Transforming Corner-Office Strategy into Frontline action

Group 9
Anish Chengappa (E10) Chandrasekar Nittala (E35) Abhinava Pal(E37) Andrew Simoes(E50) Shailanchal Uniyal(E59)

Contents
Overview

Crucial Situation for Strategic principle

Constructing a strategic principle

Revisiting the strategic principle

Overview The challenge faced by organizations and its solution(Strategic Principle)

1) Flexibility
2) Innovation 3) Risk taking

Business opportunities can be seized faster Better services and products Empowerment of employees

1) Strategic direction 2) Cohesion in decision making

But if all the employees are potential decision makers there is a chance of the organization going haywire. Thus we need a Strategic Principle

A strategic principle is a memorable and actionable phrase that distills the companys corporate strategy into its unique essence and communicates it throughout the organization.

Overview

Strategic principles of some Companies

Related Concepts

Distillation of strategy The 80-100 rule Communication Confusing strategy with the mission statement: Strategic Mission principle Statement
Drives Strategy Drives Culture

Actionable

Aspirational

Overview

The three defining attributes of a Strategic Principle

The strategic principle, as the distillation of a companys strategy guides allocation of capital, labor, brand, time etc. But more specifically it does the following :

It forces trade-offs between competing resource demands AOL Southwest Airlines It tests the strategic soundness of a particular action Testing actions at AOL It sets clear boundaries within which the employees must operate while granting them freedom

Experimenting within boundaries at Vanguard

Crucial Situations for Strategic Principle

There are 4 situations in a business environment that make formulation of a strategic principle crucial to success: Decentralization More and more companies becoming decentralized This causes a rising need for a mechanism for a coherent action Diversified conglomerates Need to provide SBU heads the freedom to tailor their strategies Need to maintain consistency in execution and implementation Rapid Growth In case of rapidly growing companies inexperienced managers are often faced with situations where they have to take crucial decisions There may be issues to which there are no precedents A clear and precise strategy gives them a guideline to follow

Crucial Situations for Strategic Principle

Technological Development Organizations focusing on Speed Competitive advantage Through implementation of technology In case of changing technology companies may form a strategy that is reactive in nature Implications for technology oriented firms

Institutional turmoil

Continuity during periods of organizational turmoil Short term CEOs ; Leadership Succession A new leader can come up with a new strategy keeping in mind the essence remains the same

Constructing a Strategic Principle

The best of the examples come from organizations that were founded on their strategic principle with the strategy being built on them. Examples: eBay, Wal-Mart, Southwest Established Multinationals may have to build this principle based on strategy.
Summarize Differentiation
Resource allocation to create unique value Summarize the differentiation

Endurance Test
Capture the essence of the strategy keeping long term goals(Genetic code)

Communicative power
Clarity , Conciseness, memorable nature Pride in communication

Action orientation
Ability to promote and guide action The three attributes

Revisiting the strategic principle

Just like a companys strategy its strategic principle is not eternal. It may need to be changed. Certain circumstances where the strategy needs to be modified are as follows: Change in customer demographics Change in customer needs Change in costs and assets Under above circumstances the strategic principle may remain the same. But there may be a significant: change in legislation revolution in technology change in business models Here the strategic principle may need some refining. Examples: GE, Vanguard

Thank You.