Tips for Strategy Analysis

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Tips for Strategy Analysis
Bernhard Keim, SIG Leader
First of all, make sure you differentiate between strategic analysis and strategy analysis. Strategy Analysis analyses the existing or intended strategy before it tries to formulate a better one.

As every company has found a specific way to compete, it does already have a strategy. Mintzberg e.a. described it as the "emergent strategy". To do so you have to make the existing or intended strategy visible first by describing it and find its shortfalls, before you can move on to formulate a better one. How to go about that? Here are some strategy analysis tips:
  • CULTURE: In Strategy Analysis, you should be aware of the limits of specific strategies that are set by the culture of the organization. Every organization has been formatted in a unique way. It has its own operating systems that have been formed by its actions and previous experiences.
  • NICHE: These previous experiences have been made on specific occasions in the "economical niche" where it developed and succeeded. If environment changes, the niche might be endangered.
  • ADAPT: An organization can't change the environment, it can only successfully adapt. Identifying external changes and adapting the organization in an appropriate way is essential for future success.
  • AWARENESS: Before you formulate a new strategy you have to be aware of your existing one. Describe not the way you want it to be seen, but how it actually is and how it actually works. To formulate a new strategy without taking its path dependency on the existing one into account, won't work. It will deprive even the best "Better Strategy" the momentum it needs to succeed.
  • STRATEGY FIT: There are many strategy models around, but these are all just tools. They never are the solution. They make you think and help you to describe and understand your existing strategy. With the help of these tools you can improve it or work out a new strategy that better suits your organizationís specific needs, a strategy that really fits. If it is the right one it will be unique and not a mere copy.
  • CHANGE: Putting strategy into action is a change process. Strategy execution works only if it makes sense for the employees, the organization as a whole and its markets. If people don't understand or see a need for this change, only the board room will be moved be it, not the organization and not the markets.

3 Key Questions About your Competitive Strategy
Javier Elenes, Member
In my practice as a consultant I apply these 3 key questions about any competitive strategy:
  1. COMPETITION: Is it clear how we are/shall be different and better than the competition? For example: are we better in service while the same in quality and price?
  2. CSFs: Did we define the critical success factors, the competitive company characteristics that shall be reinforced or developed? For example: improved CPI of the process, or an Aggregated Value analysis to spot and eliminated events that do not add value in the process.
  3. 3 More Cs: Is the strategy supported by the 3 Cs (Commitment, Competences and Consistence)? Commitment of key people, Competences of people, equipment and systems, Consistency on the control of the business.

Conditions for Strategy
Bernhard Keim, SIG Leader
@Javier Elenes: The 3Cs are very important to put your plans into action. Especially the last C, consistency, is the one you have to make sure beforehand. Without consistency of a strategy, competencies and commitment will have little effect.
But even the best strategy won't work if it is the wrong one. It might be wrong because of market conditions, market access, timing (remember Apple's Newton that hit the market far too early) etc. But the real challenge is your company's culture, the way your company has been initialized. Just as you can not run a DOS-Programme in an Apple OS, you cannot run every smart strategy in every smart company. There are limits for a strategy by any company. These are caused by the experiences, expectations, the poise of its employees. That's why you always have to catch the entity as a whole first when you shape strategy.

The Precise Conditions of Strategy
melchiorre calabrese, Member
In principle I agree with what you exposed. The problem is that each of the "3 Cs" is never configured at all. For example, if we talk about "COMPETITION", we could be the best in quality service, but we could be equal to our competitor in price. That may seem rather straightforward. But now consider the market share to which we offer our products or services: is it a slice of market more responsive to price or to quality? And, could it be our services or products are offered to different slices with different types of reactivity?
Therefore our competitive strategy should be based on statistical observations which in turn will feed mathematical models for the identification of the strategy. This strategy shall subsequently be monitored and analyzed. At the end, this process will suggest a final strategy, that shall be followed until the moment in which an internal or external factor of the organizational context determines a need for change.

Tip for Strategy Analysis
Jafeth Quintanilla, Member
I recommend the 7S Model of McKinsey that suggest Strategy, Structure and Systems as hard elements and Skills, Staff, Style and Shared values as soft elements of any holistic approach for organizational success. The 7 elements all together are important and fundamentals for success of any firm. Each one is not enough alone, but all at the same time guarantees that a strategy can work effectively. Note that appropriate leadership (in 7S Model seen als part of "Style") is important to.achieve the long term objectives.

7S Might Be Too High Level
Bernhard Keim, SIG Leader
The 7S framework originates from the 1980s but is nevertheless still useful. It helps to quickly investigate the main parameters of any organization. On the other hand it won't answer the question about possible shortcomings of a strategy. Strategy means focus. One cannot focus on more than three issues at the same time if change is needed. And strategy means change.
What is it what a strategy wants to change? For example being better than the competitors is a goal, but not a strategic answer. Having a goal in mind is important and provides direction. But overcoming all the obstacles and addressing the hurdles in the right way is strategy.

A Pseudoscientific Competitive Strategy Formula for Strategic Focus
Javier Elenes, Member
Talking about strategic focus, I recommend your DIFFERENTIAL VALUE / PRICE delivered to the customer should be > 1,2.
That means you deliver 20% more VALUE than the competition at the same PRICE.
Where VALUE equals QUALITY x SERVICE (perceived by the customer), so the formula may also be read as follows:
Competitive Index = (QUALITYy/c x SERVICEy/c) / PRICEy/c
y means yours, c means competition.
1,2 means a DIFFERBES strategy (DIFFER for DIFFERential, BE for Better and S for Strategy).
In order to concert Intention in Action, the strategy has to be supported by:
- Commitment of the People
- Competences of People
- Equipment/System
- Consistence in control of the Business.

Interesting Formula for Strategic Focus
Bernhard Keim, SIG Leader
@Javier Elenes: I like your formula because it shows what matters for strategy: differentiation. If your product or approach to the market makes no difference, it will hardly be strategic. If it does, it might help.
A problem remains, that the parameters used are hard to measure. Yes, it can be done, but it is demanding.

CHECK your GOALS as Well
Bernhard Keim, SIG Leader
Let me add one further thought to strategy analysis: checking the goals of strategy. You do not have to join every battle just because you have this super-strategy that enables you to win. If the market is shrinking even winning 100% of the market does not necessarily help your company.

Think of horseshoe makers. There was a time millions of horseshoes were needed everyday, but it's not big business anymore. The same holds true for the manufacturers of CDs, videotape-recorders, etc. Had you formulated your goals differently you still may be in business. If you had focused on safe mobility instead of horseshoes, you might manufacture tires today. If you had focused on giving instant access to music instead of CDs, you might run a music-portal like iTunes today and could even deliver videos on demand.

The goal has to be satisfying certain customer needs in a superior way. If you only want to beat your competitors you might miss this point. Don't waste your time by conquering shrinking islands.

Strategy Integration
Helen Strong, Member
Agree with Bernhard Keim have to be in the right market. However I suggest that analysis of strategies has to be done holistically. Different combinations of strategies will have different impacts on the sales or market share achieved.
Keep good records of timing and extent of strategies in place and related spend; check awareness levels and market share and do the correlations for the package of strategies in place. Change one factor and see the impact.
Just remember that advertising spend effect depends on your relative share of spend (compared with competitors), and its effects reflect in the month / period following the spend.


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