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Part 2: Accelerate Performance with Strategic Alignment - Define the Logic of your Strategy

Norman Chorn

In Part 1 "How to Accelerate Performance with Strategic Alignment - Understand the Logic of the Market"  we outlined different market conditions and defined them in terms of two overarching logics — Exploring and Exploiting.

 

To briefly recap, an Exploring logic is one where customers are seeking new solutions for emerging needs. It’s all about change and action.

 

An Exploiting logic occurs in a more stable market in which the issues are about lowering costs and working collaboratively with customers.

 

It’s a market that focuses on stability and cohesion.

 

FORCES THAT SHAPE YOUR STRATEGY

 

Clearly, it is one of these two logics — or a combination of both — that will shape your strategy as you operate in these markets.

 

See figure 1 below that describes how these logics will form your business strategy:

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The diagram outlines 4 distinct strategy types that regularly appear in competitive markets[1]. In each case, the strategy type is formed by a combination of the two logics described above.

 

Each of these types are described in further detail in table 2 below:


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UNDERSTANDING THE STRATEGY TYPES

The table above shows that two of the strategies (Prospector) and (Defender) have highly focused logics, while the Analyser is a combination of logics achieved via a different organisation design. The Reactor is shown to be least viable form because it has little clear logic:


  • The Prospector emphasises exploring new opportunities through innovation and a highly flexible, decentralised structure. It does not always excel in exploiting these opportunities but focuses on growth and creativity.

  • The Defender emphasises stability and operational efficiency which is achieved by tight controls and standardised processes. It focuses very little on innovation and change but delivers steady earnings in its core market.

  • The Analyser achieves a combination of both exploring and exploiting. However, this is NOT achieved by combining these characteristics into a single organisational form. Importantly, the exploring and exploiting focuses are achieved in separate business units, divisions or departments. In other words, an Analyser organisation needs to consider itself a portfolio of businesses — some focused on exploring, and others on exploiting. And the explore and exploit parts should be managed differently with different processes and KPIs.

  • The Reactor is the least successful of these strategy types, largely because neither its strategy nor organisational form is clear and consistent. As we shall see in the final email in this series, the Reactor’s culture and strategy is too unstable for the development of capabilities and competencies that produce a competitive edge.


A KEY LESSON

Strategic success is achieved through focus — and focus is imbalance. A deliberate imbalance in resources and effort. The 3 successful types display this focus:

 

Prospector (high explore; Defender (high exploit); and Analyser (portfolio approach) all make deliberate tradeoffs to achieve this focus.

 

We will see how this is supported in Part 3, that focuses on culture and its alignment with strategy.


About Norman


Dr Norman Chorn is a highly experienced business strategist helping leaders build highly successful and resilient organisations. Well known to many as the ‘business doctor’!



By integrating the principles of neuroscience with strategy and economics Norman achieves innovative approaches to achieve peak performance within organisations.

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Part 3: Accelerate Performance With Strategic Alignment - Develop The Appropriate Culture

By Norman Chorn • 27 Mar, 2023
In my previous article "Accelerate Performance with Strategic Alignment - Define the logic of your strategy", we demonstrated the alignment between the market and business strategy by matching the logic of the market with the logic of the strategy. The Explore logic emphasises a market where customers seek new solutions for emerging requirements. The strategy responds by exploring new opportunities and driving for growth. The Exploit logic occurs in a more stable market where customers seek lower costs and reliability of supply. The appropriate strategy focuses on operational efficiency and building close customer relationships. Culture is key to shaping the capabilities of the business to successfully implement strategy . It drives the way that people behave, decisions are made and actions are taken. It determines, therefore, the strategy that is actually realised in the market, as opposed to that which is merely intended. We make a key distinction between the desired culture and the appropriate culture. The desired culture is what people may choose because it sounds attractive and in vogue. However, the appropriate culture is the culture that is required to successfully implement the chosen strategy. Often, these can be different. For example, people might seek to develop a culture that is ‘innovative’, ‘flexible’ and ‘empowering’, but this may not be the appropriate culture needed to successfully implement the business strategy. DEVELOP THE APPROPRIATE CULTURE FOR YOUR STRATEGY Developing the appropriate culture requires a deliberate emphasis on certain cultural attributes and making trade-offs on others. As we will see, the attributes that are traded off are usually the opposites of those that are emphasised.
Strategic Alignment

Part 1: How To Accelerate Performance with Strategic Alignment - Understand the Logic of the Market

By by Dr Norman Chorn • 27 Mar, 2023
Do you know what will help your organisation perform better? In the last 30 years of research a key finding is to ensure your strategy is right for the market, and then to have a culture and leadership style to reinforce this. But what’s the code that unlocks this alignment of market, strategy, culture, and leadership? What is the approach that outlines how these key elements fit together? If you had a chance to attend or watch the replay of my live webinar ‘How Leaders Align Culture with the Logic of Their Strategy?' I discussed an approach to create this alignment. Following on from this topic, I thought it would be of benefit, to share my key insights of “Strategic Alignment” methodology in greater detail and I will do this over the next few articles. This will help you and your organisation create strategic fit between your organisation and the market. Forces that shape the market and strategy We begin by outlining the timeless forces that explain the patterns behind behaviour, decisions, initiatives and plans. Extensive research shows that we can apply these same forces to explain the overarching logic of how a market operates and what customers want. See Figure 1 below - The forces that shape behaviours, decisions, initiatives and plans
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