Cours Strategie ENSIIE 2012 v1.61

Enterprise Strategy
Erwan Guiziou
Copyright Erwan Guiziou 2013 All rights reserved
2013
Agenda
Strategic analysis
Change
Objectives and strategy
Agenda
STRATEGIC ANALYSIS OBJECTIVES AND STRATEGY CHANGE
Pre-announcement actions Internal analysis Options review HR management Announcement External analysis Strategy Quick wins Performance evaluation SWOT - Strengths - Weaknesses - Opportunities - Threats Services offer
Competitors reaction
Agenda and milestones Consequences
Agenda
Internal analysis
M.O.S.T. Value system Structure Systems
Human Ressources
Sales / Marketing Finance Operations R&D / after-sale
Internal analysis
Human Ressources
Mission, objectives Strategy, tactics (1/3)

Mission and objectives
Has the entreprise defined a mission (why we exist) / values (what we believe in) / a vision (what we want to become) ?
- Are the objectives of the company clearly defined ? - Are the objectives shared by employees ?
- Can the objectives be quantified ?

- Are the objectives appropriate to the current organisation or are they outdated? (has the world changed but not the objectives?)

Strategy and tactics
- is the strategy of the organisation clearly defined ? If yes, which one is it ? (differentiated / low-cost et large / niche)
- how is the strategy defined ? Emerging, deliberate, planned ?

- is the strategy coherent when looking at the objectives ? Sustainable ? - is the strategy cohrent with the environnement and internally ? Sustainable ? - Basic elements: objectives scope means

Strategy and tactics
- is the strategy using the ressources optimally ? Or will an alternative strategy deliver a higher net present value ?
Financial capital (focus on the most profitable operations) Human capital (HR strategy) Physical capital (machinery investment) Customer capital (loyalty, reputation, brand)
Is the risk / benefits ratio coherent ?
Now listen carefully

Interview Dame Anita Roddick:
Which company is she the founder of ? Who does it belong to now ? What is she mainly referring to in the video ? What are two themes that seem to oppose themselves ? List all the internal analysis topics she is talking about
Interview Michael Dell:

What is he mainly referring to ? How is the strategy set at Dell ?
List all the internal analysis topics he is talking about
Internal analysis
Human Ressources
The value system (1/1)
Supplier
Firm
Customer
Inventory
- What is the value system in place ? - Advantages / drawbacks ?
Distribution channels
- How does the channel work ? What is it made of ? - Is it possible to change it ?
Internal analysis
Human Ressources
Structure (1/3)
- Classical structure - Simple structure (SOHO)
- Fonctional structure (SMB)
Structure (1/3)
- Divisional structure (large companies)
- projects structure (building, communication or new product) - professionnal bureaucracy (hospitals, universities)
Structure (3/3)
- is the structure coherent towards the environnement or is it reaching its limits ? - is the structure sub-optimal and produces insufficient coordination or differentiation for the needs of the organisation ? - is the structure coherent regarding strategy ?
Exemple: legal structure

IES ACESI France S.A.R.L. prsidence SAS Holding ACESI Suisse ACESI Centre / Est ACESI Canada
Organisational structure
From simple structure (SOHO)...
Write down what the issues could be in such a transformation?
to fonctional structure(SMB)
Analyse interne
Human Ressources
Systems (1/2)
- Are the following systems in place? - Control - Coordination of the strategy implementation? - Information
- Do they support the strategy ?

- Can they be easily copied by the competition ? - Is the advantage sustainable ? Patents ?
- Are costs reduced ?

- Do they contribute to the user experience? - If very developped, can they become , can they hinder progress ?
Systems (2/2) Anthonys triangle
Anthony, Planning and control systems: a framework for analysis, Division of research, Harvard Business School, 1965
Copyright Erwan Guiziou 2012 2013 Tous All rights droits reserved rservs
Systems - Anthonys triangle example

1 2 3 4 Strategic
x
Pas assez de sys
x
No sys.
x
No sys.
Tactical
NA
14
P&L
6x
x
Sys. cout du travail mais rien dautre
enXL Pas de systmes budgtaires
Pas de sys planif. Pas de sys employ
10
Knowledge
NA
- Sys prise de commandes. - Data warehouse - Email + XL - Sys de gestion commandes - Data warehouse
11
12
x
- Sys gestion comm. 15
Operational
13 NA Production
- Data warehouse - E-mail + Intra/Internet - Sys crdit
- Sys training et Perf via Intranet - Sys de chemin de carrire
16
- Sys gestion comm. -Paie - Intranet
Finance/ Accountancy
Sales/ Marketing
Human Resources
ACESI Systems
1 2 3 4 Strategic
6 x
Tactical
P&L en XL ?
x
11
x x
Knowledge
14
10
Intranet pour vision projet

Operational 13 Myde Intranet pour CRS Production
- Sys prise de Commandes -Email, XL - EPB + CRM - CRM - EBP - XL
12
16
- Intranet
- Intranet
15
- E-mail + Intra/Internet - Sys crdit EBP
- Sys gestion comm. -Paie - Intranet
Finance/ Accountancy
Sales/ Marketing
Human resources
Systems (3/3) another classification
McKenney, McFarlan and Pyburn, The information archipelago plotting a course Harvard Business Review, Jan-Feb 1983

Interview M. Lija at Sony Ericsson
Which systems is he referring too ? What kind of advantages does the IT systems bring to the business ? Why is it important ? What triggered these changes to the IT systems? Which other aspects are covered at the very end of the video?
Exercise for next session

Choose one company and run
an internal analysis on the following topics by answering at least the following questions:
Describe its M.O.S.T

What is its value system ? Does it bring an advantage ? Drawbacks ? Etc.
Describe its structure ? Coherence with the strategy ?

Which systems does it use ? Why ? Any competitive advantage ?
Internal analysis
Human Ressources
Human resources (1/6) - mechanisms

- is the number of employees enough to follow the strategy? - is the quality of employees sufficient to implement the strategy? - Mechanisms:
Rewards Recruitment Performance Evaluation Training
Source: Fombrun, Tichy and Devanna, 1984 (C) John Wiley and Sons Inc.
- Are the mechanims relevant ? Do they support the strategy ? - Does the reward strategy encourage a behaviour compatible with the overall strategy?
Rajans type of rewards

Group-related
Non-money related
Security-driven: Life-time jobs Corporate prestige
Tradition-driven: Cost of living increases Perks
Money related
Employability-driven: Training and development Personal career plans
Contribution-driven: Performance-related pay Merit bonus
Individual-related
Human resources (2/6) - culture

- Organisation culture classification:
Source: Goffee and Jones, 2000 Harvard Business Review
high
Mesure of sincere friendship between community members
Sociability
Networked
Communal
Fragmented
low low
Mercenary
Solidarity
Mesure of the possibility for a community to pursue objectives rapidly and efficiently, without taking into account personal ties
high
- is the culture coherent with the strategy ?


Sociability
Mesure of sincere friendship between community members -1 0 1 - People try to make friends in the company and have strong relationships - people get on well together
- People in our organisation meet outside work

- People appreciate each other - When people leave the organisation, they stay in contact - People help each other because they appreciate each other
- People share their personal stories
Solidarity
Mesure of the possibility for a community to pursue objectives rapidly and efficiently, with taking into account personal ties
- People in our company understands and share the same business objectives - work is performed efficiently and is productive - Our company takes strong actions to solve inadequate performance - Our collective will to win is strong - When opportunities appear for a competitive advantage, we are quick to seize them* - We have the same strategic goals - We know who our competition is

Source: Goffee and Jones, 2000 Harvard Business Review
high
Networked
- Advantages: Creativity, engagement - Drawbacks: Cliques, gossip, low productivity, little idea critics - Example: Unilever - Works when: long-term strategies, critical knowledge of the local market, the global success is a sum of local successses - Advantages : specialists in one domain (surgeons, lawyers) - Drawbacks : critical towards the organisation, little information sharing
- Advantages : Communal organisational identity, risks and rewards sharing, enthousiasm - Drawbacks : linked to the leader, pbs with growth, diversification or internationalisation - Example : start-ups - Works when : innovation with cooperation, long term strategies, dynamic and complexe business environnement - Advantages : competitive sense, will to win, high productivity - Drawbacks : little cooperation, ideas exchanges, creativity - Example : Dell - Works when : rapid change, clear and mesurable corporate goals, clear identified competition
Sociability
low
- Example : University, lawyers practice

- Works when : little dependance at work, individual innovation
Fragmented
low
Mercenary
high
Solidarity

Sociability
Mesure of sincere friendship between community members
- Promote ideas sharing, interests and emotions to recruit PLU - increase social interactions between employees (parties, excursions, etc.) - reduce formality between employes - limit hierarchical differences - act as a friend, pay attention to those in need Mesure of the possibility for a community to pursue objectives rapidly and efficiently, with taking into account personal ties
Solidarity
- develop conscience of competition through videos, newsletters, memos, etc. - create a sense of urgency - stimulate the will to win - encourage adhesion to share organisational goals
Human resources (6/6) - Leadership

- Do we have the right leader or are we at the limits ?
- Management roles: (team leader / role model / referee / negociator) Does the management fulfill all the roles or are some neglected ?
- Is the style of leadership appropriate or anachronic, distant, autocratic ?

- Do we have leaders (through values) or hierarchical control methods?
- Do we have a succession plan in place?

Interview Mrs Flanagan
Which type of companies does she refer to ? What is essential according to her for an organisation ? What is the tactic she recommends for the board ? What is the problem she refers to in recruitment ? What can be the consequences ? What does she recommend ? What should be the rule to be followed ? What kind of questions did they ask at the recruitment sessions ? What do you think about it ? Explain your viewpoint

Interview Michael Dell
Which processes in the HR area are talked about ? What is Michael Dells view on culture ? Which variable is he refering to ? Does it make sense in his company ? Take a critical view at it, what does the journalist underlines ? What do you think about MDs answer ?
Now listen carefully and analyse
News about EasyJet and Sir Stelios Haji-Ioannou Read on http://www.guardian.co.uk/business/2009/dec/09/easyjetboss-to-stand-down Analyse the document. Which HR issues are illustrated here ? What would you recommend to solve them ?
Internal analysis
Human Ressources
Sales / Marketing Finance Operations R&D / after-sales
Sales and marketing (1/5)

- Is the company market oriented? Or production first and then try to sell? - National or international quality ?
- Market orientation from the top management or too busy by production? - Status of the marketing in the company? Sophisticated ? Or not developped enough ?
- Segmentation (transactional (SB, consumers) relationship (public, LA, LB)) - Targeting (different type
of offers for different segments)
- Posititioning (create an image of the product for the target and position it towards other products) - What is the process? Monitoring? - CRM in place?
Marketing / ventes (2/5) exemple ACESI demandes clients
Sales and marketing (positioning illustration)
Sales and marketing (positioning illustration)
Product (range)
Price
Place (channel) Promotion Services Strengths / weaknesses ?
Physical location
People Process

Products positioning
Source: Boston Consulting Group / Kotler, Marketing Management
high
Market growth
low
high
Relative market share
low

The result is a marketing plan that contains:
- Targets - Commercial channels
- Operations to do during the year Sales actions or promotions

- Numbers to reach revenues, market share, etc. - Means to put in place (physical, human, financial)
- Milestones

What is continuously present in his speech ? why is it important ? Interview Dame Anita Roddick What does she think about branding ? Why ?
Are there different levels of branding ? For what purpose?

Interview Sir Stelios Haji-Ioannou (2 videos)
What is the strategy here in terms of brand(s) ? choice ?
Why such a
What about brand extension ? Advantages / drawbacks ? Quote other companies that do this Compare with the brand strategy at Body Shop

How does he see marketing?
Summarize the 3 main ideas in the video
Do you know Dave Carroll ? (and United Airlines)
www.youtube.com/watch?v=5YGc4zOqozo http://www.youtube.com/watch?v=_Hd8XI42i2M www.youtube.com/watch?v=n12WFZq2__0&feature=related

Internal analysis
Human Ressources
Finance (1/3) Financial ratios

Return on capital employed (ROCE)
Costs
Profit on sales
2 4
Assets
Sales generation
Sales costs / sales
Admin costs / Sales
Other costs / Sales
Fixed assets utilisation
Current assets utilisation
5
Sales / nb of employees
Sales / debtors
Sales / creditors
Sales / stock
Profit / nb employees
Current ratio
7
8
Debtors sales Creditors sales Stock sales
Liquidity ratio
Finance (2/3) Profitability ratios

1 ROCE : Return On Capital Employed: indicates the efficiency and profitability of a company's capital investments
EBIT Total assets Current liabilities Net profit Sales Sales Total assets
Profit on sales = Profit on sales = measures how much out of every dollar of sales a company actually keeps in earnings
Sales generation = shows the value of sales generated from each $ of total assets. The higher the ratio, the better.
3 4
Fixed assets utilisation ( = sales / fixed assets) and current assets ( = sales / current assets ) utilisation: the same as #3 with more precision
6 7
Sales / # of employees
Profit / # nb of employees
Finance Financial ratios

But profitability ratios are not enough to gain a balanced view of the performance of a company. Why ? Profitability is important but achieving liquidity is vital for survival. A lot of failure have come from that. A company must be able to meet its financial obligations.
Finance (3/3) Liquidity ratios

8 Current ratio: measures the ability of a company to meet its financial obligations due within one year. A low current ratio indicates potential difficulties. High current ratio can mean idle resources. Liquid ratio = attempts to measure a companys ability to pay its way in the short-term without having to liquidate stock. The acid test, can we pay our way ? i.e. pay our debts as and when they are due. Stock turn: number of times stock is turned over on average in one year. The higher the ratio the better. Debtors weeks: number of weeks on average debtors take to pay their invoices. The lower the ratio the better. Efficiency of the credit control Creditors weeks: number of weeks on average the company takes to pay its creditors. The higher the ratio the better. But be careful on not overdoing it in a partnership
Current assets Current liabilities
Current assets - stocks
Current liabilities
Sales
Stocks
Debtors x number of weeks in the period Sales for the period Creditors x number of weeks in the period Sales for the period
Finances (2/2)
- ROCE ? Profitable ? Profit growing ? - Return on sales? Do we have the correct marketing mix ? Are margins reduced because of competition? - Do the shareholders trust the company? - Ratios: compare with competition (part II) - Environnement: how is the company financed ? Coherent? Long-term? - Does the finance position of the company constraints its strategic choices?
Internal analysis
Finance video
Internal analysis
Human Ressources
Operations a few definitions

- Structure (suppliers, internal operations, customers - Capacity (the measure of usable resources available to a system) - Scheduling (minimizing production time and costs) lead time = getting the materials + building - Inventory - Quality - quality by inspection (eg 10% of the products checked) - quality control, aiming at mistakes prevention - quality insurance (documentation and consistency) - TQM process improvement requests - 6 Sigma: 3.4 defects per million opportunities
Operations an example Dell

Step 1 - Preparation and assembly
1. Process initiation - Orders download from IT system (in parts) and description of order called the traveller (paper) 2. Parts availability checked --> orders not started if parts missing. Anti static tote with traveller on conveyor belt 3. Parts added to tote with pick to lights (PTL) system - each part scanned --> inventory and tracability measures 4. Chassis, memories and processors added at the end in a special tray as more costly (damage risks reduced) 5.Operator installs MB into chassis - delicate operation separated - conveyor moves system to furthest BTO cell 6. Three operators per cell - 2 for build, 1 for testing - when system built, quick test applied; if system fails test, it is 7. rerouted to another area where retest occurs. If fails again, disassembly process happens

Step 2 - Quality checks, Software download and labelling
8. Systems removed from conveyor belt by multi-unit Stacker for SW download and tests - human damages avoided 9. Ten percent of systems pulled off from assembly line for quality assurance checks 10. Two test cycles - diagnostics and hardware. After software downloaded, systems re-tested 11. Common and some customer specific SW download - Final test, systems de-stacked and moved back to conveyor 11A. Specific customer hardware, software, asset tagging and labelling added 12. Brand and model labels applied - FCC and other suppliers label applied(e.g. Intel) - Here as at each stage, capture 13. of routing position - Full quality test (labels, cosmetics, hoods)

Step 3 - Shipping preparation
14. System scanned - removed from tray by hoist and placed into pre-assembled cardboard box 15. Docs and accessories added and scanned into the box using PTL system (inventory and WIP adjust) 16. Ten percent of systems have contents checked 17. Daily, 1.5 percent of system are totally checked to evaluate customer experience with initial use of the equipment 18. Automatic seal of boxes - multiple orders move to staging area - single orders directly to shipping 19. Multi-unit order consolidated assembled together and placed on conveyor to shipping. Completed orders scanned 20. and moved directly to pre-assigned trucks. Last scan before truck. Peripherals and monitors merged offsite
Operations Dell - metrics

The Customer Experience metrics available to every employee world-wide region by region updated every week
STT - Ship To Target: It measures the percentage of complete systems which ship from Dells manufacturing facilities within 5 days from the time the order was entered into the sales system
IFIR - Initial Field Incident Rate: It measures customer issues (real or perceived) requiring parts or service or replacement of a system within 30 days of the system shipment. MWD Missing, Wrong and Damaged: It measures customer issues when delivered systems either do not contain the right components or components are missing or systems are damaged. Very important for customer satisfaction. SDOTFTF Service Delivery On-Time First Time Fix: It measures the percentage of service calls completed by a Dell Service Provider (DSP) in which the technician arrived with the required part(s) within the contractual period (for example, 4 hours or Next Business Day) and resolved the issue on the first visit.

EMF operational MWD Trend
EMF MW&D Trend
1.00% 0.90% 0.80% 0.70% 0.60% 0.50% 0.40% 0.30% 0.20% 0.10% 0.00%
Log Quarter To Date Mfg Quarter To Date Weekly Logistic s Actual Weekly Mfg Actual Cumul Fcast Weekly Actual 0.80% FY01Q3 0.14% 0.66% 0.14% 0.66% FY01Q4 0.16% 0.44% 0.16% 0.44% 0.60% 0.60% Q1 W1 0.14% 0.35% 0.14% 0.35% 0.57% 0.49% Q1 W2 0.15% 0.37% 0.16% 0.38% 0.55% 0.54% Q1 W3 0.16% 0.37% 0.17% 0.37% 0.53% 0.54% Q1 W4 0.18% 0.41% 0.23% 0.51% 0.50% 0.74% Q1 W5 0.18% 0.41% 0.16% 0.43% 0.48% 0.60% Q1 W6 0.17% 0.39% 0.15% 0.30% 0.46% 0.45% Q1 W7 0.16% 0.36% 0.13% 0.17% 0.44% 0.29% Q1 W8 0.14% 0.32% 0.05% 0.14% 0.41% 0.18% Q1 W9 0.13% 0.29% 0.05% 0.04% 0.39% 0.08% 0.00% 0.00% 0.37% 0.00% 0.00% 0.34% 0.00% 0.00% 0.32% 0.00% 0.00% 0.30% Q1 W10 Q1 W11 Q1 W12 Q1 W13
Dell Confidential
Operations Dell managing demand

Forecast / Master Sales Plan (MSP) Demand Management Master Production Plan (MPP) Material Requirement Plan (MRP) Supplier Collaboration
Supplier commits
Materials constraints
Requisition Purchase order placement Customer order received Mfg call off
Confirmation by supplier Delivery HUB
Operations IT to the rescue

Supply Chain Integration
Internet Speeds the Flow of Information
Suppliers
Dell
Customers
valuechain.dell.com Inside.dell.com
www.dell.com www.dell.com/premier www.support.dell.com
Operations (2/2)
- What is the structure of the system ? - What are the options chosen to fight against competition? (word document) - Usage of resources vs Usage of material
- Any problems with capacity?
- Is production sufficient to get economies of scale?

- Inventory? Possible improvements? - Quality ? Can it be used as a differentiation? - Are operations linked with marketing?
Internal analysis
Human Ressources
R&D after sales (1/1)

- Does the R&D support the overall strategy or are the managers pursuiing their own goals? - Enough funds to insure products developpment? - Frequency of new products developpment ? Using customer feedback? Formalised ? - Alternative to channel distribution? - After-sales support quality?
Agenda
External analysis
P.E.S.T.L.E. + Key success factors + scenarii Strategic groups + market segments
Macroenvironnement Industry (sector) Competition Porter 5 forces
Organisation
Market
External analysis
Macro-environnement
P.E.S.T.L.E. + key success factors + scenarii
Sector analysis
Data Porter 5 forces Industry lifecycle
Competition analysis
Strategic groups Market segments

- do not define too narrow a scope - Goal: determine the key success factors that affect the environnmental change - See document - Derive KSF - Define two scenarii with one KSF and describe the potential impacts on the company
Analyse externe
Macro-environnement
Sector analysis
Data Porter 5 forces Industry lifecycle
Competition analysis
Strategic groups Market segments
Sector analysis : data

Investors return, 1994 - 2004
25,0
22,6
23,0
20,0
18,4
15,0
14,9 13,0 11,4 13,7
10,0
9,6
Top 500 average (42 sectors) 12,4
5,0
3,5
0,0
0,0
-2,6
-5,0
Sector analysis : Porter 5 forces
New entrants
Bargaining power of suppliers
Rivalry intensity
Bargaining power of customers
Substitution threat
Sector analysis : Porter 5 forces

Threat of new entrants
- industry with attractive margins? - Important capital needed to start? - is the brand important? - Cost of operations? - Government influence? - Access to distribution channels? - Competition retaliation high?
Rivalry intensity:
- industry growth? - how many competitors on the market? - easy differentiation? - exit barriers : low / high? - price war ?
Substitution threat:
- Product substitue possible?
Bargaining power of customers:

- customer concentration? - critical size for customers? - number of competitors offering a similar product? - substitution costs? - information availability?
Bargaining power of suppliers:

- purchasing volume? - substitution costs? - input of the company important for the supplier? - competitive market ? - number of suppliers increasing or decreasing?
Sector analysis : industry lifecycle

Source: Kottler et Armstrong - 1990
Market size
Introduction
Growth
Consolidation
Maturity
Decline
Time
Low rivalry Low rivalry
Strong growth buyers are weak Barriers to entry low Key is capacitiy to growth
Growing rivalry More powerful buyers

Growth is slower a few exits Key: strong finance and management Slow growth Standard products Barriers to entry high Key are market share and costs control
Extreme rivalry
A lot of exits Strong competition on price Cost and implication key
High differentiation Innovation is key
Sector analysis : industry lifecycle

- Where is your industry on the curve ? - Where are your products on the curve ?
Source: Kottler et Armstrong - 1990
Market size
Introduction
Growth
Consolidation
Maturity
Decline
Time
Structural map: an example

Suppliers Partners Competition
Strategic groups market segments
Agenda
SWOT example a local IT services company

Internal
-Culture (and values)
- Technical expertise - Operations (dashboard system) - Management team with 3 people - Sound finances
Strengths
Weaknesses
- Financial independance limits the development - Experts recruitment is difficult - Strategy and marketing not formalised
Positive
- International development
- New services development (consultancy services) - Consultants not treating those aspects - Borders proximity
- The industry is changing quickly, risk

of commoditization - Emerging technologies (Cloud) - Strong competition - Difficult differentiation with the competition
Negative
Opportunities
Threats
External
Agenda
Generic strategy (part II)
Agenda
STRATEGIC ANALYSIS OBJECTIVES AND STRATEGY
CHANGE
Pre-announcement actions Internal analysis Options review HR management Announcement External analysis Strategy Quick wins Performance evaluation SWOT - Strengths - Weaknesses - Opportunities - Threats Services offer Competitors reaction Agenda and milestones
Consequences
The strategy clock

Source: Johnson and Scholes, 2009
High
4 3 5
1
Low
7 8
Low
High
Diversification ?
Diversification ?
Source: Johnson and Scholes, 2009
High
Low
Performance
Agenda
CHANGE
Consequences
SFA analysis
Strategic options
Do nothing Withdrawal Consolidation Penetration Product development Market development Diversification
Suitability
Feasibility Directions
Acceptability
Remarks
Methods
Internal development (organic growth) Mergers and acquisitions Joint ventures and strategic alliances
Out of the box thinking ? (read the article written by W.

Chan Kim and R. Mauborgne !)
The market structure drives performance
Strategy drives the structure
Structural view
or environmental determinism
Blue ocean view
Agenda
CHANGE
Consequences
Pre-announcement actions
- Interview M. Brandon
- Retrieve the main ideas - Comment / analyse
- What can be the barriers to change
Change is good but
- Support at top level is crucial to success
- To get change accepted, management needs to identify the stakeholders, both from an interest and power point of view
The stakeholder power / interest matrix
High
Keep satisfied
Key players
Company management
Customers
Back office staff
Front office staff Shareholders Analysts
Stakeholder power
Parts suppliers Media

Low Low
Services suppliers Competition
Minimal effort Stakeholder interest
Keep informed
High
Vision barrier Establish a sense of urgency Operationnal barrier Financial barrier
People barrier
Motivation, rewards*, training, recrutement
* remember Rajans matrix
Agenda
CHANGE
Consequences
HR management
Changing the structure
Dells video on structure what are the key lessons ?
Changing the culture

Coming back to the culture matrix, which one is the most appropriate ? If the culture needs changing, which steps should be taken ?
Illustration with the video (John Roberts, former chief executive United Utilities)
Competency gap analysis, staff audit
Finding change agents

Setting a developement and training program for the change leaders
Agenda
CHANGE
Consequences
Announcement
Internal announcement
explain the reason for change and instil a sense of urgency
communicate the vision

present the intended roadmap encourage feedback present the new structure and the first change agents
Do not wait for everything to be planned

How do you announce departures of internal staff ? (Video of M. Sharman)
Then public launch
Announcement effective communication

CHANGES
Routine Face-to-face
(one-to-one or group) Overly rich communication causes confusion
Complex Rich communication for complex change
Interactive
TYPE OF MEDIA
(e.g. telephone video conferencing)
EFFECTIVE COMMUNICATION
Personal memo
And take internal social networks / Intranet into account !
(e.g. tailored memos, letters)
Routine communication for routine change
General bulletins
(e.g. circulars, announcement on noticeboards)
Too little information and sensitivity leads to mistrust and lack of commitment
Lengel and Dafts effective communication of change / Source: Johnson and Scholes, p 564, 2002
Agenda
CHANGE
Consequences
Example of actions that can lead to quick wins

Hire new managers ? Acquire a small company ?
Start a complete training program ?
Organise a all employees meeting ? Align employees objectives with the companys objectives until changes sink deeply into a companys culture [], new approaches are fragile and subject to regression (Kotter, 1995) Move dissenters sidelines Letting people go (illustration with John Roberts video)
Agenda
CHANGE
Consequences
Performance evaluation: Kaplan and Norton balanced scorecard

Finance
Financial perspective - Return on capital employed - Profitability - Revenue growth - Cashflow - % revenue from services
Sales/Marketing
Customer perspective - Customer satisfaction survey - Call center satisfaction - Market share - Pricing index - Number of customers lost / won Internal business perspective
Operations
- Customer service lead-time - SDOTFTF: Service Delivery On Time First Time Fix - Tender success rate - Spare parts delivery performance
Innovation and learning perspective - Turnover - Staff survey - Number of employee suggestions - Profit per employee - Benchmarking index
HR / R&D
Agenda
CHANGE
Consequences
Competitorsmoves
Try not to get into a price war
Reassess your own decisions / moves
Agenda
CHANGE
Consequences
Agenda and milestones
Prepare the plans in advance

Which plans do you need to prepare and execute the change ?

Deliverables
Plans
Base documents to prepare

Communication plan Sponsoring plan
Coaching plan
Training plan Training tools (user guide, e-learning, serious games) Resistance to change plan, feedback plan on change Events and key moments in the project (events limited to the change management team, launch events Metrics to measure plan follow up Roadmap for the change management Roadmap describing mission and objectives of the groupe, actions and means to implement, milestones
Deliverables
Surveys (offline or online) Training tools
Comments
Configuration and questions / answers Guided tours E-learning Questions and answers User guide Training material sandbox
Agenda
CHANGE
Consequences
Consequences
Think about the consequences for the company and its people in terms of :
Skills, capabilities and resources
Rewards and systems
Becoming a learning organisation (ref: Peter Senge)
A word of conclusion
Encouraging risk (illustration video M. Dell)
Gouvernance about setting the overall strategy in large organisations (illustration video M. Dell)
Start all over again !
Strategic analysis
Change
Objectives and strategy

Cours Strategie ENSIIE 2012 v1.61

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Cours Strategie ENSIIE 2012 v1.61

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Enterprise Strategy

Objectives and strategy

Copyright Erwan Guiziou 2013 All rights reserved

Copyright Erwan Guiziou 2013 All rights reserved

Copyright Erwan Guiziou 2013 All rights reserved

Copyright Erwan Guiziou 2013 All rights reserved

Copyright Erwan Guiziou 2013 All rights reserved

Mission, objectives Strategy, tactics (1/3)

- Can the objectives be quantified ?

Copyright Erwan Guiziou 2013 All rights reserved

Mission, objectives Strategy, tactics (2/3)

- how is the strategy defined ? Emerging, deliberate, planned ?

Copyright Erwan Guiziou 2013 All rights reserved

Mission, objectives Strategy, tactics (3/3)

Is the risk / benefits ratio coherent ?

Copyright Erwan Guiziou 2013 All rights reserved

Now listen carefully

Interview Michael Dell:

List all the internal analysis topics he is talking about

Copyright Erwan Guiziou 2013 All rights reserved

Copyright Erwan Guiziou 2013 All rights reserved

The value system (1/1)

- How does the channel work ? What is it made of ? - Is it possible to change it ?

Copyright Erwan Guiziou 2013 All rights reserved

Copyright Erwan Guiziou 2013 All rights reserved

- Fonctional structure (SMB)

Copyright Erwan Guiziou 2013 All rights reserved

Copyright Erwan Guiziou 2013 All rights reserved

Copyright Erwan Guiziou 2013 All rights reserved

Exemple: legal structure

From simple structure (SOHO)...

Write down what the issues could be in such a transformation?

Copyright Erwan Guiziou 2013 All rights reserved

Copyright Erwan Guiziou 2013 All rights reserved

- Do they support the strategy ?

- Are costs reduced ?

Copyright Erwan Guiziou 2013 All rights reserved

Systems (2/2) Anthonys triangle

Systems - Anthonys triangle example

enXL Pas de systmes budgtaires

Pas de sys planif. Pas de sys employ

- Data warehouse - E-mail + Intra/Internet - Sys crdit

- Sys training et Perf via Intranet - Sys de chemin de carrire

- Sys gestion comm. -Paie - Intranet

Copyright Erwan Guiziou 2013 All rights reserved

Intranet pour vision projet

- Sys prise de Commandes -Email, XL - EPB + CRM - CRM - EBP - XL

- E-mail + Intra/Internet - Sys crdit EBP

- Sys gestion comm. -Paie - Intranet

Systems (3/3) another classification

Now listen carefully

Copyright Erwan Guiziou 2013 All rights reserved

Exercise for next session

Describe its M.O.S.T

Describe its structure ? Coherence with the strategy ?

Copyright Erwan Guiziou 2013 All rights reserved

Copyright Erwan Guiziou 2013 All rights reserved

Human resources (1/6) - mechanisms

Rajans type of rewards

Security-driven: Life-time jobs Corporate prestige

Tradition-driven: Cost of living increases Perks

Employability-driven: Training and development Personal career plans

Contribution-driven: Performance-related pay Merit bonus