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Case 1 HPI4008
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Case 11. What is:
a. Strategic management?
- requirements Govers
Strategic management
An integrative management field that combines analysis, formulation, and realization in the quest for
sustainable (!) competitive advantage. (what)
- Sustainable remain variable over time
Outperforming for instance via
1) Value proposition (product, service, design)
2) Business model; how are you approaching (supply chain, digital platform)
3) Organizational capabilities; reputation, agility
Sustainable competitive advantage
It refers to a situation when one organization can over time perform better than its rivals
= Sustainable competitive advantage
VUCA
VUCA is a managerial acronym that’s used to refer to the turbulent conditions and unpredictability of
the outside environment. The full form of VUCA is volatility (V), uncertainty (U), complexity (C) and
ambiguity (A).
V = volatility; constant change and how large they are changing
First and foremost, VUCA means volatility. The V of VUCA implies the pace of change in a business
environment—be it an industry, a specific market or even the whole world in general. The more volatile an
environment, the more frequently and rapidly are things likely to change within it. High volatility is synonymous
with instability, unpredictability and turbulence and, therefore, brings in a substantial amount of risk. Volatility
may include factors such as demand fluctuations or short time-to-market. While volatility can be challenging for
organizations to tackle, it also has the potential to open the doors to creativity and innovation in the long run as
business leaders come up with out-of-the-box strategies to manage risk.
U = uncertainty; to what extent do you have unpredictability in your system
Next, VUCA means uncertainty. The U of VUCA, uncertainty, is the lack of predictability of the future. While
predicting the future is hard, it’s even more so in a fast-paced business environment. Uncertainty crops up when
organizations and leaders are unable to understand the current market scenario and struggle to forecast future
outcomes and the immediate effect of their actions. It’s difficult for leaders to chalk out a roadmap for growth in
an uncertain VUCA world. In recent times, the global pandemic COVID-19 ushered in uncertainty in the global
environment with governments and business leaders across the world struggling to interpret the market
conditions and implement necessary measures.
C = complexity ; how many layers and parts are in your economic system in what you are trying to
compete in.
Complexity, the C of VUCA, refers to the different factors at work in a business environment, the relationship
among them and their impact on one another. A large number of different and interconnected factors increase
the complexity of an environment, making it difficult to interpret, analyze and control. This hinders
organizations’ and their leaders’ ability to make impactful decisions. To successfully operate in a complex VUCA
world, business leaders not only need to trace a pattern between the interacting factors in the market but also
adapt their business to the evolving conditions. The stock market is a significant example of a complex business
environment.
A = Ambiguity; how many interpretations and co-realities exist at the same time
,Lastly, the A of the VUCA model, ambiguity, denotes the absence of clarity while interpreting a situation. An
incomplete picture involving contradictory information or lack of relevant details can give rise to a vague or
ambiguous situation. It follows that the more ambiguous an environment is, the harder it becomes for
organizations and business leaders to decode and make important decisions. Ambiguous situations leave
organizations to explore multiple avenues, test their viability in the process and make necessary adjustments.
The four elements of a VUCA model are interrelated. For instance, a dynamic, volatile and complex market is
susceptible to changing frequently, which might give way to uncertainty and ambiguity, making things difficult to
discern. Each specific arena of VUCA requires special attention, focus and strategy to embrace growth in a VUCA
world.
VUCA = if you all have that a lot you have a lot of VUCA
No organization is immune to influences that come from it’s external environment (the conditions,
entities, and factors surrounding an organization that influence it’s activities and choices). Strategic
management is a process that helps organizations response appropriately to potential threats and
opportunities.
Focus; to get a sense of direction for an envisioned future, we need…
Therefore we need a BHAG
,Talking about mission and mission into a goal oriented way; it consist basically of core values, core
purpose, translated into BHAG, visioned future.
BHAG
1) Target BHAG
2) Common enemy BHAG
3) Role-model BHAG
4) internal transformation BHAG
A big hairy audacious goal, or BHAG, is a clear and compelling target for an organization to strive for.
Strategic horizon (Govers)
McKinsey’s Three Horizons of Growth are all about keeping you focused on growth and innovation.
This strategy framework requires you to categorize your goals into 3 different ‘horizons’:
Strategic Horizons: Time Span
1. execute current
2. improve/innovate current
3. explore/experiment with unknown’
Horizon 1: Maintain & Defend Core Business
Activities that are most closely aligned to your current business.
Horizon 2: Nurture Emerging Business
Taking what you already have, and extending it into new areas of revenue-driving activity.
, Horizon 3: Create Genuinely New Business
Introducing entirely new elements to your business that don't exist today.
Because of this VUCA you see that the time there are 3 different needs and requirements are on the
table at the same time. This can bring a question forward: on which horizon should we focus?
- Incumbent vs. start-up
Example: Simultaneously working in three horizons requires capabilities from (esp. incumbent)
organizations, which is quite challenging…
- Impact on your vision future
- Maybe you have different cultures
- Different processes and structures
- Need of different systems
Not one fits all approach
Core elements → Deliberate or emergent – planned, entrepreneurial, ideological…
Creation, implementation and overall direction → definition, aim, core values, uprose, bhag,
envisioned future.
i. What are the core elements?
Each organisation is positioned in an external environment; and, to maintain or strengthen its position,
organizations must employ strategic management because the organization is in competition with
other organizations who wants to have a viable position in that environment.
So, strategic management = An integrative management field that combines analysis, formulation, and
implementation in the quest for competitive advantage.
→ Let’s do things better than the competition’ = have a better competitive advantage than the
competition
Strategic management involves the creation, implementation and overall direction for a firm. It
requires both internal and external management functions to facilitate the development
implementation and monitoring of strategy within a organization.
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