The strategic thinking of contemporary businesses has been shaped by military strategists since the beginning of organized warfare. Sun Tzu hinted at indirect business strategies when he said winning without fighting is the pinnacle of skill on the battlefield. Sun Tzus thoughts about the factor of terrain, in todays business landscape, translates to markets, industry structures, value propositions, and industry forces. Sun Tzu preached to know and attack the enemys strategy. In Sun Tzus Art of War, he spoke about five core factors in military strategy and each of these factors can be directly translated to terms of business strategy. To create a rigorous corporate strategy, companies must follow a strategy development process beginning with a agreed upon set of beliefs around its business positioning and existing strategic challenges.
The next steps include defining what the desired vision of the organization is and then going into the details of planning how to get to that state. It is also important to realize that there is more to strategy than just winning. Strategy is about value creation, strategy is about competitive selection, and strategy is about flexibility. In order to understand your strategic challenges, you must begin with a comprehensive current state understanding of your situation.
Strategy development has evolved through 5 key stages over the years. Strategy development started with a focus on financial planning in the 1950s, moving to long-term business planning in the 1960s, to strategic planning in the 1970s and eventually to a focus on strategic management in the present day. In the current day, the strategic development theme is on integrating strategic planning and execution with a stress on the primary notions of core competencies, strategy planning and execution, and balance scorecard analysis. A lot of competitive strategy is also hinged on ideas in the 1970s, where the focus was around thinking strategically to out maneuver competition and the business frameworks of alternative strategies, portfolio analysis, and the BCG Growth Share Matrix were actively used for the first time. Changes to strategic mindset represent a changing landscape, new business leaders, and emergence of disruptive technologies and changes.
An important activity used in strategic planning is scenario analysis. It is used to help businesses plan for and make flexible future estate organizational restructuring plans. It is important to understand what makes a market unique, such as a high degree of government regulations, high industry fragmentation, and importance of R&D. There are several market ecosystem-based analysis factors, including ones that are socio-demographic, economic, political, technological, and current trends. Proper market analysis example involves defining the market scale and the study depth, understanding the core industry issues, and planning effectively. Oftentimes, the scenario planning process is performed in a workshop environment, where decision makers, management, subject matter experts, and external consultants, are gathered in a 4 day off-site location to decide on various future state scenarios. Scenario planning techniques is also called scenario thinking and scenario planning analysis. There are also several market place analysis variables, including market size development, pricing changes, research and development, market place characteristics, market force structure, and historical trends. An important task in the scenario planning framework is defining the primary axes of uncertainty after building a 2-axis scenario map. Understanding how to do a market analysis involves both supply analysis and demand analysis, the latter of which includes segmentation and segment analysis, understanding consumer buying behavior, and historical analysis. In the strategy development process, it is always critical to conduct rigorous market analysis.
Today, there are Mintzberg and Bower present contrasting and complementary ideas around strategic management. H. Mintzberg also advocates a transformation of business processes, where management recognizes the need and has the ability to conduct complete business operations transformation. Mintzberg proposes for an organization, bottom-ups approach to drive strategy development that adheres to organizational configuration. In organizational configuration, the organization takes on behaviors based on adaptation to business surroundings.
Strategy Development
Source: http://gettingfat.net/47712/jp-morgan-lessons-strategy-development-in-under-direct-competition/
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