- Welcome back to Business Strategy
as a Scientific Skill.
I'm Deborah Dauber and in this lecture
I'll be walking you through a toolkit
for developing strategy.
By the end of this class you should
be able to describe the key elements
of an enterprise's strategy,
understand a few common tools used
to facilitate strategy development and when to use them,
be able to draft SMART objectives,
and understand the value of monitoring
progress towards goals.
So let's revisit the structure of strategy.
As we discussed in the prior course,
the general process for an enterprise
to develop a strategy involves
first assessing their current state
and setting what their desired state is,
and then the development of strategy
is simply a matter of developing
a list of prioritized specific objectives
to follow in order to get from
the current state to the desired state.
In this course today we're gonna talk
in a little bit more detail about tools
that help in the development of the strategy itself.
It's actually a very simple process.
First, generate as many ideas as possible.
Second, prioritize those five or ten
most critical ideas that have to happen
in order for the enterprise to achieve their goals.
And finally, get specific on those high priority objectives.
For each of these I'm gonna walk through
the goal, the step, and also some tools
that will help in getting there.
First, generation of ideas.
What are some ways you can generate ideas?
Well first off on here, this slide,
we have the tried and true facilitated brainstorm.
Many of you have probably experienced this
in your own off-sites or retreats yourself.
It involves a team of people, usually a couple stacks
of sticky notes, and you generate as many ideas
as possible and literally just post them
up on a whiteboard to think about.
This is also something an individual
can do on their own, I recommend finding
as creative a spot as you can and then
just generate as many ideas as you can.
Sometimes in a corporate setting
we'll choose to generate ideas using
a little bit more of a structured approach.
One example of this is war games.
War games is the only tool I'm gonna
be talking about in this lecture
that really requires a team, and that's because
in war games you take your team
and you break yourself up in to smaller groups.
Each group represents a company,
whether that be your regular employer,
or one of your competitors, and you go through
a series of breakouts in which each group
goes off and thinks through what are the
most likely strategies that that company
they're representing in the exercise
is gonna develop in response to the market conditions.
After the breakout everyone comes back together
and talks about all the strategies
that have been developed and specifically
thinks about what that means for
your main company, and what kind of strategies
you need to develop to be ready
for each of those competitive plans.
It's a little bit of a convoluted process
but it's great for generating ideas
that are really robust in a competitive market.
And finally, there are some checklists
that are available to help make sure
you're thinking about every aspect
of your strategy as you develop it.
The checklist I have shown here
is called the four Ps, and it's used
really commonly by marketing groups
to think through each aspect of
a marketing plan that's really critical.
In this case, it's product, price,
placement, and promotion, and a good strong
marketing plan will incorporate
aspects of each of these pieces
into their final marketing plan.
Whatever strategy you use, facilitated brainstorm,
a more structured approach or a checklist,
the goal of this first part of strategy development
is just to get as many ideas on the table as you can.
The second step is to prioritize them.
Our first option on prioritizing
is again a tool you've probably used before,
either voting or forced ranking within a group,
just to pick what are the top three
or five or ten, whatever's a manageable amount,
number of objectives to include in your strategy plan.
Sometimes, if a company or a lab
has a bunch of projects going on
it can be a little bit difficult
to figure out relative priorities of different projects.
And for that there's a whole set of tools
that we'll talk about as two-factor matrices.
A two-factor matrix is really just
a simple data visualization tool
that helps to compare programs.
Typically the axes represent program strength
and program desirability and then you map
the programs on to your axes and the size
of the bubble or sometimes the formatting
of the bubble reflects program costs,
program revenues, growth trajectory, etc,
any factor that seems relevant in your prioritization
and your strategy development.
And this then completed matrix allows
you to compare cost-benefit of each program
and determine some high-level strategy.
I'm gonna now walk you through three
different examples of a two-factor matrix,
but I want you to keep in mind that
there are many different variations
you could choose from and in developing
a strategy it's best to pick those
factors that are most critical for your setting.
Here's the first example.
This is a growth-share matrix.
On this matrix the x-axis, which I'm gonna
point out increases counter-intuitively
to the left, is market share
and the y-axis represents market growth.
Depending on where each program hits this matrix
tells you a little bit about what
kind of strategies you want to be considering.
In the upper left quadrant you have programs
that have both high-market share
and are in high-growth markets.
These are great programs, they're the stars.
A company will invest in these programs
because they're producing lots of revenues
and it's basically all system go,
you really want all your programs
to be in this upper left quadrant.
In the lower left quadrant you have programs
that are high in shares still but maybe
in a small growing market or even a shrinking market.
These are the cash cows.
These programs make a lot of money
and so the company is gonna keep them around,
but they may or may not invest
any new money in because market
is not growing as much as it could be.
Now if the company feels they can invest
in a cash cow and move it upwards
in to that star category, it will,
otherwise it's probably not worth investing in a cash cow.
In the lower right we have programs
that have a low share and are in a low-growing
or even shrinking market, these are the dogs.
Typically the guidance on a dog is to divest.
You wanna get rid of that program because
it's just not worth it for the company.
Now I wanna make the point that
dog is a relative term.
For a big pharma company who wants
a blockbuster drug, that's a drug that nets
a million, a billion dollars per year,
a fifty million dollar product is a dog,
it's really not worth it for them to invest in it.
However, for a young biotech company
that just wants to get some revenues
or maybe wants to get some experience
selling drug that same fifty million dollar drug
is a huge boon, it's a star for them.
And so typically that's why you see
dogs are divested rather than killed
because that program still has value
for some company out there.
And finally we have the upper right quadrant.
This is a quadrant where your share is low
but you're in a growing market
and you have to think a little bit more
about the strategy for this program.
Clearly if you can invest and move that over
into high-share high-growing market,
make it a star, that's what the company is gonna do.
Sometimes you just can't move the share
or for whatever reason it doesn't make sense
to invest so a company may do a variety
of different things with the program in that matrix.
Whatever it be, wherever the program is,
you can see that these matrices already start
to give the company a sense of prioritization,
where to put resources, where to invest,
and where maybe to divest some programs.
Another variation on the two-factor matrix
is the attractiveness-strength matrix.
In this case the x-axis represents
program strength which may include
market share but also might include
other factors such as marketing ability,
and on the y-axis we have market attractiveness
which again will involve market growth
but may also involve market size
or other factors that make the market
particularly attractive to your enterprise.
This matrix is interpreted very similarly
to the prior one in that the closer
you get to the upper left the more the companies
like to invest and really try to milk as much
as they can out of that program.
The more you're in the lower right
the more the company is gonna think about
divesting and maybe getting rid of that asset.
The yellow ones kind of in the middle,
if the company feels like they can invest
and push it in to the upper left quadrant they will,
but there may be other factors at play for those programs.
I wanna now walk you through an example
of a two-factor matrix that's used
more commonly in the non-profit world.
In this case the x-axis, now increasing to the right,
is profitability of a program,
and the y-axis is impact.
Now a non-profit program, a non-profit organization
doesn't care as much about profits
as they do their mission, so in this case
impact involves alignment with the mission,
it involves scale and depth of engagement,
and it involves availability of alternatives.
So if I'm running a non-profit organization
that's providing job services and I offer
a career training session but so does everyone else
and my clients have many options,
that's gonna have less impact than if I'm in an area
where there really is a lack of career training services
in my area and I'm the only game in town.
When you map the programs on to the two-factor matrix
the size of the bubble in this case
reflects the annual budget of the program,
which often is far more impactful to the non-profit
than the profitability of the program.
So for example if I'm looking at this
now as a non-profit and I'm trying to figure out
my relative strategies, this career workshop
program here is really nice, I like it,
it's very high-impact, it loses a little money
but not too much, as a non-profit
I'm very excited about that program.
My online resources on the other hand,
they're not so impactful and I'm not losing
a lot of money but if they start losing more money
I might start thinking about removing
those online resources, or at least not investing
in them because it's not the biggest impact,
as a non-profit I wanna make a lot of impact.
Now this is for non-profits, but if you wanted
to then continue to convert this matrix
towards an academic setting you might
replace profitability with productivity.
So you have a two by two matrix now
where you're looking at productivity
of your programs on one side and impact on the other,
and maybe budget is the size of the circle
and you can see how that already starts
to get you thinking about which research
programs you wanna continue in your lab.
So now in this process we've developed
a long list of options and we've prioritized,
now it's time to make our most critical objectives
as specific as possible, and specifically
we're gonna get SMART by writing
the objectives in SMART format.
Many of you may have used this yourself
and you'll be happy to hear it's a good
career skill because SMART objectives
are used everywhere throughout the industry.
So SMART stands for specific, measurable,
depending on who's trained you
either actionable or attainable,
relevant or realistic, and time-based.
The critical thing about SMART goals
is that they're very specific,
they're very time-based and it's something
you can actively monitor over the course of time.
Here's some examples of some not-so-SMART goals
and then the SMART iteration of them.
Not-so-SMART goal might be grow market share.
It doesn't really mean a lot in
the absence of any other context or data.
The SMART version might look like grow from five
to fifteen percent market share by the end of the year.
It's time-based, it's specific,
you know what you have to do.
Here's another example from a research lab,
I wanna publish.
That's not really very helpful to track, is it?
The SMART version might be publish three
first-author manuscripts in either
Tier one or two journals in 2018.
It's very specific and it's very clear
if you're gonna achieve that goal or not.
If you're a young company you might
wanna partner, well again, partner is pretty vague.
This one I broke in to two separate objectives.
In this case step one is to develop
a roadshow presentation for potential partners
by the end of Q1, and step two is then to meet
with at least three of those partners in Q2.
So now you can see we've gone from some
pretty vague, not very helpful, semi-directional
not-so-SMART goals to a really concrete plan
that's easy and clear to follow
over the course of time with the SMART goals.
The beauty of SMART goals is you can then track them.
And so here on this side we have
what's called a balanced scorecard in which
all we're doing is just looking
each quarter at how we're doing against the goals.
So goal one, grow from five to fifteen percent
market share by the end of the year.
Well it looks like Q1 was a little iffy
but then we got on our feet and as of the end
of Q3 I'm feeling very good about
our ability to meet this goal by the end of the year.
We're all systems go on this one.
Publication, uh-oh, not doing so well.
As of the end of Q3 we're still
very much in the red, so this tells me either
we've set a poor goal, an unrealistic goal,
or we hit a block in the road or we need
to change our resources around somehow,
something, some action needs to be taken
or we're not gonna meet this goal.
This is an area that, as a leader,
I'm gonna pay very close attention to.
Not necessarily punitively, more just to get myself
and my enterprise back on track.
And as you can see then you step through
all the goals and fill it in and as a leadership group,
or even as an individual, you can look at this and see
what are the trouble areas, what are the safe areas,
where do I really need to be paying the most attention.
The balance scorecard helps you maintain focus
on your strategy, it helps you track the progress,
and it gives you early warning in case you need
to make changes to address problem spots.
And this brings us back again to the structure of strategy.
We've now talked through how to develop a strategy,
through the generation of objectives,
setting priorities on these objectives,
and getting smart, and in fact really specific,
with those objectives.
And that brings us to the end of this
particular lecture on developing
the Developing Strategy Toolkit.
You should now at this point be able to describe
the key elements of an enterprise's strategy,
understand a few common tools used
to facilitate strategy development and when to use them,
be able to draft SMART objectives,
and understand the value of monitoring
progress towards goals.
Thank you very much for listening.