STRATEGY SESSIONS

 

SIZING UP A FEW STRATEGIC OPTIONS

 

by Dr. Steve Payne

 

Americans have long been both envied and criticized by others for our spending habits. We have been called a nation of “conspicuous consumption.” Yet tougher times in recent years have forced some into recognizing and practicing wiser spending. There has been a trend recently for some commentators to offer tips or advice regarding frugality during recessionary conditions. Suggestions on how to become more of a “cheapskate” and to conserve resources abound now. My wife would quickly claim that I have long been a practitioner of “conspicuous frugality.”

From a business perspective, an incremental dollar that is saved through cost cutting is more valuable than a dollar earned through increased sales revenue. The incremental dollar of revenue is diminished through taxes and other expenses. So cutting costs is an obvious and often-used strategic option in recessionary times. The limitation, though, of offering a “laundry list” of tips for reducing living costs is that many of these tips don’t necessarily fit a particular individual’s consumption values or tastes. This series of essays focus instead on explaining a strategic decision-making process that should help readers find and choose from a broader scope of options than simply cost cutting.

As just one example of strategic potentials, consider social networking in business or personal life. Potential opportunities can arise in normal conversations with family and friends. A father of a recently-minted college graduate once told me that he insisted that all of his children attend that local university, but not because he was that convinced of established values associated with a college education. The man owned a successful retail business and wanted his children fully engaged in the social life of the university, including fraternities and sororities.  The reason for this was for his children to create their own friendships and business contacts, especially upon the father’s retirement and their taking over the business.
 
Many college graduates undertake college interviews, use employment agencies, or try conventional means for securing jobs.  But there are also cases in which a graduate learns through a friend that the friend’s uncle is head of a bank or automobile dealership that is planning to expand and hire a few more individuals. This early information can obviously be a huge advantage in securing a job.

We all interact socially and develop certain networks of friends and acquaintances. Through chance, we might from time to time pick up tidbits of information that become helpful. A more strategic orientation during tougher economic times examines these networks or contacts and might expand and/or focus these contacts to improve the amount and quality of employment information being received.

If information is power, then gaining useful information through personal contacts can be useful in several steps of strategy development. For example, consider a decision concerning an apparently attractive job prospect. Locating a few individuals who have that job, or have worked in a slightly advanced position in that direct line of promotion, for at least several years at that firm can be a valuable decision input. Offer to buy each lunch, or just try to meet with several of them outside of their work environment. Ask each to describe the “good, bad and any ugly” aspects of that position that they have encountered. That information can be helpful in more fully evaluating the extent to which the job and its characteristics will satisfy your own personal values, tastes, and goals. Very often recruitment, personnel, or supervisory employees at the company can offer a distorted perspective or “spin” in trying to attract talent. Characteristics, such as salary or other benefits associated with the job, can seem so favorable and tempting that these overwhelm a serious and more strategic evaluation of person-job fit.

Many strategic options or potentials can exist for us. Choosing what seems a promising or the best option of those available can be an exercise in self-delusion -- when we fail to consider or “put on the table” other potentials. One or more of these additional options might supplement or replace what initially seems the answer to our career or life dilemmas.

STRATEGY SESSIONS #6

SOME BASIC STRATEGIES

by Dr. Steve Payne

A strategy is simply a plan and a pathway from where a person is now toward certain goals that a person has for the future.

There are many kinds of strategies.  Some strategies are well known in business competition, in military battles or wars, and in games.  Perhaps the most famous historical account concerning strategy is the Art of War attributed to Sun Tzu , a high-ranking military general and strategist who lived around the fifth century BC.  He discussed issues such as the costs involved in successful military campaigns, the importance of alliances, the use of creativity and timing in attacks, the need for flexibility in responding to shifting circumstances, and evaluation of the intentions of competitors.

Among the most basic strategies are ones such as a thrust or a straight-forward and often bold attack at the heart of the opposition.   A feint or flanking strategy is one that appears to be at one target area when it’s actually designed to attack another target area that is perceived to be less well defended.  An encirclement strategy seeks to surround an enemy or target and cut off its supplies or retreat.  A gambit strategy is sacrificing in competition one or several of your resources to try to position yourself better to attack and gain more of an opponent’s resources.  One strategy can be a bluff in which an attack is threatened in hope the opponent will surrender certain resources without the costs of competition. If an opponent expects major retaliation from you for an attack, there’s a chance that he or she will not attack your position at all.   A playing possum and a poison pill strategy effectively lower the inducements for opponents to attack.  There are also competitive strategies, such as reverse engineering by which the resources or accomplishments of successful competitors are closely studied in order to learn these capabilities and be more competitive in applying these.

One business-related category of strategies involves whether the plan seeks its goals through offering capabilities at a lower cost than competitors who have a similar goal and are able to provide.  This is known as a cost leadership strategy. By contrast, the plan might seek its goals through differentiation of an individual’s capabilities as unique or different and, therefore, worthy of premium or higher pricing.  A focus strategy is one that aims at a particular and narrower market niche than some other competitors pursue.  The strategies mentioned here are just a few examples of many types of strategies that one might pursue.

In determining potential strategies, part of Step 2 in this strategic process, competitor analysis, is critical and involves two concerns or dimensions.  The first dimension is the extent to which others are pursuing somewhat similar markets and opportunities as you have identified and want to enter.  The second concern is the extent to which competitors for such markets have similar, better, or worse competitive resources and capabilities than you have. Competitor analysis takes into account 1) the awareness of others of those markets that you want to pursue, 2) their motivation actually to try to move into these markets, and 3) their relative abilities to be successful entrants into those markets.  Certain markets and opportunities really reward first or early movers into those markets, while other markets see first movers often faltering and late movers becoming successful as they adapt better to changing market conditions.  Competitive markets, and the opportunities within these, can be characterized in various ways, including whether these change slower or quicker than typical markets.

Some markets and opportunities may be open to many successful entrants or these markets could be so narrowly defined as to allow only a few successful entrants.  For example, nursing graduates from universities have long had a fairly large number and broad assortment of good employment opportunities due to an undersupply of well-educated and certified nurses.  Other employment markets can be difficult to enter and limited due to employee cutbacks or other reasons.  More difficult-to-enter employment markets and the more vexing life challenges demand more careful strategic analysis and decision making.

 

 

 

 

 

STRATEGY SESSIONS  #5

BEYOND THE ME IN STRATEGY

by Dr. Steve Payne

Let’s shift attention to introducing the second step in a truly strategic self-management process.

We all are aware of certain opportunities and threats that surround us, but more systematic investigation and better knowledge concerning relevant opportunities and threats can improve our success in our careers and lives. A systematic analysis of these opportunities and threats includes, first, a scanning of basic information on conditions existing in the general environment or outside world. By general environment, I mean economic, political, technological, social, and other conditions. Some people are more aware of trends and conditions in these environments due to their regularly scanning of information from newspapers, magazines, and the internet. Some executives and political strategists even hire assistants to prepare “briefing books” to keep them constantly abreast of developing news and trends.

Beyond general information scanning, a more focused monitoring is needed of information sources about certain external conditions and trends that have much more meaning related to our own personal goals. Again, some people have greater access to such focused information or spend much more time than others monitoring trends. Even further analysis of opportunities and threats occurs through gathering information and projecting how certain conditions and trends might likely develop into the future. The purpose of all this information scanning, monitoring, and projecting is an assessment of which conditions and trends might lead to significant personal opportunities and threats.

The importance of analyzing external environments for strategy formulation was highlighted back in the early 1980s with the #1 best-seller entitled Megatrends by JohnNaisbitt. That book and others have offered recommendations of particular ways to collect more accurate and far-sighted external information as a base for strategy selection.

To investigate personal opportunities and threats, we need to shift next to specific industries or markets and the competition for resources, capabilities, and core competencies to serve or support these particular markets. Who are these competitors of ours? And what resources and capabilities, apparent goals, strategies, and likely assumptions about the future do these competitors have? This competitor analysis is necessary in order to appraise the attractiveness of a particular market or industry for our competitive pursuit. Actually mapping types of competitors and describing them along several dimensions (goals, basic strategies, capabilities, etc.) in contrast to our own dimensions can prove useful. Some markets or opportunities are impractical or very difficult to pursue due to personal resource limitations, usually involving various types of cost or delays for an individual to compete effectively there.

In order to begin to develop strategies for competing in specific individual markets, customers for our capabilities and services need be understood. Who are these customers? What are they seeking or what capabilities would impress them? How might these customers be better served than now and better contacted for marketing our own capabilities? Markets that seem attractive can be studied further and split into particular subsets of activity or functioning and the types of customers involved. Who is actually getting hired within particular market niches and what capabilities do they have in contrast or comparison to you?

Based upon this rough introduction to the first and second steps of a strategic self-management process that I’ve outlined, I’ll move along next to describe some actual typesof strategies. These will range from more basic types of strategies to some strategies that are more advanced.

 

 

STRATEGY SESSIONS  #4
 
THE ME IN STRATEGY
 
by Dr. Steve Payne

All of us confront significant life and career challenges that can require important decisions. These challenges and decisions can vary greatly though. Instead of my trying to offer specific advice or tips that might apply only to limited individuals or situations, I'm recommending basic strategic thinking and a decision process that might be used for almost any major challenge. So these essays are something like a mini-course on how to make more strategic life and career decisions.

My focus this time is still on the first step in a strategic decision-making process. That step is determination of personal strengths and weaknesses in confronting a particular challenge. Organizations and businesses often analyze their strengths and weaknesses in order to decide about "outsourcing." Outsourcing is obtaining outside resources or capabilities needed to undertake a potentially rewarding opportunity. Organizations examine their major activities such as logistics, operations and marketing that each help deliver value to customers. Where these organizations do not already have core competences for a sustainable competitive advantage, they can seek assistance to help gain this advantage. This assistance might come from consultants or contractors or through mergers, acquisitions, or joint ventures. The question becomes how much reward is potentially available due to this outside assistance and for how much additional cost.

 

For individuals confronting life challenges, they can also benefit from better understanding their personal strengths and weaknesses. Gaining knowledge of (1) how to further develop their existing strengths and overcome weaknesses and (2) how to market these characteristics for life and career opportunities is important. For example, a person might identify a possible career opportunity and then the personal resources he or she has and lacks that would be attractive for taking advantage of that opportunity. One might then decide on an educational or training program, other forms of personal development, and self-marketing activities to be very competitive for securing that employment opportunity.

 

Entrepreneurial opportunities often require several individuals with different capabilities to develop core competences for a particular market. Individuals should consider what "value-added" contributions that their capabilities might offer to specific types of businesses or other organizations. Yet understanding one's own actual resources or capabilities for employment opportunities can be difficult due to psychological barriers or properties.

Some overestimate their capabilities or have an inaccurate understanding of marketplace competition for desired opportunities. Personal capabilities can be diminished due to recent changes in technologies or markets. Some can underestimate their capabilities or take certain of their capabilities for granted. It's useful to consult individuals familiar with competitive capabilities and needs in specific markets to get a possibly more objective view of one's personal capabilities for these opportunities.

The first step of this strategic decision process is then a very personal self-examination. What personal resources and capabilities do you possess now and what do these offer to others? Which of these personal capabilities of yours might be further developed and marketed for certain career or life opportunities? How do others evaluate your personal capabilities now, particularly those who are knowledgeable about such opportunities, know you well, and would be very honest and open in revealing their judgment.

   

STRATEGY SESSIONS  #3                       

A FEW BASIC CONCEPTS IN STRATEGIC ANALYSIS

by Dr. Steve Payne              

Introduced in my last blog was a four-step strategic process for making major career or life decisions.  I’ll add in this blog some of the common language or concepts associated with this
strategic process.

A strategy can be simply defined as a possible path or plan to get a person or group from a particular state of being to a more desired, future state of being, or a goal. Often strategies are distinguished from tactics. Tactics are specific ways to undertake and accomplish strategies.

A football coach might develop a few new strategies for a team to try to win more games and get into the playoffs as one possible team goal. Among those strategies might be to run the ball more in certain game situations, relative to the option of passing it, this season.  This strategy might have been selected due to the particular strengths and weaknesses of a given starting quarterback and an offensive line. That running strategy is supported by tactics or more detailed plans for carrying out this running strategy against other teams that they’ll be playing which have particular strengths and weaknesses in their defensive lines and backfields.

Certain football, baseball, and other professional coaches are legends, and part of their reputation or fame is often their strategic ability.  These coaches are even occasionally invited to business and professional seminars as outside experts on competition, and they earn additional income by sharing some of their strategic thinking. Of course, coaches who have gained sustained competitive advantage through their strategic competencies are not likely to be completely forthcoming or specific in sharing their winning strategies – if these could be simply copied by their direct competitors.

At the core of strategic thinking is concern about resources, capabilities, and core competencies of a individual, group, or organization relative to the social, economic, technological, and other environments in which this individual, group, or organization desires to find an favorable competitive niche. Individuals have or can obtain a number of tangible and intangible resources in order to compete for various opportunities. Resources include personal abilities or characteristics, skills, talents, etc., as well as financial, information, and many other types of assets that can be helpful in competing for personal or business goals. Some resources are already held and cost little or nothing to possess and use. Other resources can be costly and/or require time and practice to develop as a competitive asset. Resources can be scattered attributes that one just possesses or could possess. A set of resources that is recognized and then meaningfully integrated for competitive purposes to gain desired ends is known as a capability in the jargon of strategic management. Resources and even capabilities alone are not enough though to have sustained competitive advantage. The term core competencies is used to describe a set of capabilities that are a source of sustained competitive advantage over rivals.

There are criteria to determine if certain capabilities exist that qualify as core competencies for sustained competitive advantage in a field or endeavor. The key question to ask is whether the resources that you have or could develop into capabilities can lead to a sustained competitive advantage in a particular competitive field or opportunity. Key criteria to evaluate capabilities as core competencies and for sustained competitive advantage are 1) Are these capabilities valuable ones for this competition? 2) Are these capabilities rare ones for competitors to possess? 3) Would these capabilities be costly for other competitors to obtain or imitate? 4) Are these capabilities difficult for others to find substitute capabilities that could be used in this competition?

We can hardly discuss capabilities and core competencies in isolation from the external environments in which these qualities are needed and judged. Many textbooks in strategic management devote early pages to Step 1 in the strategic process or identifying resources, capabilities, and core competencies. Then such textbooks devote a chapter or two to Step 2 in this process concerning how to analyze key factors in external environments that influence strategy selection. Later chapters cover Step 3, or how various types of strategies might be considered and chosen, and Step 4, on implementing chosen strategies, evaluating the success of these strategies upon implementation, and fine-tuning strategies based on results.  In future blogs, I’ll discuss in more detail each of these four steps for strategic decision making.