I finished this book in February 2024. I recommend this book 9/10.
Why you should read this book:
This is the most practical strategy book I've come across. It provides a step-by-step process with included templates in the appendix. The book also provides pitfalls and recommendations on how to succeed after the strategy has been developed. Additionally, it highlights what should be on the agenda during weekly implementation meetings and what it takes to build an effective communication plan.
Get your copy here.
🚀 The book in three sentences
Most practical strategy handbook I've read.
Step-by-step process, including templates.
Steps for post-strategy to ensure implementation and communication are executed. It even includes a small chapter on mergers and acquisitions and shareholder activism.
🎨 Impressions
Written by a college professor and has a classroom feel in its layout.
📝 My notes and thoughts
P10. They found that each market leader chose and persisted over time with one of three strategic "value disciplines": (1) customer intimacy (providing an extremely high level of service), (2) product leadership (consistently bringing new and innovative products to market), and (3) operational excellence (being the low-cost provider in their industry). The authors assert that a successful business needs to maintain at least "acceptable" levels of performance in each dimension, but management needs to choose one dimension to become a market leader in their industry and excelling in any of the dimensions requires making sacrifices in the others.
P31. While SWOT framework is often used on its own, additional "sub-frameworks" can be applied to conduct a more granular analysis of an organization's external and internal strategic factors. Two of the most popular strategic analysis frameworks that feed into the external "opportunities" and "threats" elements of the SWOT analysis are the Five Forces industry and the PESTEL analysis.
39. Apply the 80/20 rule. In any of the Five Forces and PESTEL categories, it is easy to spend 80 percent of your time trying to find and analyze 20 percent more data. Because external analysis is concerned with predicting the future, no amount of data will enable management to accurately foretell the future environment within which the organization will operate. Hence, strategic decisions must be made based upon often limited and what may seem like insufficient data.
P41. Chapter Summary:
At its core, strategy is about predicting the future.
While the SWOT framework can be used on its own, additional "sub-frameworks" can help be applied to conduct a more granular analysis of an organization's external strategic factors, including the Five Forces industry analysis and PESTEL analysis.
Scenario planning is a key tool to help management prioritize potential future developments identified by a Five Forces and PESTEL analysis.
Best practices of external strategic analysis include prioritizing data, regularly updating data, using multiple data sources, and applying the 80/20 rule.
P48. Although the SWOT framework can be used on its own, supplementary "sub-frameworks" can be applied to conduct a more granular analysis of an organization's internal strategic resources. Two of the most popular strategic analysis frameworks that feed into the internal "strengths" and "weakness" elements of the SWOT analysis are the value chain analysis in combination with the VRIO analysis.
P55. Chapter Summary:
Two of the most popular strategic analysis frameworks that feed into the internal strengths and weakness elements of the SWOT analysis are the value chain and VRIO analyses.
P59. Strategic Ideation:
External Analysis (Five Forces, PESTEL.)
Internal Analysis (Value chain, VRIO.)
Potential Strategies
High-impact Priority Strategies (Investment, Revenue, Risk, NPV(Net Present Value)/IPR(Internal Rate of Return)/Real Options.
P59. To generate a list of potential strategies, management should draw upon the external and internal strategic data collected to inform the "strategic ideation" process. For example, a potential strategy might be to establish and expand the firm's international presence with associated market share and revenue growth goals. External data, including growth rates of various markets, demographics projections in each potential market, and consumer spending power forecasts for each market, should inform management's decision about whether international expansion is generally worthwhile and, if so, which markets are most attractive to enter. Likewise, internal data about the firm's capacity (financing ability and the number of staff, for example), as well as the firm's capability (knowledge and skills) to expand internationally, should also be considered. Combining external and internal data with the collective experience and creativity of the management team (and potentially others in the organization in a more "democratized" strategy process) will yield different possibilities for entering selected markets. Potential market entry strategies include variations of exporting, licensing, joint ventures, mergers and acquisitions, of greenfield approaches.
P61. Besides comparing potential strategies based upon the expected impact of each on service, competitive positioning, or market share, common methods used to compare potential strategies based upon their projected financial value creation include net present value (NPV) is used to calculate the total current value of a project's future cash flows. The basis of NPV is to project an investment's (such as a new market entry strategy) future cash outflows and inflows, discount all the future cash flows back to the present day (based on the cost of the firm's capital), and then add them together. The resulting number is the investment's NPV. A positive NPV means that, after considering the time value of money, the company will make money if it proceeds with the strategy.
P63. Best practices:
Keep the list of priority strategies short.
Uses data.
Identify "wild ideas."
Apply rigor in selecting priority strategies.
P64. Key Frameworks, Tools, and Templates.
P70. Chapter Summary:
Moving from strategic analysis to strategy selection is where analytics meets creativity in the strategy process.
While drawing upon external and internal analytical data, developing an array of potential strategies is also a creative exercise.
Combining external and internal data with the collective experience and creativity of the management team (and potentially others in the organization in a more "democratized" strategy process) will yield a broad array of possible strategies.
In addition to identifying potential strategies that are realistic pursuits for your form, generation "wild ideas" stretches the creative element of the strategic ideation process by identifying thought-provoking, albeit not yet viable, potential very long-term strategies.
Because of resource limitations (people, time, and capital), most firms cannot pursue more than three to five major strategic initiatives at any one time.
Therefore, management must target the few highest-impact priority initiatives and identify any others that need to be abandoned or deferred.
Besides comparing potential strategies based upon the expected impact of each on service, competitive positioning, or market share, common methods used to compare potential strategies based upon projected financial value creation include net present value, internal rate of return, and real options.
There can be multiple internal and external participants involved in strategy execution who perform essential activities, including senior executives, the internal strategy team, external strategy consultants, board members, middle management and employees, key customers, and activist shareholders.
The best practices in strategy identification and selection include keeping the list of high-impact priority strategies short, using both external and internal data, combining data with creativity, identifying "wild ideas," and applying rigor in selecting priority strategies.
Potential pitfalls in strategy identification and selection include relying on analysis only, relying on creativity and intuition only, and ignoring "wild ideas."
Key tools that help structure strategy identification and selection are Ansoff's growth matrix, the market entry options map, the innovation landscape map, the four levels of innovation matrix, the platform ecosystem, the value net, the strategy canvas, and the strategic priorities map.
P80. Weekly review meetings between the task force heads, and led by the program management team, should:
review progress from the previous week
identify any obstacles encountered
address any cross-functional coordination required
specify key actions for the upcoming week
identify decisions needed from the steering committee that are essential to implementation progress.
P80. Effective agile program management incorporates five key principles:
80/20 rule for decision-making. Managers often spend 80 percent of their time trying to obtain 20 percent more information before making decisions; therefore, "80 percent information" is sufficient to decide, implement, and adjust.
Push most decisions down to the implementation task forces. More "material" decisions—large capital expenditures or major personnel impacts—should be raised to the steering committee for rapid resolution. The longer decision-making takes, the greater the chance of losing implementation momentum.
Staggered implementation. To build momentum, achieve "quick wins," publicize them, and congratulate the successful teams.
Simplify tracking and reporting. Develop and install a streamlined implementation tracking "dashboard," including one-page summaries for each task force and for the overall implementation program.
Apply implementation learning to future planning and ongoing execution. Continuous customer and employee feedback is essential to adapt implementation actions as needed.
P81. The implementation infrastructure at Petrichemical Inc. was managed using these agile principles. Cross-functional implementation coordination meetings were held weekly, which included the program management team and the leader of each task force. The meeting agenda focused on five key items for each task force to report: progress made since the previous week, any obstacles encountered, cross-functional coordination needed, key actions for the upcoming week, and key decisions required from the steering committee. After each weekly meeting, any major decisions required to keep the execution process moving—large capital expenditure, significant systems, or operational changes—were taken by the program management team to the steering committee for rapid decision within 72 hours to either approve, disapprove, or request modifications.
P89. Implementation strategy is as important as the strategy vision itself.
P92. In any transformation effort, leadership is important in providing clear direction for the move into an uncertain future. Unfortunately, however, exceptional leadership is frequently difficult to find during major transformation efforts. Too often, management who should be "transformation champions" opt for playing politics instead of providing visible leadership to the organization. This tendency only makes it more difficult for people to get a resolution of their "me issues" described below that generate so much uncertainty and low morale across the workforce. When people see top managers merely jockeying for political positions during a strategic transition, with little or no focus on the business, its customers, or its employees, the seeds of a failed strategy are sown. Ensuring that someone oversees strategy implementation and defining clear lines of authority helps mitigate the political game-playing.
P93. To be successful, the person in charge needs several key characteristics:
Exceptional project leadership, project management, and project coordination skills.
Clout with and respect from (the two do not always go hand in hand) the broader organization.
Solid decision-making ability.
A knack to lead and facilitate productive and efficient meetings that include various constituencies.
An exceptional multitasker.
Extremely organized.
Consensus builder.
Can create positive relationships with varied stakeholders at all levels of the organization.
Effective communicator.
Detailed-oriented while also seeing the "big picture."
Ability to recognize and solve problems quickly.
P94. Before people become focused on making required operational, service, or technological changes, they consider the personal impacts, including:
Will this affect my pay?
Will I potentially be put out of a job?
To whom will I be reporting?
Will my role change?
Do I have the required new skills?
Does this impact my advancement opportunities?
Will I have to move locations?
P101. The three levels represent a progressive hierarchy of the reasons why transformation is resisted. The base level, "not knowing," represents people's lack of knowledge about the new strategy and implementation requirements. The middle level, "not able," represents people's lack of ability to perform the tasks made necessary to effectively implement the desired strategy. The top level, "not willing," represents people's personal reluctance to make the effort to transform. Moreover, each level of the Resistance Pyramid suggests a tangible action for managing resistance. At the base level of "not knowing," what is required is communication to first make people aware of the desired strategy and subsequently to keep them informed about the implementation effort. At the top level of "not willing," what is required is performance management consisting of setting clear team and individual goals, measuring performance against the established goals, providing feedback and coaching about team and individual progress, and providing rewards and recognition for achieving set targets. It is important to recognize that resistance is natural and not necessarily an indication that something is going wrong with the implementation.
P103. Best Practices:
Put as much focus on strategic transformation management as on strategy formulation. Many organizations devote significant resources to internal and external strategic analysis during strategy formulation, while strategy execution and strategic transformation management are an afterthought. Successful strategy implementation and transformation management require management focus and resource allocation not just during strategy formulation but also throughout execution. Rigorously apply the seven fundamentals of transformation management. As described above, seven fundamentals facilitate successful strategic transformation: clear implementation leadership, address "me" issues quickly, provide extensive communication, ensure a focus on customers, make tough decisions, create focused initiatives, and manage workforce resistance at every level.
P113. A Comprehensive Transformation Communication Plan
P130. Best practices:
Make key talent retention and re-engagement a priority. Unfortunately, management often overlooks key talent retention and re-engagement during transformation efforts, or they delegate it to others. However, management must act early and overtly participate in key talent retention and re-engagement planning and delivery. Address key talent retention and re-engagement early. Key talents are marketable, and often, it does not take them long to find other employment. Therefore, management must plan and implement key talent retention and re-engagement early in the transformation process before key talent decides to leave.
P158. Potential Pitfalls:
Ignoring the non-market. Large firms have found that because of their market power and visibility, they cannot ignore non-market issues. However, even small firms with limited resources can choose and implement a non-market strategy by joining industry groups or releasing position papers and marketing campaigns relating to non-market issues.
P160. Chapter Summary:
Non-market strategy is a term applied to the aspects of business strategy that address relationships that do not unfold within commercial markets but still affect the company's ability to reach its strategic goals.
A company non-market environment is composed of various entities including regulators, goverments, citizens, NGOs, activitis, and the media.