the role of strategic management in organisational performance Become a strategic planner who is able to draft a strategic plan

PROCESS OF STRATEGIC PLANNING : THE BIG PICTURE

EXTERNAL ENVIRONMENT Economic Social Political Technological Clients/ Customers Competitive/ Collaborative forces REVISE AND CHANGE AS NEEDED

Assess Organizations Current and Future Situation

Develop Vision & Mission

Set Objective

Craft Strategies

Implement Strategies

Evaluate Performance

Resources Capabilities Technology

Present strategy Performance Top Management

REVISE AND CHANGE AS NEEDED

INTERNAL ENVIRONMENT

A SUMMARY MODEL OF THE ELEMENTS OF STRATEGIC MANAGEMENT

Strategic Direction
The external environment STRATEGIC ANALYSIS Internal Environment

Generation of options

STRATEGIC CHOICE

STRATEGIC IMPLEMENTATION

Resource planning

Evaluation of options

Selection of strategy

People and systems

Organization structure

Rapid and discontinous changes in the enviroment Increased competition across nations, cities, regions, organisations Environmental changes are radical not incremental
Role of government is changing Citizens and societies are becoming smarter Key events in one country influence many others Increasingly urban population. By 2020 about 60% of society will be urban Globalisation national boundaries less meaningful Importance of knowledge, skills and education

Increasing stakeholder demands Resource constraints Complexity in organisations

Think strategically
Have a vision and mission for the organisation

Develop effective strategies to deal with them

Formulate strategies

Properly implement the strategies

Implement strategies

Periodically evaluate outcomes and take action

Evaluation and control

Think strategically
Have a vision and mission for the organisation

Develop effective strategies to deal with them

Formulate strategies

Properly implement the strategies

Implement strategies

Periodically evaluate outcomes and take action

Evaluation and control

Prof. Datuk Dr. John Antony Xavier UKM-GSB FEB 2014

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Articulating a Strategic Direction/Envisaged Future

Yang
Core Ideology (mission) Core Values Core Purpose
Envisioned Future (Vision) 10 to 30 year BHAG (Big, Hairy, Audacious, Goal) Vivid description

Yin

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FUTURE

BHAG Envisaged Future

Mission/ Core ideology Purpose

Values

UKM-GSB

Prof. Datuk Dr. John Xavier

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A description of what the organisation is capable of becoming or would like to become in 10-30 years What do we want to become? Paradox One hand: concrete (visible, vivid, real); On the other future (dreams, hopes, aspirations BHAG (BEE Hag) quantitative or qualitative True BHAG
clear, highly focused, compelling acts as a catalyst for and energises team spirit has a clear finish line People get it rightaway (Kennedy man in moon)
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Martin Luther King I have a dream not a business plan!

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Setting BHAG far into the future requires thinking beyond current capabilities and enviroment BHAG BHAG Not a sure bet only 50-70% chance of success but the Co. must believe that it can reach it BHAG requires extraordinary effort and a little luck
is visionary and not strategic or tactical is a creative process

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Vivid translate words into pictures (man on moon, computers in every home, proton in every household; Ford build a car so low in price no man making a good salary will be unable to own one) Vivid passion, emotion and conviction
I think there is a world market for may be five computers Thomas Watson, Chairman, IBM 1943

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Ask We are sitting here in 20 years; what would we love to see? What should the Co. look like? What should it feel to employees? What should it have achieved? If someone is writing a article in a major magazine in 20 years what will they say of the Co.? Does the vision get our juices flowing? Do we find it stimulating? Does it spur forward momentum? Does it get people going?
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Requires unreasonable confidence and commitment Remember! BHAG is not a goal! GE Become #1 or #2 in every market Honda (1970s) Yamaha wo tsubusu! Nike (1960s) Crush Adidas Stanford University (1940s) Become the Harvard of the West Visionary company 1% inspiration, 99% alignment
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MAYBANK : To be a regional financial services leader LOREAL: The right to be beautiful day after day STARBUCKS: To be one of the most respected brands in the world NESTLE: To be the recognised leader in nutrition, health and wellness Apple: To make a contribution to the world by making tools for the mind that advance mankind
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DIGI Our vision is to be a company that is always Changing the Game. We do this by constantly pushing the boundaries, defining new standards and ensuring continuous improvements in all parts of the business

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concise, clear, future orientation, stable, abstract, desirable, simple, understandable, challenging, easy to communicate (11-22 words) and remember

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Joel Barker Futurist, Author, Lecturer

Study by Business Week firms that develop a mission statement have 30% higher return than those without Peter Drucker: That business purpose and business mission are so rarely given adequate thought that it is perhaps the most single cause of business frustration and failure.

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What is our business?

Define the basic reason of existence

An essential building block of the strategic management process

A business is not defined by its name, statutes or article of incorporation Only a clear definition of the mission and purpose help the organization to achieve clear and realistic business objectives (Drucker, 1973)

Reason for being Idealistic motivations for doing the Co.s work clear focus that directs peoples attention and energies to live out the purpose and provide them a sense of self-worth Helps in making strategic resource allocation decisions to realise their customer value proposition Captures the soul of the organisation Purpose should last for at least 100 years (vs specific goals objectives - and strategies) Can achieve objectives and strategies but you cannot fulfill mission a guiding star Mission does not change it inspires change
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3M: To solve unsolved problems innovatively Hewlett Packard: To make technical contributions to the advancement and welfare of the community McKinsey&Co.: To help leading corporations and governments be more successful Nike: To experience the emotion of competition, winning and crushing competitors Disney: To make people happy Starbucks: To establish Starbucks as a premier purveyor of the finest coffee in the world while maintaining our uncompromising principles as we grow (Old) New To inspire and nurture the human spirit one person, one cup, and neighbourhood at a time
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Purpose
To satisfy shareholders and stakeholders

Strategy
A definition of what business we are in? Position strategy Strategic competitive advantage

Behaviour
The behavioral standards required to convert purpose and strategy into action

Value
The beliefs and moral principles of the organization, culture & philosophy

The 4 elements must reinforce each other Source: The Ashridge Model, Campbell and Yeung (1991)

Core ideology guidance and inspiration; glue Values guiding principles and tenets Mission Why we exist core purpose fixed; only strategies and practices change It is more important to know who you are (core ideology) then where you are going (vision) because vision changes as the environment changes
Yin does not change complements the Yang Yang the envisioned future changes

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The 5 Whys Random Corporate Serial Killer game Ask the Mars Group:
Mars Group (6 -7)
Gut-level understanding of organisation Highest level of credibility with peers Highest level of competence

Ask stakeholders and clients Check the founding legislation

If tomorrow they can retire as multi-millionaires would they still work for the organisation?

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Components of a Mission Statement

Customer
Who are the Co.s customers?

Products/ Services
What are the Co.s major products / services?

Markets
Where does the Co. compete?

Technology
Is the Co. technologically current?

Concern for survival, growth and profitability

Is the Co. committed to growth and financial soundness?

Philosophy
What are the Co.s basic beliefs, values, aspirations, and ethical priorities?

Self- concept
What is the Co.s distinctive competence or major competitive advantage

Concern for public image

Is the Co. responsive to social, community and environmental concerns?

Concern for employees

Are the employees considered a valuable asset?

At LORAL, we believe that everyone aspires to beauty. Our mission is to help men and women around the world realise that aspiration, and express their individual personalities to the full. This is what gives meaning and value to our business, and to the working lives of our employees. We are proud of our work

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Timeless guiding principles; intrinsic value require no external justification almost religious tenet hold on to it even if it is a competitive disadvantage
E.g. Disney imagination; wholesomeness Norstrom service to the customer; HP respect for the individual F&N integrity, professionalism, customer centricity and passion for business

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 E.g. Disney imagination; wholesomeness; no cynicism Disney has evolved from making short animated films, to feature length films, to theme parks, to cruises, but their mission of providing happiness to young and old, and not succumbing to cynicism remains strong.

Discover your core values and purpose beyond simply making money
Starbucks:
great work environment by treating each other with respect and dignity; embrace diversity as an essential component of the way we do business; apply the highest standards of excellence to purchasing, roasting and fresh delivery of our coffee; customer satisfaction all the time; contribute positively to our communities and our environment; recognise profitability is essential to our future success

Core values 3 - 5
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Be honest as to what values are truly central Values must stand the test of time Who should identify core values?
Mars Group (6 -7)
Gut-level understanding of organisation Highest level of credibility with peers Highest level of competence

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 What core values do you personally bring to work What will you tell your children are the values at the workplace and those they should hold when they grow up If you woke up tomorrow a multi-millionaire and can retire what values will you continue to hold Will these values be valid a 100 years If you start a co. what values would you build into it

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Norstrom -Service to the customer above all else -Hard work and individual productivity -Never being satisfied -Excellence in reputation

Sony -Elevation of Japanese culture and national status -Being a pioneer not following others, doing the impossible -Encouraging individual ability and creativity

Walt Disney -No cynicism -Nurturing and promulgating wholesome American values -Creativity, dreams and imagination -Fanatical attention to consistency and detail -Preservation and control of the Disney magic

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Public Bank To be ranked among the top 100 banks of the world Guiness Anchor Bhd GAB is an icon business. Respected the world over for delivering exceptional growth in people, brand and performance PETRONAS To be a leading oil and gas multinational company of choice

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We did not find an explicit and formal statement of purpose in all of our visionary companies
Collins and Porras (1997)

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Organisational culture is typically missing from the standard mission statement which is why the statement alone is ineffectual. The ultimate value of the vision as a management tool is undermined if the vision is nothing more than a statement of purpose and a strategy for getting there. Purpose and strategy do not have the power to enhance performance unless they can be converted into action, policy and job-related behavioural guidelines
Lipton, 1996

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Incomplete mission statement is better than no mission More important is the process of developing a mission
Genuine mission statement is a product of both deep understanding of the organisational and environmental reality and deep insight

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Mission UKM is the National university that safeguards the sovereignty of the Malay language while globalizing knowledge in the context of local culture. The Vision UKM is committed to be a leading university that pioneers innovation in the construction of knowledge to achieve the aspiration of producing a society imbued with dynamic, learned and civic leadership.

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Maybanks mission is to humanise financial service across Asia by: Providing the people with convenient access to financing Having fair terms and pricing Advising customers based on their needs Being at the heart of the community

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Hai-0 We are committed to promoting healthcare culture and improving humans well-being Digi We deliver Internet for All as part of our commitment to building a connected Malaysia enabling access to mobile internet services and applications by offering customers the right combination of devices and value pricing, as well as the best usage experience
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Sineks Golden Circle Model

Why How What

Inside-out Model Starts with Why

Outside-in Model Conventiaonl Model

People dont buy what you do. They buy why you do it, and what you do serves as the proof of what you believe Simon Sinek
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Google Lets organise the worlds information Mozila Lets kill Microsoft AirAsia Everyone can fly Walmart Everyday low prices Wikipedia Lets all contribute knowledge and create a true repository of global information Amazon.com We seek to offer Earths Biggest Selection and to be Earths Most Customer-Centric company
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Apple started as a computer co. Its Why gave it a sense of direction; wanted to make a dent on the universe When Apple came up with its Mac, IBM was spending 100 times more in R&D. But it was why that made the day Everything we do we do differently. Made it to challenge the status quo

Martin Luther King I have a dream not a business plan!

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MAYBANK To be a regional financial services leader Hai-O We aim to become the premier healthcare company in Malaysia and thereby bringing the greatest value and pride to our customers, business partners, employees and shareholders

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Public Bank To sustain the position of being the most efficient, profitable and respected premier financial institution in Malaysia GAB

PETRONAS

1. 2. 3. 4.

We We We We

have a passion for winning value and respect each other show integrity in all that we do provide enjoyment

We are a business entity Petroleum is our core business Our primary responsibility is to develop and add value to this national resource Our objective is to contribute to the well-being of the people and the nation

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If your future looks bright, make sure your team knows about it.
Tell the story of how you achieved all this, thank the people who helped you get there!

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Well, I dont know what will happen now. Weve got some difficult days ahead. But it doesnt matter with me now. Because Ive been to the mountaintop Like anybody, I would like to live a long life. Longevity has its place. But Im not

concerned about that now. I just want to

do Gods will. And Hes allowed me to go up to the mountain. And Ive looked over. And Ive seen the promised land. I may

not get there with you. But I want you to

know tonight, that we, as a people, will get to the promised land. ___Martin Luther King Jr.

My Personal Mission And Vision To laugh often and much; To win the respect of intelligent people And the affection of children, To leave the world a better place than what I've found,
To know even one life has breathed easier Because I have lived, This is to have succeeded _Ralph Waldo Emerson
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What must we do to achieve our vision and be true to our mission? What specifically must we achieve: performance goals: ouputs, impact and benefit for clients and organisation What objectives can formulate based on our strategic issues

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Begin with the word to followed by an action verb State a single key outcome Be S.M.A.R.T State what and when but not why and how Be simple and understandable It is something that everyone can agree to

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What is Strategy?

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Sun Tzu strategies 2000 years ago 1. When the enemy advances, we retreat! 2. When the enemy halts, we harass! 3. When the enemy seeks to avoid battle, we attack! 4. When the enemy retreats, we pursue!

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Means to achieve ends (outcomes) Build on strengths; take advantage of opportunities Guide how to handle threats and minimise weaknesses
Strategies can be both intended and emergent Strategies can be proactive or reactive

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SUITABILITY:

FEASIBILITY:

Does it exploit organisational strengths and opportunities? Does it overcome weaknesses and threats? Does it match objectives and values?
Can the strategy be funded? Can the organisation perform to the required level? Is it the best of all the alternatives? Will the strategy achieve the objectives? Will the strategy be acceptable to all stakeholders?

ADEQUACY AND ACCEPTABILITY:

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Action plans provide concrete information regarding: What is to be done When it is to be done Who is responsible How specific outcomes are to be measured What resources are needed What assumptions are made in planning the actions

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KRA Outcome Strategy: Strategic Initiatives (programmes and activities) Unit/ Person responsible Time-line KPI + Targets

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