Implementing a Vision:

1
Chapter 7

• Implementing a Vision
• Strategy, Tactics and Business Plan

2
If we know where we are and something about
how we got there, we might see where we are
trending--and if the outcomes which lie naturally
in our course are unacceptable,to make timely
changes. Abraham Lincoln
President of the United States
3
Primary Business Challenges

• Deciding what things are worth doing.
• Getting things done!

4
If the strategy is a hammer, the tactic is a
nail. The actual end results are accomplished by
the nail. If the nail isn't hammered correctly
then the battle is lost. Sometimes the hammer
also misses the nail.
5
When in Doubt
Think customer!
A major difference between companies is how they
treat their customers.
Also do your homework on your competitors.
6
Competitive Analysis
What the competitor is doing and can do Current
Strategy How the business is currently competing
What drives the competitor? Future Goals At all
levels of management and in multiple dimensions
Competitors Response Profile Is the competitor
satisfied with its current position? What likely
moves or strategy shifts will the competitor
make? Where is the competitor vulnerable? What
will provoke the greatest and most effective
retaliation by the competitor?
Assumptions Held about itself and the industry
Capabilities Both strengths and weaknesses
7
Progressive Corporation

• 1988 Performance
• Record Revenue
• Record Earnings
• Outstanding Company Culture
• Highly Respected Business Leader
• Well Regarded Company
• Could Things Possibly Be Better?

8
Progressive Corporation

• 1989 Impact
• Voters Passed Proposition 103 in California
  Resulting in 52 Million Being Put into an Escrow
  Account.
• Allstate Gained a Larger Market Share in
  Progressives Niche Market for the First Time.

9
Progressive Corp. Business
Progressive decided that it was really in the
business of reducing human trauma and economic
costs of auto accidents.
10
Progressive Corp. Vision
We seek to be an excellent, innovative, growing
and enduring business by reducing the human
trauma and economic costs of auto accidents in
cost-effective and profitable ways that delight
customers.
11
Progressives New Business Strategies

• A New Definition of the Business.
• Establish Lower Profit Margin Objectives.
• Pursue a Broader Auto Insurance Market.
• Provide Consumer Access to Policy Rates.
• Provide Policy Information to Customers.
• Guarantee Policy Renewal.
• Utilize Multiple Distribution Channels.
• Promote Company Identity.

12
Progressives New Business Strategies

• Curtail Diversification.
• Reduce Operating Expenses.
• Assign Business Process Ownership.
• Establish a New Employee Compensation System.

13
IS Support of New Strategies

• Express Quote Service.
• Immediate Response System.

14
Peter Lewis
Fortune Magazine, August 7, 1997
Sex. Reefer? and Auto Insurance
Peter Lewis has built Progressive Corp. into a
smashingly successful company and a stock market
star. But get a load of his lifestyle.
15
Read-Rite Corp.
1. Cash flow problems
2. Largest customer was getting out of disk head
manufacturing.
3. Increasing threat of Japanese competition.
4. Limited customers dictates the need to exploit
the Japanese market.
16
Strategic Solutions
1. Formed a joint venture with Sumitomo Metal
Industries and received 30 million
investment in Read-Rite as part of the
agreement.
2. Used the credibility of the joint venture to
purchase the manufacturing facility of its
largest customer through a transfer of
equity in Read-Rite and signed a long-term
agreement to supply disk heads to the customer.
3. Went public (sold stock) and raised a
significant amount of capital.
4. Invested in a manufacturing facility in the
joint venture company in Japan and initiated
a marketing effort in Japan.
17
Operating Goals
1. Attain highest customer satisfaction in the
industry. 2. Provided just-in-time technology. 3.
Achieve lowest possible cost. 4. Attract, attain
and develop the best team in the industry. 5.
Enhance shareholder value.
18
Specific Strategies
1. To penetrate markets and achieve market
leadership it is necessary to achieve
product volumes to offset the capital
intensity of the company operations. 2. Achieve
quality, low cost operating costs through a Total
Quality Management program. 3. Aggressively
pursue the hiring and retention of the
technical skills that are critical to competitive
success. 4. Prioritize the obtaining of funding
to support future growth.
19
5. Establish alliances that will enhance product
excellence and/or operational performance.
6. Emphasize the global aspects of the company
since there are only ten major customers in
two countries. 7. Emphasize the role of
information systems to develop products and
support core business processes.
20
IS Identity Crisis
My world collapsed recently during a strategic
planning meeting between the information systems
organization and our marketing department.
How can we in IS help you to realize your
goals? asked the IS Director. This seemed like
a good open-ended question, and I was waiting for
the vice-president of marketing to embrace IS in
his confidence. We were prepared to act as a
full business partner with the marketing
department.
Beyond capacity planning for your computers, I
dont know how you can help. Im not even sure
what your role is in all of this replied the VP
of Marketing.
21
Information Technology Impact
Information Technology
Work
Information
Organization
People
22
Information Technology Impact
Semi-automated batch system (out-dated)
Increased complexity for route salesman and plants
Information Technology
Work
Information
10 day information float
Organization
People
Route Salesman
Regional Competitors
23
Information Technology Impact
Communications Network and Hand-held Computer
Increased complexity for route salesman and plants
Information Technology
Work
Information
Reduced information float to 24 hours
Organization
People
Route Salesman Account Specialist Merchandiser
Decentralized Marketing Organization
24
Diversification Logic?
Sony into Hollywood (Tristar) PepsiCo into
restaurants (Taco Bell, KRC and Pizza
Hut) PepsiCo into Wilson sporting goods and two
freight companies Viacom into retailing
(Blockbuster) Xerox into insurance (Chubb and
Forrester) Southern California Edison into
sporting goods
25
Toyota Diversification
At a time when diversification is often suspect,
Toyota, guided by a historical perspective, is
moving into other areas such as prefab housing
and especially telecommunications.
26
Toyota Perspective
The companys plan is driven by historical cycles
dating to the 1700s that suggest that a single
line of business rarely prospers for more than
sixty years.
We are not arrogant enough to believe that the
automobile business can be profitable
perpetually.
In 2000 they want 10 of sales (10 billion) to
come from outside the auto and truck business.
The waves of change are reflected in the dominant
infrastructure of the time.
27
Prevailing Infrastructure
1800 Canals
1850 Railroads
1900 Highways
1950 Telecommunications
28
The Three Components of a New Strategy
Vision
Internal Assessment
External Assessment
A New Strategy
Figure 7-1
29
Strategy Considerations

• Competitive Environment
• Market Target
• Basis for Perceived Competitive Advantage
• Key Profit Drivers
• Product and/or Service Portfolio

Hello, Porter Competitive Model!
30
Additional Considerations

• Whether to be an industry leader or follower.
• How aggressively to implement a new strategy.
• Determining people skills and availability.
• Determining that funding is available.
• Not violating factors ranging from laws to
  company values.
• Balancing short and long term objectives.
• Producing positive results within the scope of
  the mission and
• vision of the business.

31
A Valid Theory of Business

• The assumptions about environment, mission and
  core competencies must fit reality.
• The assumptions in all three areas must fit
  together.
• The theory of the business must be known and
  understood throughout the organization.
• The theory of the business has to be tested
  constantly.

Peter F. Drucker
32
A Valid Theory of Business

• Some theories of business last a long time, but
  they do not last forever.
• A theory of business becomes obsolete when the
  company achieves its original objectives.
• Any company that doubles or triples in size in a
  short period of time has outgrown its original
  theory.

33
A Valid Theory of Business

• The first signs of fundamental change rarely
  appear among customers. They show up among
  non-customers.
• Unexpected failure is as much a warning sign as
  unexpected success and must be taken seriously.

34
A Valid Theory of Business
A degenerative business theory is like a life
threatening disease. It must be taken seriously
and requires decisive action.
35
(No Transcript)
36
SWOT Analysis

• Strength A collective organizational
  competency, asset or capability that enables it
  to achieve a high level of success.
• Weakness A collective organizational
  competence, asset or capability that is
  competitively inferior and provides a
  vulnerability that can be exploited.
• Opportunity A trend or event that could lead to
  a positive change in position if addressed by a
  strategic response.
• Threat A trend or event that could lead to a
  negative change in position if not addressed by a
  strategic response.

Source The Art of Strategic Planning
for Information Technologies
37
Six Strategy Responses
1. Retreat to core businesses and outsourcing
non-core services. 2. Redefining the entire
nature of the business. 3. New forms of
association or alliances. 4. Changing products
and/or services. 5. Reengineering business
processes. 6. Recognizing the need for
information.
38
Additional Challenges
1. Whether to be a strategy leader within the
industry or to be content to let someone else
lead. 2. How aggressively a new strategy
should be implemented. 3. Assessing whether the
necessary skills exist within the organization
and if they can be made available to focus on key
elements of the strategy.
39
4. Determining whether the funds are available to
implement and sustain the strategy. 5. Making
sure that the strategy does not violate a range
of factors from laws to company values. 6.
Maintaining a balance between short-term and
long-term objectives. 7. Addressing issues so
that the scope of the strategy produces positive
results for the company.
40
SWOT Analysis
Vision Goals Company Values Financial Status Cash
Position ROI Position Societal Demands Competition
Core Competencies People Skills Overall Resources
Strengths Weaknesses Opportunities Threats
Suggest strategies that should be tested against
41
Competitive Strategy Elements
Product Line
Target Markets
Finance
Purchasing
Marketing
Research and Development
Manufacturing
Distribution
Labor
42
Strategies can be relatively simple.
Implementation is often the major challenge.
43
A Logical Approach

• Find a tactic that will work.
• Build it into a strategy.

44
Employee downsizing, right-sizing or dumb-sizing
(take your choice) should not be based solely on
cost cutting.
45
Smart Sizing

• Consistent with the vision and strategies of the
  organization.
• Help build future strengths of the company while
  streamlining or eliminating unnecessary processes
  and functions.
• A big of a price to pay for anything less than
  this.

46
Essential to Run a Business

• Vision
• Strategy
• Tactics

The Importance of these Factors as Key
Priorities Continues When People Are Empowered
with More Authority and Responsibility
47
Strategy Implementation
Senior Management
Vision
Business Uncertainties
and Macro Strategies
Empowered Implementers
Company Culture
Micro Strategies and Tactics
Risks to be Avoided
Critical Performance Factors
Key Enterprise Business Processes
Figure 7-3
48
Managing for Results

• Objectives
• Authority
• Responsibility
• Training
• Motivation
• Performance
• Results
• Reward

Control
Figure 7-4
49
Information Needs
Senior Management
Emerging Opportunities and Threats
External Impact of Strategies and Tactics
Internal Impact of Strategies and Tactics
Performance Measurements
Empowered Implementers
Figure 7-5
50
I/T Based Strategies
MARKET PLACE
OPERATIONS
Federal Express USA Today Charles Schwab
Whirlpool Xerox
SIGNIFICANT STRUCTURAL CHANGE
BancOne Boeing Frito-Lay Wal-Mart
USAA L.L. Bean McKesson
TRADITIONAL PRODUCTS AND PROCESSES
Figure 7-6
51
Company Infrastructure

• Data Management
• User Applications
• Voice Management
• Network Management
• Plan Process
• Financial Strategy
• Organization

Figure 7-7
52
Which Way Should the Arrows Go?
Business Vision and Strategies
Right Sizing
Total Quality Management
Re-engineering
53
Information Systems Strategy

• Technology Scope
• Governance
• Distinctive
• Capabilities
• Architecture

• Support/Services
• Policies
• Resources/Skills
• Standards