OUBS MBA Strategy module

In October I completed the Strategy module of the OUBS MBA - very interesting module that stays at a ‘helicopter view’ of organisational strategy. The course uses a Johnson and Scholes model of Analysis, Choice and Implementation as a basis and examines the links between strategy, structure and systems in some detail. The course residential brings this together very well and clarifies how the models may be used to ‘funnel down’ from the analysis to arrive at the issues around implementation. Why such a focus on implementation? I think it’s clear to most of us that CEOs who fail tend to fail on execution not strategy. All strategies work to some extent but a failure to execute is a relatively common problem.

Next course is the ‘Making a Difference’ 12 month module. This new course has received some bad press. The objective is to start with self-analysis as a manager and propose how your strengths and weaknesses can be managed and put to use on a project that will make a difference to your organisation. This type of course addresses the criticism that MBA schools turn out knowledgeable but inexperienced managers - to succeed in this module you have to learn and demonstrate experience. So far I am interested and believe this is a positive subject as part of an MBA

Work 4 hours a week

Interesting article in the IHT on the book by Timothy Ferriss: (http://www.iht.com/articles/2007/11/12/business/workcol13.php). I think the essence of the book calls for us to drop our tech gadgets, ignore email and start calling people on the phone. This idea is not particularly new except that Ferriss believes that he can reduce the work week to 4 hours by this method (http://www.fourhourworkweek.com/). Working as I do in the land of the 35 hour week (theoretically) it is interesting to see hard working Americans taking an interest in this idea. The 4 hour week is taking it too far but it does remind me that I spend a good part of my day on email. The email questions and answers are not wasted time but in part a symptom of functional and global organisational structures. Global processes, a VP in Seattle, colleagues and functional managers based in WA, Iowa, and Singapore etc require this method of working and time zones make using the telephone difficult. However an alternative would be to specialise by site – live by global rules but manage locally and autonomously. Instantly meetings, travel and conferences would reduce freeing us focus on concrete tasks such as product development, sales, marketing and production. This would lead to increases in efficiency. There is a trend in global organisations to move away from global, functional, headquarter based structures to transnational structures with local autonomy. This ‘centres of excellence’ model has recognised advantages - one of which is to reduce dependence on email to get things done.

Corporate Social Responsibility in Indonesia

I read in the WSJ that Indonesia is planning a CSR (Corp Social Responsibility) tax to oblige corporations to pay a certain % of profits or revenue to “good causes”. The view that corporations have such wide responsibilities is increasingly accepted by governments and NGO’s. It takes stakeholder theory to its logical limit: making world citizens all equal stakeholders in every corporation. This is a form of Utopia. Milton Friedman stated in the NYT (1970) that "there is one and only one social responsibility of business–to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game”. Yes we are all stakeholders in our corporations but we do not have equal rights. Owners invest in corporations to make a return. The Agent – Principal relationship must be respected. Agents must act in the interests of their Principals or why would the Principals entrust them with their money? To take CSR too far is to risk the basis of investment in private industry and thus the economy itself. Countries (or Governments) such as Indonesia who insist on their rights before those of Principals will find that the latter group may wish to invest elsewhere. Unfortunately the harm that this causes will affect a wide group of stakeholders - the citizens of these countries.

Strategy - Environment or Resource based?

Empirical evidence points to the fact that the industry environment does not explain inter-firm profitability differences. Robert Grant's view is that models like Porter's '5 forces' should not therefore be used alone as an analysis tool for strategic planning. Grant prefers his resource based view (RBV) which "offers a superior explanation" (OU 2007) of why some firms are more successful than others. This is a complex area and I am sure Porter and Grant would agree on the need to analyse both the environment and resources as part of a strategy setting process. One powerful point made by Grant is that the forces in the industry environment are themselves often resource based. For example, 'barriers to entry' is an often quoted force controlling market entry. Industry barriers are often the size, power, distribution base, IP, etc. of the industry players and these are the resources of particular firms. The resources are therefore the root causes of other effects that control industries, their attractiveness and the profitability of key players.
Strategies should therefore make the most effective use of a firm's resources. Hamel & Prahalad make a good point in arguing that, further, strategy should stretch a firm's resources in order to ensure that these continue to develop and sustain a competitive advantage.

Second Module of OUBS MBA

Having finished B713 (fundamentals of snr mgt) I am now starting B820 strategy - a 6 month module with 3 TMAs (assessments) and a final exam to complete. Looks interesting so far and I am beginning to understand the course structure and therefore also how to approach questions of strategic analysis and formualtion. The basic structure is Strategic Analysis (Macro to Firm level) then Strategic Options (based on competitive diff) and finally Strategy Implementation (I assume based on project and change management). For each part and sub-parts there are many applicable models. The choice and use of the right models is the core of the course. For analysis it starts with the Macro environment (so STEP or STEP(LE)): for industry, Porters's 5 Forces and Strategic Groups/Spaces; and for firm, Resource Based View (Grant), Porter's Generic strategies, Game Theory, Value-Net model etc.
After this course there is one more compulsory module (Making a difference - 12mths) and 2 * 6 month options that can be taken in // or series. I am tending towards Marketing and Finance options in // to the compulsory module but will make this decision later.
I continue to recommend the OUBS MBA to colleagues based on content and opportunity to apply ideas instantly to your daily managerial role.

Marks & Spencer (UK retailer)

I was interested to see that M&S has delivered a 25.6pc increase in pre-tax profits and a 10.1% rise in sales. This seems to be a direct result of Stuart Rose's leadership and strategic course. M&S seems to have clarified their strategy as a quality retailer. All their publicity is providing the right consistent messages, whether for food or fashion. The previous team, led by Luc Vandevelde, tried to 'save' the company with aggressive cost cutting and downsizing. Porter would say that this is not a strategy but a series of operational objectives. Now that the company is pursuing a strategy again everything is falling into place. So the lesson is to make a profit, first decide which market(s) you want to be in and then position yourself in a unique space.

Is Porter right?

Porter (Harvard Business Review, 1996) described strategy as 'the creation of a unique and valuable position'. He dismisses the concept of increasing market turbulence as being a driver for 'flexibility' and calls 'hypercompetion' a 'self-inflicted wound'. The idea is that no matter what the environment, organisations need a strategy to set their course, define their constraints and create a unique position. The Southwest airline model is frequently used as an example. For Europeans Ryanair and Easyjet are better still. Who would have thought some 10 years ago that Europe's 3rd biggest airline (passenger numbers) would be an Irish start-up and that in 3 years time Ryanair may be the biggest European airline surpassing Air France-KLM and Lufthansa! Ryanair owe their success to the Southwest example but also to a relentless focus on their low cost strategy and its achievement as intended. Meanwhile the established airlines with no particular strategy, except to meet operational targets, struggle to survive. The lesson is to separate strategy formulation from managing operations. Targets set out in terms such as revenue, cost, margin, passenger miles or similar are not strategy (they may become constraints). Strategy is what you are and what you want to be. Successful strategy is what sets you apart. I agree with Porter.

A warning to keep in mind...

Brien's First Law:

At some time in the life cycle of virtually every organization, its ability to succeed in spite of itself runs out.

This explains why managers need to learn. There are models of
strategy that say that the differences in performance achieved
by organizations with similar resources are due to the quality
of management. Managers working in Pam Am, Sony, Kodak and Polaroid
probably thought that their companies' were great - until the fall came.

Incidentally I have seen this quoted as Brien's and Brier's first law.
I am not sure who he/she is, which name is correct or if there is
a second law...