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Posts Tagged ‘Strategic Management’

Reflecting on the evolution of strategy at Sony and Panasonic

September 6, 2010 3 comments

Assessing Sony corporate strategy based on publicly released documents and their website, with commentary comparing them to Panasonic’s stated strategy.

Public statement on Sony’s corporate strategy: http://www.sony.net/SonyInfo/News/Press/200806/08-080E/

Sony’s website announcing corporate strategy transformation: http://www.sony.net/SonyInfo/IR/info/strategy/message.html

notes:

  • context: undergoing transformation in response to a disastrous 2009, with the goals of returning to profitability, improving customer experience and seizing growth opportunities simultaneously.
  • They characterize the global environment as the most challenging in a generation and they made fundamental changes in structure and processes. They reorganized electronics and game businesses to respond to increased competition and a customer base which has more choices and more access to information than ever before.
  • They reorganized around a consumer products and devices group to bring together hardware, sensors and batteries and were looking to gain efficiencies and cross sector synergy.
  • The network products and services group is more of a business-to-business solution provider
  • lines of operations are to be supported by horizontal platforms of sales, marketing, manufacturing, logistics, procurement and customer service and they plan to do centralized R&D and software development. Their goal is to be more agile, competitive and successful and more responsive to shifting customer network demands.
  • They recognize a need to cut costs and be better stewards of their financial assets and their strategy includes consolidated purchasing, reducing headcount, consolidating manufacturing worldwide. They are reducing their suppliers by 50% and have already achieved a 20% savings in annual procurements. There aggressively managing inventory and accounts receivable to improve cash flow and financial position
  • they recognize the need to be more aggressive in marketing using multi-modes of connecting directly to consumers

comparing Sony to Panasonic:

  • much narrower focus in product lines and business sectors in Sony and so they are likely to be experiencing much more volatility since they have fewer business sectors affecting their bottom line. Much less language concerning corporate citizenship and sustainability, which demonstrates the urgency that they feel to get their financial house in order. The report reads as if they have drifted away from efficiency in operations and are scrambling to get back in line. They are even using their corporate strategy page as a way to introduce new product lines, presumably as part of their multi mode outreach to consumers and investors.
  • The Sony website has an extensive treatment of corporate culture and the opportunities for young people to find unique and innovative careers with the company, although this is conspicuously absent from their top level strategic plan which is focused on bottom-line performance exclusively. They do appealed to the founders guiding principles and speak about Sony’s DNA which still thrives after 60 years http://www.sony.net/SonyInfo/CorporateInfo/History/prospectus.html
  • the initial prospectus had at its center considerations of the workforce and providing an environment for engineers to satisfy their vision as individuals and productive members of their society. This was important at the time since they were just coming out of World War II
  1. a. The first and primary motive for setting up this company was to create a stable work environment where engineers who had a deep and profound appreciation for technology could realize their societal mission and work to their heart’s content.”
  • You cannot find the following sensibility anywhere in the current strategy document either:

“…We shall eliminate any unfair profit-seeking practices, constantly emphasize activities of real substance and seek expansion not only for the sake of size”. Interestingly this was management policy number one in the original prospectus.

  • They’ve set targets of 5% profit margin and 10% ROE for 2013 which is consistent with a mature, capital-intensive industry that features rapid trend dynamics. Getting the market assessment right is important for them in order to produce appropriately sized lots

My sense is that the current global business environment is much more important than differences in the culture between the two companies as both are undergoing dramatic transformations which will affect their bottom line immediately. If and as they are successful, I expect their culture to adapt slowly, as it always seems to.

It’s interesting to me to note the extreme shift in perspective between the founding document in the current strategic plan at Sony. The original company’s vision was to create an internally consistent company that would lead the way in reconstruction of Japan while the current outward focus on returning to profitability by any means necessary is completely bottom-line driven. The pages on corporate culture lag those of the strategic plan which is an indication of where the company focuses these days. The original prospectus for Sony talked about rightsizing the company and not chasing every possible profit, although the current document has adopted the Western orientation completely it seems

Reflection on Mintzberg’s The Rise and fall of Strategic Planning (1994)

August 8, 2010 5 comments

Marine Institute Ireland, Strategic_Planning_S...
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Highlights from Mintzberg ‘s The Rise and Fall of Strategic Planning

Ch 1: planning and strategy. Mintzberg offers definitions in this chapter. He asks “Is strategy making  simply a process of planning or is it simply an oxymoron? Should strategy always be planned, never be planned or sometimes be planned? What’s the relationship between strategy and planning?”

  1. Mintzberg begins by explaining planning: he reminds that planning is used so broadly and in so many different contexts that it almost cannot be defined. He says scholars have been failing to define planning since the mid-60s. He thinks this is because scholars have been more concerned with what planning might be than what it actually is. He has made a career of classifying approaches and methods, inputs and outputs, perspectives on planning. As an example he takes issue with the idea that “planning is future thinking” because it cannot be bounded. It’s a definition that’s too fuzzy. He also takes issue with the idea that planning is controlling the future because it too is unbounded. He disputes that planning is simply decision-making, because if it were you wouldn’t need a separate word. The Chapter 1 discussion really illustrates the challenge of trying to get a set of operationally defined concepts that are used with rigor in order to approach the subject systematically.
  2. He settles on the idea that planning “is a formalized procedure to produce an articulated results, in the form of an integrated system of decisions”. The emphasis here is on formalization and systematization of the phenomenon to which planning is meant to apply. This is an operationally feasible definition and identifies planning as one means among many of developing a strategy.
  3. justification for planning: he notes that organizations must coordinate their activities; account for the future; be rational in their approach; develop control plans. All of these lead us inevitably to planning.
  4. the difference between planning and strategy: he points out that just as there are many different definitions of planning so too are there many definitions of strategy. Various writers consider strategies to be plans, patterns, positions, perspectives or some combination of these. Mintzberg believes strategy is different than planning and that there is a difference between planning and strategy formation. In Chapter 6 for example he will describe strategy formation as an output of an ongoing dialogue between managers, leaders, operators with many feedback loops that seek to capitalize on rapid adaptation to changing environments, which is considerably different than the idea of strategy formation as the result of a rational forecasting process.

Chapter 2: introduces multiple models of planning. A masterful analytical treatment of the complicated human process that includes rationality, process control, perspectives, worldview and many distinct schools of thought regarding planning.

  1. the basic planning model comes from the design school and treats strategy as a bringing together of competing values, environmental considerations a process of evaluation and choice with a notion of implementation. He offers an alternative view with the Ansoff model which is as complicated as a wiring diagram of your motherboard. He shows the connection of Ansoff and Steiner’s models to what has become known as the PPBE ( planning, programming, budgeting, and execution) model within the Department of Defense. This is a cold war era relic of rational planning taken to the logical extreme.
  2. conventional strategic planning: he analyzes the various stages of conventional strategic planning, decomposing them into their components such as: objective setting, external and internal audits, strategy evaluation and implementation.
  3. He sorts out 4 hierarchies in typical strategic planning: objectives, budgets, strategies, programs and shows the linkages between these which are usually taught in management by objective courses.
  4. He concludes the chapter with a discussion of what he calls the great divide of planning which groups two sets of activities: performance control and action planning as separate and distinct groupings of actions
  5. finally he uses the 4 hierarchies to look at  3 different types of planning: conventional strategic planning, analytical planning, and capital budgeting

Chapter 3: evidence on planning

  1. anecdotal evidence: he acknowledges that there is an abundance of anecdotal evidence that supports the notion that planning pays off. He demonstrates convincingly the problems with anecdotal stories as a combination of survival bias, selection bias, confirmation bias, and a failure in the design of experiments
  2. literature review of systematic studies: he concludes that systematic studies do not support the efficacy of most planning regimes
  3. typical planners response to the literature: Mintzberg says these come in five different forms and are all acts of rationalization in some way
    1. denying the problem
    2. trusting that the process will work even if specific results the workout
    3. developing ever more complex modes of planning
    4. reverting back to simpler planning strategies
    5. believing that it’s different in their organization
    6. he  highlights Col. Harry Summers indictment of the Department of Defense’s supremely rational Planning, Programming, Budgeting and Execution (PPBE) system which was an attempt in the 60s to rationalize preparations for war in the conduct of war itself. Summer says “the rationalistic approach is characterized by the pretension to universality of its solutions, its intolerance of tradition and authority, quantification, simplification and lack of flexibility. It’s very efficiency prevents flexibility by eliminating what does not contribute to achieving the current objective so that alternative means are not available if the objective is changed”
    7. he concludes the chapter by observing that conventional strategic planning typically is a conservative process that undermines both creativity and strategic thinking. He thinks it’s inflexible and breeds resistance to major changes. He thinks it discourages creativity in favor of extrapolating from the status quo which emphasizes a focus on short-term rather than long-term

Chapter 4: pitfalls in planning. In this chapter Mintzberg describes the importance of commitment of an organization to its planning and strategy making process, it shows why this can be a problem. He has an extended discussion on the intersection between planning and change management. He doesn’t actually job of demonstrating why politics in organizations inevitably effect what is usually considered to be a rational process. He observes that in a session with control can prevent a strategic planner from containing a set of flexible options suitable for an emerging and dynamic environment.

Here are assumptions/tribal wisdom that Mintzberg (p195) calls into question about planning and commitment for example:

why do we assume that:

1. planning is committed to management?

2. Commitment to planning produces a commitment to strategy making, and a commitment to the results the strategy produces, and an effective implementation plan?

3. planning will produce loyalty and commitment from management?

as an example: consider the 5 goals that our board have for us: do you believe that these appropriate objectives and further, that they CAN be managed? and further, that having a 3 year strategic plan is the best way to achieve them (if we believe there can be a causal connection between our actions and those goals)

example: do you really think that “stock price” is an appropriate object of management by our company? and that we can actually affect stock price according to a plan?! this would be laughable if it weren’t so sad. Think of all the short term manipulations required to be able to influence analysts, brokers, the press etc in order to spin quarterly and annual earnings. Its pointless and counterproductive. In fact, an excessive concern with stock price is a clear indication of an unsuitability in your corporate management. There are many studies that show that between 75 and 90% of the variation in a company’s stock price is attributable to the sector and market dynamics, ie beyond a company’s control. The fact that BSG uses this as a measureable part of managerial performance raises serious questions to me about its suitability in educating young impressionable managers. (Ken’s opinion only)

Chapter 5: fundamental fallacies of strategic planning (see Brenda’s detailed notes below)

Chapter 6: a new framework for thinking about strategy and planning.  Mintzberg offers a behavioral framework for planning based on his belief that planning as it actually is conducted should inform our understanding of it as a process that can help us integrate our operations and visions. I’ve summarized the topics that he describes in Chapter 6 below in case you find these subjects interesting

  1. synthesizing analysis and intuition
  2. planning as strategic programming
  3. plans as a means of communication and control
  4. planners as finders of strategy
  5. planners as analysts
  6. planners as catalysts
  7. planners and strategists
  8. a short summary of planners in context

Ken’s  conclusion: a superb piece of scholarship that remains central to any understanding of the broad topics of planning and strategy. You may not agree with his recommendations are insights in Chapter 6, but you have to take his analysis of the state of planning and a deep theory of strategy making into account if you’re concerned about organizational strategy.

Deeper look at Chapter 5 and 2 discussion questions:

Within chapter five of our selected book, Mintzberg (1994) discusses scenarios instead of forecasts.  The discussion maintained that the future is unknown but with assumptions you can question what and when to make decisions by utilizing scenario building.  With the business strategy game, we are using this type of activity to make our strategic decisions because as we make our decisions those decisions build upon the future structure of our company.  Mintzberg explained scenarios as “focused less on predicting outcomes and more on understanding the forces that would eventually compel an outcome; less on figures and more on insight” (p. 248).  Team B’s focus is on letting our products speak for themselves as expressions of our inner quality and spirit and to use our business as a force for growing a sense of global community and interconnectedness.  This chapter focused directly on finding the “right fit” to how many scenarios to build.  The focus is on the vision.  The business strategy game provides for uncertain times but our company is not concerned with the bottom line but is concerned more with the people within our organization.

Mintzberg’s passion is not in the planning but in the collaborative effort of including all information into the decision making process to include others within the organization.

Question to consider:

  1. What have been your experiences when “planners” have made decisions without the consideration of others within the organization?

Mintzberg discussed strategic thinking is a reflective systematic activity where creativity must be used as you break down the vision of the organization into pieces to come to a final decision.  He explained it as an experimental activity where one might have to “think to act and act to think” (p. 293).

  1. How does strategic planning obstructed strategic thinking at your organizations?
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Integrated strategic change and how it differs from traditional strategic planning and traditional planned organization change

June 11, 2010 3 comments

Model of the Human Processor
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Cummings and Worley define the concept of integrated strategic change (ISC) as a comprehensive OD intervention that examines how plan change that can add value to strategic management. The integrative piece looks at a synthesis of business strategies and organizational systems responding together to external and/or internal disruptions. This strategic change plan then would help members manage the transition from current status and organizational designs to a desired future strategic orientation. The simultaneity of strategy and organizational design is the essence of the integrated change plan. ISC is one of the newer concepts in the OD repertoire.

ISC can be either radical or gradual in its systemic realignment between the environment and the businesses strategy. It has a results-focus while simultaneously examining processes, structure and strategies. It is concerned with the implementation, transition states, and human resources and not just the conceptual plan.

It looks simultaneously at strategy, operations and tactics; and both planning and execution. ISC considers three-time states: the present, the transition, and the desirable future. It goes beyond the isolated, rational analysis of traditional strategic planning to include human factors, culture and environment in the implementation phase. It is a highly participative process as opposed to traditional strategic change planning which typically resides in a small staff sell at the highest echelon in the executive branch of the organization.

It has four phases: strategic analysis, strategic choice, designing the change plan, and implementing the plan. The four steps are overlapping and iterative as opposed to linear and compartmentalized, as in the traditional methods.

Finally, ISC differs from traditional processes by examining strategic orientation as the unit of analysis; considers how to gain commitment and support for the strategic plan as an integral part of the overall plan; and incorporates elements at all echelons throughout the organization in analysis, implementation and monitoring effectiveness. Ownership is central to this concept.

My experience with Army strategic planning has been of the traditional variety and it’s clear that ISC is a better fit for the real world of managing change in large organizations. The annual off-site gathering of senior leaders to create a vision which is put on a shelf and back to business as normal is the stereotype, mostly true, of the traditional process. The pilot program of reengineering an Army installation that I participated in as the senior military planner, featured some of the elements of ISC and in those areas the plan was much more successful than when we applied traditional means. To the extent that we consider transitions in implementation, human factors, and incorporated stakeholders from every echelon, we were successful. When we tried to implement a top-down, from-a-distance strategic vision, we suffered the usual problems of traditional planning.

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Information technology: integrating IT into Strategic planning

April 11, 2010 2 comments

Is There Group Wisdom for Strategic Planning?
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Your information technology department MUST be part of your strategic planning process for our value can be created and multiplied2 reasons:

1. they have possibilities and enablers that may suggest new ways that your value can be created,d explanded, multplied, leveraged

2. if they don’t know where you are going and why, and how you are evolving, they will always be trying to integrate a static model of the organizations processes. In other ways you will be integrating where you were, not where you are going; IT will then be an anchor and not an accelerator

You need IT

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leadership in complexity: making the game simple

January 20, 2010 Leave a comment

Classical ideal feedback model. The feedback i...
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this is a reflection on strategies of leadership under conditions of complexity

Michelle: as your excellent posting on CAS notes, at certain degrees of complexity we have to adopt simpler and shorter term behaviors, and act with care and humility, measuring results and applying the feedback more rapidly in order to evolve our practice to conform to the new demands of a changing environment.

I think your analogy of a football playbook to be right on target. They have the general principles of how they want to play, but they require this tightly organized group of teammates to adapt in split seconds to the opponent and to the players around them in order to be successful.

I’m reminded of Vince Lombardi‘s strategy of running to daylight in which simple zone blocking that was very physical allowed the line to gain a space advantage and then required the running back to simply find the hole and run through it. The flexibility built into the strategy was perfect for a highly complex and adaptive learning environment.

By rendering the strategy into a simple heuristic that was easy to communicate and understand, he was able to synchronize and simplify the complex situation in to manageable proportions. This is a different strategy than trying to decompose the football problem into smaller subsets, which is still by its nature a control strategy rather than an adaptive strategy.

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