Saturday, October 24, 2009

Are you sure you have a strategy? (Hambrick & Fredrickson)

Framework for Strategy Design – based on 5 elements
[Arenas, vehicles, differentiators, staging & economic logic]

1. What actually constitutes strategy?
2. What are the 5 key elements of strategy?
Arenas: Be specific about where you will be active, what areas/categories you will emphasize. Strategy may be centered on one product or one category or one customer segment
[Product Categories, market segments, geographic regions, core technologies, value creation stages?? Key product or complementary one?

Vehicles: how do you intend to attain a significant business presence in your chosen Arena?
(Joint Ventures, strategic alliances, acquisitions, R&D, Product Development, Marketing, Globalization)?

Differentiators: Image, customization, price, styling, quality, reliability? What is the value proposition?

“Arena’s, Differentiators & Vehicles – constitute the “substance of strategy”.

Staging: Set priorities – what do we do first? What’s the plan of a record? What is the sequence by which we entire a specific arena? How quickly do we move? What’s our time horizon?
[Key influencing factors include: Funding, Urgency – i.e. first mover advantage? achievement of credibility]. Sometimes the pursuit of early wins is also important because it can help build momentum.

Economic Value: How will profits be generated? What’s our biz model and how does it tie in to the other 4 elements? What’s our pricing strategy?
o Economic logic analytics, results in a determination of how profit will be generated. That could happen on the front end, through aggressive pricing, or on the back end by effectively monitoring costs

Note: Strategy is not primarily about planning- it’s about intentional, informed, and integrated choices. The strategy diamond featuring the 5 strategic elements is a basis for creating a well thought out intentional, informed and plan.

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