1. STRATEGIC PROCESSES, TOOLS and LESSONS Frameworks that Amplify Individual and Team Strategic Thinking by Asking the right questions Analyzing available information Actingto make an impact

2. Strategic Processes, Tools and Lessons 2

3. Strategic Processes and Tools I have developed a set of “tools” aimed at helping individuals and teams enhance their strategic thinking skills. The tools provide leverage that will help develop, focus and magnify the talents of the teams and individuals. The tools provide mental discipline – so, they may feel a bit awkward at first, but will become more natural with use. The tools are grounded in the real world of strategic thinking – we will show that they have both philosophical and practical power. Creative people and teams amplify their creativity with skillful use of mental tools. 3

4. The Strategic Thinking Process 4

5. The Strategic Thinking Process By what choices and circumstances did we get here? What are those in our industry facing? Who are we playing against? What do internal resources and capabilities do we have that allows us to capitalize on opportunities and sustain success during threats … and what internal resource and capability limitations do we have that might keep us from capitalizing on opportunities and sustaining success during threats ? What are the external opportunities and threats that we will face? How so our strengths and limitations align with our opportunities and threats? What strategic action alternatives do we have, and how can we package those alternatives into a coherent strategy? How do we best implement our chosen strategy? What results do we expect that allow us to determine whether or strategy was successful or not? 5

6. The Strategic Thinking Process(and tools for leveraging your thinking) 6

8. Environment

9. Competitive position

10. Strengths and limitations

13. Expected Results7

14. Strategic Thinking Leverage Tools 8

16. Every organization is pursuing a strategy

17. embedded in the past

18. enacted in the present

19. The past brings with it both assets and liabilities

20. Thoughtful strategic analysis and action helps organizations avoid being

21. captured by the past

22. consumed by the present

23. The aim is to accurately read and respond to the past9

24. Strategic Leverage Tools4C Analysis Condition 1 The HISTORIC 4C ANALYSIS provides a framework for better mapping the connections that have led a company to its present conditionsby identifying the historic choices, internal culturalelements and the major events which acted as catalystsfor the organization responding as it has. Choice 1 Cultural Element 1 Catalyst 1 10

25. Strategic Leverage Tools4C Analysis The underlying philosophy is that Every organization carries with it a history that is both an asset (potential building blocks) and a liability (potential stumbling blocks) for the future The history of an organization is embodied in the conditions it faces, the choices it made, the process through which those choices occurred, and the original catalysts for those choices Condition 1 Choice 1 Cultural Element 1 Catalyst 1 11

26. Strategic Leverage Tools4C Analysis: Basic Elements Conditionsrefer to visible consequences or results of the organization’s choices and can be qualitative or quantitative, strategic or operational, etc. Choicesrefer to the formal and informal decisions made by the organization in response to events that acted as catalysts for making the decisions Culturalelement refers to any person, group, practice or other condition through which the catalytic event was filtered or understood. Catalystis any internal or external event that led to a major issue the organization had to face. Condition 1 Choice 1 Cultural Element 1 Catalyst 1 12

27. Cultural Element 1 Catalyst 1 Condition 1 Choice 1 Choice 2 Cultural Element2 Catalyst 2 Choice 3 Condition 2 Cultural Element 3 Catalyst 3 Choice 4 Cultural Element 4 Choice 5 Condition 3 Catalyst 4 Choice 6 Cultural Element 5 Catalyst 5 Choice 7 Condition 4 Cultural Element 6 Choice 8 Catalyst 6 13

28. Strategic Leverage Tools4C Analysis: Using The Historic 4C Analysis The diagram comes first. Each element is given a short but meaningful title. The 4C element shapes and sizes may be modified as needed. The 4C lines represent the connections - focus on major connections most significant in providing the clearest sense of the primary historic forces driving the organization. 14

29. Strategic Leverage Tools4C Analysis: Using The Historic 4C Analysis The pages of discussion following the 4C diagram should focus on describing the elements and connections in concrete, organization-industry specific terms. The structure of the 4C discussion should reflect a conscious decision about what best describes the organization’s history. There is no one best way to structure the discussion. 15

30. A Sample 4-C Analysis 16

32. Every organization a part of a network of environmental forces.

33. Each force has an ongoing impact on the possibilities and problems facing a company.

34. Successful firms seek to be both recognize and respond to critical environmental trends and issues in timely, progressive and creative ways17

36. Honest recognition of reality and aggressive response to reality are all too rare.

37. One of the most important benefits of strategic thinking is to help organizations live, and thrive, in the real world – not the world of illusion.18

39. STEP-FAR ANALYSIS to examine social, technological, economic and political issues and trends impacting a specific industry19

40. Strategic Leverage ToolsSTEP/FAR Environmental Analysis STEP/FAR Analysis focuses attention on four key categories of environmental issues: Social(demographic, ethical/values) Technological(production, product) Economic(income-related, cost-related) Political (laws, regulations) Each category is examined to develop Facts (what are the key environmental realities facing companies like the case company) Analysis (what do these realities mean in terms of possible impacts on companies like the case company) Responses (what actions might companies like the case company take to capitalize on and/or cope with the implications of the environmental realities they face) 20

41. Strategic Leverage ToolsSTEP/FAR Environmental Analysis The STEP/FAR grid helps to Organizethe information we gather about the environment Emphasize prescriptive analysis (vs. merely describing the environment) 21

42. Strategic Leverage ToolsSTEP/FAR Environmental Analysis 22

43. Strategic Leverage ToolsSTEP/FAR Environmental Analysis STEP/FAR should include factors dealing with technical, social, political and general economic trends and events that influence the ability of firms in a particular industry to succeed. STEP/FAR should not include factors directly related to the company’s competitive situation (these are covered in the 5-Forces Analysis) nor those dealing with the company’s strengths and weaknesses (these are covered in the SL-OT Analyses). 23

44. A Sample Step-Far Analysis 24

46. Every organization resides within a competitive industry context consisting of rival firms, buyers, suppliers, potential new entrants and companies producing possible substitute goods

47. Successful companies understand the competitive forces that face and seek to forge a sustainable competitive edge that allows them to thrive25

48. The 5-Forces Model of Competition Think of this model as offering windows to allow us to see into the parts and processes of competition. 26

49. Strategic Leverage Tools5-Forces Competitive Analysis The 5-Forces analysis is developed from the original work of Michael Porter, a managerial economist at Harvard University, and is discussed in great detail in our course text. The 5-Forces analysis is a mechanism that displays key findings regarding the competitive “realities” organizations face from the five primary sources of competition in any industry. The focus of the discussion is on the INDUSTRY, rather than the individual company. 27

50. Lessons from 5-Forces Analysis The essential truth: competition places pressure on our capacity to control our prices and/or our costs and, consequently, or ability to generate profits. Our aim is not to compete “better.” Rather, it is not to compete at all (that is, to monopolize) in any or all of the five areas of competition: Substitute products/services Potential entrants Direct competitors Sellers Buyers 28

51. Lessons from 5-Forces Analysis Objective is to craft a strategy Toinsulatefirm fromcompetitive pressures To initiate actions to produceasustainable competitive advantage,placing added pressure on rivals Which allows firm to define, redefineorrefine thebusiness model(how to provide customer value at competitive prices and with adequate profitability) for the industry 29

52. Lessons from 5-Forces Analysis The five-forces model offers a perspective that addresses knowncompetitive relationships and known competitive guidelines that govern those relationships. It is based on micro and macro economic theory and practice. It is a model that both describes competition and prescribes effective responses to that competition. 30

53. Lessons from 5-Forces Analysis Success as a competitor is a matter of knowing what to do IN OUR COMPETITIVE CONTEXT, and then doing it well. Put another way, success is a matter of fit – making sure that we know what strengthens and weakens our competitive capabilities and then acting wisely within those realities. Knowing what to do is not a mystery – in most cases the factors that lead to success or failure are readily knowable and failing to do what is required is a matter of a lack of resources, capabilities, knowledge and/or will. 31

54. Lessons from 5-Forces Analysis Doing something well is a matter of knowing what it takes to succeed IN A PARTICULAR INDUSTRY CONTEXT and then committing the requisite resources and energies for maximum strategic impact. Competitive success equals Understanding the driving forces of competition in an industry Deploying the right people with the right quality and quantity of resources in the right way at the right time Executingwith energy, intelligence and persistence Adjustingas competitive conditions change 32

55. Lessons from 5-Forces Analysis Success yesterday is no guarantee of success tomorrow because competitive conditions change as New substitutes New potential entrants New direct competitors New seller relationships New buyer relationships alter what needs to be known and what needs to be done to succeed. The environment is always dynamic – the challenge is for firm to develop the capacity to be as dynamic. 33

56. Strategic Leverage Tools Five Forces Competitive AnalysisDiscussion of Analysis in the Paper The analysis consists of reaching 2-4 specific conclusions about each competitive force and writing these down in a summary form in the chart. For example one might conclude concerning potential substitutes, “Increasing use of internet selling could lead to alternative sales channels.” Students/teams should identify at least two competition increasing factors and two competition decreasing factors for each of the five forces. 34

57. Strategic Leverage Tools Five Forces Competitive AnalysisDiscussion of Analysis in the Paper The discussion accompanying the matrix should select 2-3 factors (at least one competition increasing factor and one competition decreasing factor) for each of the five forces to discuss in detail (noting both the evidence for the factor and the influence of the factor on the future of organizations in this industry The summary statements appearing in the matrix itself should be clear and concise enough to stand on their own. Generic statements are not helpful. Also, the discussion in this section of the paper must reach some definitive clear conclusions about the overall level of competitive activity in the industry. 35

58. Sample 5-Forces Analysis 36

60. There is no more important element of strategic planning for any organization (profit or not for profit) than knowing “WHO are our customers?” and “WHAT are they like?”

61. Most companies sell a variety of different products to a variety of groups or segments of customers. At the STRATEGIC LEVEL we are interested in customers in the aggregate: segments of customers who share some set of traits that allow us to target them with the right products at the right price in the right place with the right promotion.37

62. Strategic Leverage ToolsStrategic Customer Analysis 38

63. Strategic Leverage ToolsStrategic Customer Analysis There is no more important element of strategic planning for any organization (profit or not for profit) than knowing “WHO are our customers?” and “WHAT are they like?” Most companies sell a variety of different products to a variety of groups or segments of customers. At the STRATEGIC LEVEL we are interested in customers in the aggregate: segments of customers who share some set of traits that allow us to target them with the right products at the right price in the right place with the right promotion. 39

64. Strategic Leverage ToolsStrategic Customer Analysis The table on the left shows only two of what would probably be many different customer segments. Each segment would have its own unique pattern of characteristics requiring different marketing approaches. 40

65. Strategic Leverage ToolsStrategic Customer Analysis The discussion following the graph can be done in this format – here the team describes each factor in contrast to the two companies. Customer segments do not have to be by company. 41

67. Strategic success is less dependent on the presence of one “magic” strength than it is on possessing a cluster of mutually supporting strengths.

68. Competitive strength is achieved through choices which build a tightly integrated, company-wide network of internal strengths and external connections to the strengths of other partnering organizations.42

70. Limitations occur in clusters – primarily through choices of omission or commission which build into a company a structure of limitation or linked “habits of ineffectiveness.”43

71. Strategic Leverage ToolsStrength-Limitation Cluster Analysis S-L Cluster analysis focuses attention on those factors that affect our ability to Draw close to customers through providing value-added features or service to them Distance ourselves from our competitors (both “in fact” and as perceived by current and potential customers) 44

72. S4 L4 S2 L2 S5 L5 S1 L1 S6 L6 S3 L3 S7 L7 45

73. Strategic Leverage ToolsStrength-Limitation Cluster Analysis The fundamental assertions are that Strategic success is less dependent on the presence of one “magic” strength than it is on possessing a cluster of mutually supporting strengths. Competitive strength is achieved through choices which build a tightly integrated, company-wide pattern of strength. Limitations also occur in clusters – primarily through choices of omission or commission which build into a company a structure of limitation or linked “habits of ineffectiveness.” 46

74. Strategic Leverage ToolsStrength-Limitation Cluster Analysis The Strength-Limitation Cluster Analysis is based on some very critical strategic truths: A strength is any organizational condition (for example location), capacity (for example, ample financing) or capability (excellent IT system, experienced personnel) that we judge provides the organization with a resource advantage that makes a positive difference to customers and distances us from competitors. A limitation is any organizational condition, capacity or capability that we judge makes a negative difference to our customers and fails to distinguish us from our competitors. 47

75. Strategic Leverage ToolsStrength-Limitation Cluster Analysis The Strength-Limitation Cluster Analysis is based on some very critical strategic truths: Understanding an organization’s capacity to succeed or fail means understanding the combined force of its related strengths and limitations. That is, every organization has strengths and limitations. What we strive for is to identify and create or amplify strengths whose combined impact is greater than the combined impact of our limitations. 48

76. Strategic Leverage ToolsStrength-Limitation Cluster Analysis The Strength-Limitation Cluster Analysis is based on some very critical strategic truths: Organizations need to focus both on strengths and limitations – for strengths must be continually exercised and fed or they will whither. Correspondingly, limitations, if unattended, will grow and become more serious obstacles to success. 49

77. Strategic Leverage ToolsStrength-Limitation Cluster Analysis The Strength-Limitation Cluster Analysis is based on some very critical strategic truths: In the long run, successful organizations spend the majority of their time building up strengths and transforming limitations into strengths. Preoccupation with limitations alone is a certain road to strategic failure. 50

79. Our present capital position may be strong but its trend could be troublesome

80. Our product’s competitive advantage can become a blind spot to change51

81. Strategic Leverage ToolsStrength-Limitation Cluster Analysis The Strength-Limitation Cluster Analysis is based on some very critical strategic truths: While this technique is powerful for revealing actual strengths and limitations, it can also be used in a other ways. If we imagine a strength (S1) we need to develop, we can ask “What two additional strengths (S2 and S3) must we develop to support that key strength. Similarly we can ask “If we are to avoid a limitation (L1) what two additional limitations must we avoid? We might also use the technique to “match” strengths and limitations. For example, how might Strength 1 help us overcome Limitation 1? Or, how might Limitations 4 and 5 operate in such a way to negate Strength 4? 52

82. Strategic Leverage ToolsStrength-Limitation Cluster Analysis The Strength-Limitation Cluster Analysis is based on some very critical strategic truths: It is possible to creatively augment this technique by adding “importance” or “significance” measures. For instance, assume we create a scale from 1 (low importance) to 10 (high importance). We could assign each strength and limitation a number. In the example to the left, the total “Strength Index” would be 48 versus the total “Limitation Index” of 47 – indicating a relative parity between strengths and limitations – a finding that would have real impact on strategy selection and implementation. We could further supplement the diagram with a chart that plots both “Significance” and, say, “Cost of supporting (a strength) or overcoming (a limitation).” The resulting chart (example left) might help us identify the most important or promising arenas of strategic action. 53

83. A Sample SL Cluster Analysis 54

85. Assessment of opportunities and threats should focus on their potential IMPACT and their potential IMPORTANCE

86. Assessments of impact and importance are judgments and must be supported by the strongest evidence and clearest reasoning possible.55

87. Strategic Leverage ToolsThe Opportunity-Threat Assessment Matrix 10 9 8 7 6 5 4 3 2 1 0 10 9 8 7 6 5 4 3 2 1 0 10 9 8 7 6 5 4 3 2 1 0 10 9 8 7 6 5 4 3 2 1 0 10 9 8 7 6 5 4 3 2 1 0 10 9 8 7 6 5 4 3 2 1 0 10 9 8 7 6 5 4 3 2 1 0 10 9 8 7 6 5 4 3 2 1 0 A C B D Low IMPORTANCE High E F Negative IMPACT Positive 56

88. Strategic Leverage ToolsThe Opportunity-Threat Assessment Matrix Opportunities and threats are external conditions that provide the organization with a chance to Capitalize on a condition that advances the organization’s welfare Cope with a condition to protect an organization’s welfare 57

89. Strategic Leverage ToolsThe Opportunity-Threat Assessment Matrix Classifying something as an opportunity or a threat is a judgment not a fact. Depending on one’s perspective, different judgments can be reached: for instance, is inflation an opportunity or a threat? 58

90. Strategic Leverage ToolsThe Opportunity-Threat Assessment Matrix The same external condition can be judged to be both an opportunity and a threat. For example, in a new market the lack of an industry standard for a product can be an opportunity to experiment, or can lead to customer confusion and reluctance to purchase. 59

91. Strategic Leverage ToolsThe Opportunity-Threat Assessment Matrix The portrayal of four “regions” in the matrix is a visual convenience. The particular set of O-Ts that an organization determines to address depends on: The organization’s current set of capability strengths and limitations The organization’s current strategic initiatives The preferences of top management (including such attributes as risk tolerance, proactive vs. reactive style, etc.) 60

92. Strategic Leverage ToolsThe Opportunity-Threat Assessment Matrix The discussion of O-Ts should include a clear articulation of The nature of factor The reason for the estimation of impact The reason for the estimation of importance Never assume any of this is obvious or simple – make a careful, logical defense for your thinking. 61

93. Strategic Leverage ToolsThe Opportunity-Threat Assessment Matrix The O-T Matrix should include input from two other tools: The STEP-FAR Analysis The Five-Forces Analysis The uniqueness of the O-T matrix is that it assesses external factors in terms of their importance to, and impact on, the future welfare of the organization 62

94. Strategic Leverage ToolsThe Opportunity-Threat Assessment Matrix Strategic Lessons from the OT Matrix: Every organization faces a set of conditions that present opportunities to advance the organization’s well-being, or that threaten that well-being. 63

95. Strategic Leverage ToolsThe Opportunity-Threat Assessment Matrix Strategic Lessons from the OT Matrix: Becoming aware of OT’s well in advance of encountering them provides time to carefully analyze strategic implications and to creatively plan strategic responses. 64

96. Strategic Leverage ToolsThe Opportunity-Threat Assessment Matrix Strategic Lessons from the OT Matrix: The label strategic “opportunity” or “threat” is a value judgment, not a statement of fact. The same condition may be judged to be both an opportunity or threat. The key is the reasoning (evidence and logic) that support the judgment. 65

97. Strategic Leverage ToolsThe Opportunity-Threat Assessment Matrix Strategic Lessons from the OT Matrix: Determining the “best” sequence in which OT’s ought to be addressed is also a value judgment – involving a wide variety of people in this discussion will improve the quality of the strategic plan we finally embrace. 66

98. A Sample OT Analysis Matrix 67

100. An organization’s strategic options reflect the interaction of its

102. Strategic Leverage Tools Learn to conduct a SLOT analysisIdentify Strengths, Limitations, Opportunities, and Threats and build a strategy around themAn example of reasoning through the process

103. Strategic Leverage Tools Who are my competitors and how able am I to compete with them? What analysis tools do I have? STEP-FAR ANALYSIS FIVE FORCES ANALYSIS SL Cluster Analysis OT Matrix SLOT analysis and SLOT Matrix A SLOT analysis helps you match your company’s resources and capabilities to threats and opportunities in the competitive environment. SLOT analysis can be very subjective, but adding weighting and criteria to each factor increases the validity of the analysis. Also completing the SLOT matrix can help you pick the best strategy to implement. 70

104. Strategic Leverage Tools An Example: Pixar Animation Studios Pixar Animation Studios To illustrate the SLOT analysis technique, we’ve used Pixar of Toy Story fame as a sample case. As you learn about SLOT analysis, you’ll see what results Pixar might have if it used the same technique. 71

106. Does the company manage its inventories efficiently?

107. Does the company have strong brands?

110. What do other people see as the company’s strengths?

111. What are the major sources of a company's revenue and profit?

112. Has the company demonstrated the ability to adapt and change?

113. Are the marketing and advertising programs effective?

114. Does the company use information technology effectively?Pixar’s strengths Excellent use of technology Strong brand Talented team Great track record 72

116. What products or services do competitors offer that you don’t?

118. Do team members lack vital skills?

120. Has the company brought new ideas and products to the market place?

121. Is the company losing out to competitors on the technology front?

122. What objections do potential clients or customers frequently raise?

123. Are production processes ineffective or outdated?Pixar’s limitations Product line is narrowly defined Production time is long Product line is focused on one medium - film 73

125. What niches have competitors missed?

126. Does the company’s product line have any holes in it?

127. Can poor-performing product lines be discontinued to boost profitability?

128. Is there an opportunity to demand better prices from suppliers?

130. Is there new technology that could help the business?

131. Are there inexpensive acquisition opportunities?

133. Are there training programs that would improve employees’ skills?Pixar’s opportunities Develop online products to build on existing technology strengths Continue to use technology strength to develop and sell animation software Develop games to build on strengths of characters 74

137. What are the negative political and social trends?

138. What obstacles does the company face?

139. Does the company have bad debt or cash-flow problems?

140. Where are competitors about to threaten the company’s position? Pixar’s threats Digital piracy may threaten profits One product failure could be a serious set back Other film companies may target the animated film market 75

141. Strategic Leverage Tools Use the SLOT Matrix to pick a strategy At this point in the analysis, you should have a list of strengths, limitations, threats and opportunities. To develop strategies based on this list, use the SLOT matrix. The matrix can help you to match up internal strengths and weaknesses with external threats and opportunities and develop a feasible plan for addressing the strongest forces. Four strategy types from the SLOT Matrix 76

142. Strategic Leverage Tools A SLOT Matrix for Pixar This is only one assessment of Pixar’s strengths, limitations, opportunities, and threats. A committee of actual employees and managers would have a very different analysis and as a result a very different set of strategies. 77

143. A Sample SLOT Matrix 78

145. A strategy can be seen as an interconnected set of strategic initiatives

146. When examining different strategic “sets” thoughtful strategists will compare and contrast the sets on a set of common criteria weighted to reflect key outcome priorities79

148. A Strategic Plan is a coherent, reinforcing “package” of strategic initiatives.

149. In the SEM Analysis, some of the strategic plans may have shared initiatives. This simply means that some strategic initiatives are so crucial to the firm’s future success that no matter what the overall strategic plan finally selected, the initiatives must be taken. This may also reflect the essentiality of a given initiative as a supporting part of any strategic plan.

150. So, while each strategic plan must be ultimately and collectively distinct, not every single element of each strategic plan need be.80

151. Strategic Leverage Tools And Now, What? SA1 SA2 SA6 SA5 SA4 SA3 SA12 SA11 SA10 SA9 SA8 SA7 SP1 SP4 SP2 SP3 81

152. Strategic Leverage ToolsThe Strategy Evaluation Matrix The SEM analysis takes the input from SLOT analysis and compares/contrasts alternative strategic approaches (called “packages”) on the basis of a variety of criteria. The result of the SEM analysis is the selection of a coherent, competitive strategy that best advances the interests of the company. 82

153. Strategic Leverage ToolsThe Strategy Evaluation Matrix 83

154. Strategic Leverage ToolsThe Strategy Evaluation Matrix Key term: Strategic Action. A particular strategic initiative usually associated with a functional area (“increase advertising exposure in trade magazines”), but may also involve multi-function implications (“open a regional office in South Carolina to serve the southern states”). These are stated in the SLOT analysis. 84

155. Strategic Leverage ToolsThe Strategy Evaluation Matrix Key term: Strategic Plan. A combination or "package" of strategic actions "united" by a focus on a particular theme. Alternative strategic plans differ from one another in two ways: (a) their unique combination of strategic actions and (b) their underlying theme. 85

156. Strategic Leverage ToolsThe Strategy Evaluation Matrix Key term: Strategic Theme. The big idea(s) that explain the rationale for a particular combination of strategic actions. Themes generally refer to the direction in which they point an organization, and usually allow differentiation among alternative strategic plans along some continuum: for instance, aggressive vs. conservative, expansionary vs. shrinking, customer focused vs. product focused, cost-directed vs. value-directed, etc. 86

157. Strategic Leverage ToolsThe Strategy Evaluation Matrix Key term: Strategic Theme (continued). While a strategic theme may have several sub-parts, its essence should be expressible in a single sentence that offers a vivid mental picture of the distinctive character of a particular strategic plan. 87

158. Strategic Leverage ToolsThe Strategy Evaluation Matrix Key term: Key Differentiating Criteria. A set of criteria used to compare and contrast competing strategic plans for the purpose of determining a preference of one strategic plan as over another. Criteria might include such factors as cost (short-term, long-term, direct, indirect, etc.), difficulty in implementation, consistency with corporate culture, impact on particular problems, probability of success, etc. 88

159. Strategic Leverage ToolsThe Strategy Evaluation Matrix Step 1: Drawing from the strategic actions developed in the SWOT matrix, create a variety of potential strategic plans. Summarize the theme for each of these strategic plans. Strategic plans may share strategic actions, but should have a unique combination of strategic actions. Each strategic plan should have strategic actions drawn from at least 3 of the "Cells" of the SWOT matrix (SO, ST, WO, WT). 89

160. Strategic Leverage ToolsThe Strategy Evaluation Matrix Step 2: Select three to four of the most promising strategic plans. These are the ones you will place into the Strategy Evaluation Table and discuss in your paper. In the SET each strategy would be summarized with a short, descriptive phrase, followed by a notation indicating the strategic actions that it combines. For instance, a strategic plan might be entered as: International Expansion (SA1,SA8,SA9,SA12) 90

161. Strategic Leverage ToolsThe Strategy Evaluation Matrix Step 3: Develop a variety of key differentiating criteria on which to rank the relative desirability of the four competing strategic plans. Criteria might include such factors as cost (short-term, long-term, direct, indirect, etc.), difficulty in implementation, consistency with corporate culture, impact on particular problems, probability of success, etc. 91

162. Strategic Leverage ToolsThe Strategy Evaluation Matrix Step 4: Select the five to seven criteria you feel best differentiate the strategic plans. Choose criteria that you have confidence in assessing all four strategic plans, and that offer a multi-dimensional perspective on the four plans. Rank and list the criteria by importance from "1" (least important) to “n” (where n = the number of criteria you have chosen). 92

163. Strategic Leverage ToolsThe Strategy Evaluation Matrix At this point your SEM Table would look like this (this is for illustration purposes only--only the final version of the table would appear in your write-up): 93

164. Strategic Leverage ToolsThe Strategy Evaluation Matrix 94

165. Strategic Leverage ToolsThe Strategy Evaluation Matrix Step 6: We now calculate some weighted and comparative measures that will provide insight into the relative strength/weakness of each of the four strategy alternatives Multiply the rank of each strategic plan by the rank of the criteria. Total these weighted rankings to determine the Total Weighted Score for each strategic plan. 95

166. Strategic Leverage ToolsThe Strategy Evaluation Matrix Step 6 (continued): Then, calculate the Relative Power Score (divide each Total Weighted Score by the highest Total Weighted Score for any of the strategic plans). The Relative Power Score is a measure of how close the four strategic plans are to each other in relative attractiveness. 96

167. Strategic Leverage ToolsThe Strategy Evaluation Matrix Step 6 (continued): Then, calculate the Absolute Power Score (divide each Total Weighted Score by the highest possible Total Weighted Score, derived by multiplying the sum of the criteria weights by 4: in this example 28 x 4 = 112). The Absolute Power Score is a measure of how far each strategic plan is from being the "perfect" plan. 97

168. Strategic Leverage ToolsThe Strategy Evaluation Matrix Step 7: Discuss in detail all the elements and implications of the SEM. 98

169. Strategic Leverage ToolsThe Strategy Evaluation Matrix The single most important factor underlying the quality of SEM analysis is your broad and deep familiarity with the organization, its direct competitors, and its industry. Superficial knowledge and insight about the business itself always results in an analysis that is vague and unconvincing. 99

170. Strategic Leverage ToolsThe Strategy Evaluation Matrix SEM analysis is less concerned with selecting a particular strategic plan (which it does do) than it is concerned about developing a variety of alternatives. In this sense, it is important to discuss in detail all the strategic plans analyzed: both the one selected and the ones not chosen. 100

171. Strategic Leverage ToolsThe Strategy Evaluation Matrix The actual write-up of the analysis presents only a carefully selected portion of all the ideas developed in the SEM analysis. The creation and analysis of many proposals that never find there way into the final report is at the heart of excellent analyses. Smart teams utilize all the parts of the table to direct their discussion. They provide the reader with sufficient detail to both understand and believe in what the group has placed in the table. 101

172. Strategic Leverage ToolsThe Strategy Evaluation Matrix The SEM framework only acts as a catalyst and a guide for your own creative insight and expressive ability. Mechanically filling out the tables, and discussing their results in an uninspired and technical way, will achieve little rewardable excellence. The key is to demonstrate that the entire team has truly entered into the strategic solution process. 102

173. Sample Strategy Evaluation Matrix 103

174. Sample Strategy Evaluation Matrix 104

176. Delivering (acting on) a strategy is as important as developing a strategy.

177. The purpose of strategy is to determine what we must DO in order to move toward what we want to BE

178. The final test of any strategy is

179. how well we execute it

180. with what effects.105

181. The Strategy Implementation Matrix 106

182. The Strategy Implementation Matrix Translating strategic intention into strategic initiative is a challenge in any organization. The IMPLEMNETATION MATRIX seeks to focus attention on seven major implementation questions: What outcomes argue for the needed changes? What positive forces are working for the changes needed to obtain the desired results? What major changes must be accomplished to reinforce, revise or reshape these positive forces? What specific acts are needed to make the positive changes materialize? What negative forces are working against the changes needed to obtain the desired results? What major changes must be accomplished to reduce, remove or reshape these negative forces? What specific acts are needed to make the negative forces disappear 107

183. The Strategy Implementation Matrix The entries in each cell should be as concrete as possible in light of the strategy chosen in the previous section of the analysis. The remainder of the section should clarify each cell’s entry, and should show connections between the cells in a given row. In addition, connections across rows should be discussed where appropriate. Include as many rows as needed – but remember, this is a selective analysis focusing attention on major implementation issues. 108

185. Every strategy carries with it the desire to either make things better for an organization and/or to keep things from getting worse.

186. From a results standpoint, every strategy has projected costs and benefits anticipated risks109

187. Key Results Dashboard 110

188. Key Results Dashboard Every strategy carries with it the desire to either make things better for an organization and/or to keep things from getting worse. From a results standpoint, every strategy has projected costs and benefits anticipated risks 111

189. Key Results Dashboard The 2-3 page discussion following the table should focus on explaining the brief descriptions and characterizations in the table. The table may contain more “elements” than you have room to discuss – in this case (1) make sure your table entries are as descriptive as possible (so they can stand alone) and (2) focus attention on explaining the most essential elements. Your discussion should provide clear answers to the following questions: Why does THIS element matter to THIS organization in THIS industry? What makes the elements problematic or promising – what benchmarks are you using? How did you determine the projected condition and what evidence makes it believable as a projection? What is the nature the risk (its source, impact and importance), what evidence supports your risk estimate? What logic/evidence supports your characterization of the risk as promising or problematic? Finally, be sure to end this section with a summary highlighting of the OVERALL picture the table and its discussion offers 112