As a supplement to our last post on Change and Transformation, we continue our high-level view of strategy – the long-term direction of an organisation, determined by its strategic position, choices, and the execution of those choices.
We’re looking at some of the organised thinking behind strategic planning and analysis and the cojoined groupings that include:
- Your Strategic Position (discussed in part 1)
- Your Strategic Options – this post
- Your Strategy in Action/Strategic Execution – our next post on strategy
2) Strategic Options:
- Business Strategy
- Corporate Strategy
- International
- Entrepreneurship
- Acquisitions & Alliances
You’ll see, the layering of these upon on your Strategic Position significantly elevates the complexity of your strategic thinking.
Let’s discuss what this means:
Your business strategy and modelling are the assessment of your competitive advantage and how to build business models, value propositions and strategies protect or enhance that edge.
Your corporate strategy and diversification options are about how the various business units contribute (or not!) to the overall organisation.
Do they add value or don’t they?
If they don’t, then what is the reason to retain them?
In a highly diversified conglomerate, for example, an under-performing unit may have a strategic, rather than economic purpose.
Similarly, diversifying vertically or horizontally may add further value to the whole.
Vertical integration:
Is where an organisation becomes its own supplier or customer (by integrating up or down the same value chain), whereas
Horizontal integration:
Is diversification in to other, possibly related, activities.
International diversification:
Describes the choice of expanding operations geographically and the hugely important and complex risk/return analysis of doing so.
Entrepreneurship and innovation:
Don’t just apply to “entrepreneurs” but equally to organisations that encourage and strategize for entrepreneurship amongst their people, and structure accordingly.
The FANGS are an excellent example of global enterprises where innovation is a key driver of corporate success. In the age of acceleration, agility and innovation are major value drivers.
But for many businesses, this element has taken a back seat to the hierarchical structures that frequently evolve after the founding entrepreneurs have moved on (discussed in our Insight “Change or Chance” (part 4) and to the detriment of competitive advantage.
Acquisitions & alliances:
Aka Mergers & Acquisitions and JVs, Strategic Partnerships.
Some carry more inherent risk than others and M&As have a high casualty rate.
It has been suggested that up to 90% of M&As fail to meet their strategic objectives.
So, you now have additional context for our previous post on Change – Forming a Strategic Vision.
After which we move on to the next phase of the change process – enlisting a Volunteer Army………
