Lecture 1 Introduction + Strategy and Strategic Renewal
Introducing theory
Strategy: long term plan and plans to achieve a specific goal.
Entrepreneur: someone who is willing to take risks to start a new business or venture. It involves
the organization and management of undertaking such a new venture or business including the
risks.
Organizing: suggest the arrangement or planning of an event or an activity. So in this course we
are interested in the process of this strategy and entrepreneurship.
→ The process (organizing part) through which (established or young) organizations engage in
strategy (plans for the longer term) development and renew themselves (the entrepreneurship part)
→ Core concept: STRATEGIC RENEWAL
Key questions
• How can organizations adapt and renew their strategies, in order to survive, remain
successful and help building a more resilient society? main question that guides you
through the whole course. Feel the need to transition to a resilient society and will look at the
role organizations can play in this through their strategies (renew their strategies to cope with
as well as proactively thrive this transition).
- What is strategy? Which are the main components of a successful strategy?
- What is strategic renewal? What are the different ways in which organizations can renew
their strategies?
- How can organizations optimally prepare for the future? How can they survive and remain
successful in a highly dynamic and connected environment (different players in the
environment)? resilient society and strategic planning part.
Today’s agenda
1. Introducing the course
2. Introducing theory
a. Strategy and strategic renewal
Are you sure you have a strategy? (Strategy is about the plan, something intentional on the longer
term; however, that’s not enough in a business context, we need some more information to see that we
are all on the same page in terms of what exactly a strategy is. (Hambrick & Fredrickson, 2001)
Strategic renewal of organizations (Agarwal & Helfat, 2009)
,b. Strategic planning and serious gaming
Policy gaming for strategy and change (Geurts et al., 2007)
3. Introducing the assignment
Introducing theory – Strategy
See strategy as a diamonds comprising five different elements or components which all need to be
aligned with each other. Arena’s, vehicles, differentiators, staging and economic logic. Each of these
are related to different types of questions that needs to be answered to get a sound and cohesive
strategy for an organization.
The first element is about the arena’s so: where will we be active? So what is going to be the market
both in terms of market offerings and geographic areas. So for instance, is this going to be a mass
market product or are we going for specific niches; specific segments of the markets. And are we
going to be just only in the Netherlands or maybe Europe or the whole world?
Second element is that of the vehicles. So how do we get there if we have determined the arena to be
active in, how will we make sure that we reach that arena? This has to do with the resources. So can
we get there for instance through internal organic growth or should we maybe engage in corporation
with other companies or acquire other companies or engage in a joint venture.
The third element is that of the differentiations. How will we win, how will we make sure that
customers choose our product offerings? Will we for example be the lowest cost provider and is that
why the customers will come to us. Or is it about the highest quality or is their another unique feature
that will make customers choose our products instead of on of our competitors?
The fourth element is that of staging. It is about when to do what. Will this be a complete overhaul in
which we just go trough the whole market in once or will this be a staged growth? Will we take small
specific steps before we go through the whole market? So what are the things that we need to do first,
are there specific hurtles to deal with first? So this is all about the speed and the sequence of our
moves.
And finally the fifth element is that of economic logic. So how do we make sure that we will also
make money so that we obtain also returns from this. So for instance it could be about economies of
scale or scope, so that could be the economic logic that make sure that we also get some money from
this. But it could also be something else, it could be that our customers will be willing to give some
premium prices for some things that we offer.
,Now the most important thing about this whole diamond is that everything fits together. So that all
elements, all components of this strategy diamond are coherent with each other, that they match each
other. So if your arena is the mass market, so the whole market in the whole world than this also needs
to be matched with possible specific vehicles to get there but for instance also with an economic logic
of economies of scale so that you can make sure that this is something you benefit from in a mass
market.
If at the other hand, you just want only gather for specific niche or high end luxury product, than for
your economic logic is mostly related to premium prices. So if scale economies, if that is wat
determining the market in that moment, than that is probably not a good idea, cause that is just not
very coherent. So the important thing about this is that everything should nicely fit together.
Such a strategy does not come just in isolation but is developed and influenced using multiple factors.
So we have the mission and objectives leading to a sounding coherent strategy. So these froum the
foundation, the basis of developing a strategy. So if we want to develop a strategy, than always use the
mission and the objectives of the organization as major input in the strategy development. But then
there is also strategic analysis which include multiple types of analysis; internal and external. And
these types of analysis are used to get to know the organization’s environment, the system in which the
organization is operating and also its internal resources; it’s resource base. And then you can also see
that these two, so mission and objectives at the one hand and strategic analysis on the other hand leads
to the strategy and the strategy intern will lead to different types of arrangements within the
organization suggest a structure, processes, reward systems, hrm policies et cetera.
Now in this figure all of this is pictured as a very lineair and clean process but in reality it is important
to know that it will be far more messy, that it will include feedback loops and arrows between all of
the different parts.
But now take a closer look at the strategic analyis part because that is actually one of the main drivers
of strategy and strategic renewal. So let’s see what kind of tools we have for such a strategic analysis.
, Tools for strategic analysis:
Many tools and models have been developed by strategy scholars but also by consultancy firms to do
some strategic analysis in the last decades.
PEST analysis: is a type of external analysis that gives organizations an idea of its macro environment
trough the political, economic, social and technological factors that play a role in their environment.
We also have Porter’s five forces which is also a type of external analysis that gives organization an
idea of its industry, so of the main competitive forces that are important for the organization itself.
You also have Porter’s value chain analysis which is more of an internal type of analysis which
distinguishes different activities in an organization and gives an idea of the cost structure and the value
added of each of these activities.
Than consultancy organization McKinsey has also developed the 7s model as more of an internal type
of analysis to get to the shared values, the skills, the staf, syle, et cetera of an organization.
