The Trouble With Strategy

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The Trouble With Strategy by Mind Map: The Trouble With Strategy

1. Chapter 5: The MBA Myth: Welcome to Wizard School

1.1. Who teaches Strategy?

1.1.1. Credibility check No expertise on the field from the professors lack of real-world experience No sufficient degree

1.1.2. Who wants to teach anyway? Obsession with academic research and publication no incentive to teach at all

1.1.3. Strategic management little way of theory foundations

1.2. What do they teach?

1.2.1. Even if opportunity in fact based Analysis Business Schools more customer oriented no hard work given to students Teaching proper analysis hard work for the professors Lot of preparation from professors Gurus have persuaded everyone that analysis is positively dangerous

1.2.2. Consensus, consensus, consensus Selection of key concepts Dangerous assumptions strategy will be successful so long as we can find consensus Obsession begins at MBA Classroom Study cases People lead discussion

1.3. How do they teach it?

1.3.1. Case studies Dissension in the academy Consider issues on which case will focus Exposes a problem Correlation is not science Pick your message What is the concept I want put across Point of view of the author Concepts to be thought Journalism will do Lack of substantial and rich data Superficial case studies Learn from forensic analysis Where's the WHOLE story? Building under a unique question use a text book Where's the implementation? Nothing to say about how strategy implemented Provide enough time-based information

1.4. What about students?

1.4.1. GMAT Olympics Filter for students students just prepared for the exam Structured testing scheme

1.4.2. Once through the gate already an achievement the GMAT? People failing courses Expectation of an A

1.4.3. The forced curve Standard distribution grades on the bottom people doing few work Scramble to outdo between students

1.5. What do students actually produce?

1.5.1. What's to be done Case studies How to use them in class Grades Publishing examples of student work Companies Ask applicants work

2. Chapter 6

2.1. There is a big problem. How to fix it?

2.1.1. Chuck the lot Sometimes ignoring strategy tools that don't work may not be a bad idea.

2.1.2. Do nothing Doing nothing it is not the way to go although it seems to be the most likely prospect right now.

2.1.3. Improve what we can Senior management: Get a grip Ten executives clearly have the central role in improving the situation. Up-skill others Members of temas cannot make meaningful contributions unless they understand the basics of the strategy. Consultants: best practice, please Face a dilemma, the will likely get better work and see it implemented, and on the other hand they may not get engagements at all. Business schools: Raise the bar Being explicit about their standards. Knock down the barriers

2.1.4. Establish a profession What would a professional strategy body do? A rigorous body of strategy knowledge Graded training Rigorous certification Experience Continuing professional development The broadest view The need of each member of the team to know at least some essentials of the main functions of other departments to be competent in their jobs. Create a profession out of existing institutions

2.1.5. The others: universities and consultants Universities awake from their slumber Time for the consultants to step up Strategy skill for all

3. chapter 1: the good,the bad and the ugly

3.1. Three Types of Strategy

3.1.1. GOOD benefit for all customers companies society environment solid choices effective implementation

3.1.2. BAD expanding not work Daimler-Benz. eBay. pursuit wrong policy Starbucks leads profit fall short of skilled/experienced people RWE Energie

3.1.3. UGLY systematic idiocy swissair scale and public visibility corporation/poor leadership

3.2. strategic management

3.2.1. choosing the right competitive position

3.2.2. selecting

3.2.3. steering

3.2.4. look further ahead next

4. Chapter 2: True Professionalism

4.1. Professions Speak a Common, Defined Language

4.1.1. A shared and well-defined vocabulary is important. Terms like Performance and Strategy and Core Competence do not have clear definitions .”

4.1.2. Clear Terminology is a pre-requisite for other features that make professions more reliable.

4.2. Understanding how things work

4.2.1. Understanding how things work is at the core of being a professional.

4.3. Incremental Progress

4.3.1. Professions build new ideas on what is already known Medics can treat illnesses that were unthinkably difficult just a few years ago because they have built on what they learned.

4.3.2. Serious professions deploy their bodies of knowledge as a whole, Making an aircraft that flies needs aeronautics, materials science, control systems, and knowledge of a host of other principles

4.3.3. True Professions do not constantly reinvent what they do

4.3.4. Most concepts in strategy are too imprecise, abstract, and qualitative, and are open to widely varying interpretations.

4.4. Standard Procedures

4.4.1. Professionals follow proven procedures. It would be alarming if two engineers followed different procedures to make sure an aircraft would fly safely.

4.4.2. With strategy advice, there is no set standard procedure.

4.5. Safety First

4.5.1. Professional practice is not just about victory. First and foremost, it’s about safety. Boeing and Airbus are engaged in a battle to achieve superior performance in their aircraft, but they ahare an even stronger commitment to making sure their planes don’t fall out of the sky.

4.5.2. In business strategy leaders often demonstrate a cavalier disregard for the continuing health of our organizations. Banks that messed up all our lives in 08-09 simply forgot to ask the critical question “What is the worst that can go wrong here?”

4.6. Learning and Standards

4.6.1. Professions train their people! Qualification to become a doctor, lawyer, engineer, or accountant.

4.6.2. Training gives professionals’ confidence in what they know.

4.6.3. Training alone is not enough, professions need standards.

4.6.4. The nearest that management gets to a qualification is the MBA degree. Strategy professionals, too, need training.

4.7. Policing the Professions

4.7.1. The role of professional Associations and institutions. US American Institute of Certified Public Accountants

4.8. How professional is Strategy?

4.8.1. There is only the flimsiest relationship between success and its putative causes.

4.8.2. Failed to build cumulative knowledge.

4.8.3. Management make virtually no use of any formal approaches to develop strategy or to make strategically critical decisions.

4.8.4. How much damage can the pursuit of fads, sold by consultants, actually be? Bank of America 1980’s: Tried to copy Mao’s Cultural Revolution, Lurched Charles Schwab-culture clash erupted and it was sold back, Lurched Security Pacific copying Wells Fargo Crocker, acquisition failed, created a multibillion-dollar write-off.

4.9. The Finance Take Over

4.9.1. Strategy of performance forecasting Step 1: Prepare and Analyse Historical Financials Step 2: Build the Revenue Forecast Step 3: Forecast the Income Statement. Steps 4-5: How to Forecast the Balance Sheet

4.9.2. Problems with Finance Leading Strategy It strangles Business development It INCREASES exposure to risk.

5. Chapter 3

5.1. 1. What do executive use?

5.1.1. Many mangers don't do strategy at all because the world is so dynamic and uncertain

5.1.2. 75% of executive teams did not

5.1.3. have a clear customer proposition

5.2. 2. What gets done?

5.2.1. SWOT - strengths, weaknesses, opportunities and threats

5.2.2. Market segmentation - distinguish different groups of customers

5.2.3. Value Chain analysis - working out margins and cost ratios

5.2.4. Scenario planning - best and worst case forecast

5.2.5. Balanced Scorecard

5.2.6. Porter Five Forces

5.3. 3. The powerful tools and methods

5.3.1. Checklists Recommendation Devastate rivals' profit sanctuaries Plagiarize with pride Deceive the competition Unleash massive and overwhelming force Raise competitors' costs Advice It is useful to send out misleading competitive signals There is no point in having an overall strategic plan Beware of attacking competitors' weaknesses Don't bother sustaining old advantages; it stops you building new ones Features Competing makes winning more difficult Predictability is dangerous, surprise is imprtant The ability to break the mould is a core competence No competitive advantage lasts long

5.3.2. Option lists how much resource should be devoted to: Exploring for new opportunnities Exploiting current business activity Value disciplines Operational excellence: superb operations and execution Product leadership: very strong in innovation and brand marketing, operating in dynamic markets Customer intimacy: excelling in customer attention and service

5.4. 4. Magic bullets

5.4.1. Explain everything! - 1. financial control, 2. customer's perspective, 3. internal processes and 4. the organization's pursuit of learning and growth

5.4.2. What causes what? - showing causality

5.4.3. Frameworks - word and arrow diagrams (you objective, your approach, your people, the organization, their capabilities, the culture and the procedure)

5.4.4. Resource-based strategy - the winners have better resources than losers

5.4.5. Benchmarking - comparison

5.4.6. Statistics never lie (?) - 18 key strategic variables

5.4.7. Two by two boxes - BCG matrix

5.4.8. Whatever you are doing, change it - strategic innovation

5.4.9. From caterpillar to butterfly - transformation

5.5. 5. A useful few

5.5.1. The experience curve

5.5.2. The "Five Forces"

5.5.3. The value curve

6. Chapter 4: Why the Tools Won't Work?

6.1. 1. Asking the Wrong Question

6.1.1. What determines profitability? ROIC In Reality: Cash Flow. Ex: McDonalds (2002)

6.2. 2. Using Wrong Method

6.2.1. Statistical Correlation Correlation is Causation In Reality: X does not cause Y

6.3. 3. Looking at wrong place

6.3.1. Industry Conditions (Researched by Michael Porter)

6.3.2. VRIO Criteria Valuable Rare Intimitable Organisationally embedded