Question: What did you learn from Reading #1 (What is Strategy?) that would help Clorox protect the brand integrity of Burt's Bees?

Lecture 1:

WHAT IS SUSTAINABLE STRATEGY? Why Do Strategy? A distinctive, sustainable strategy: Can lengthen the life cycle of a firm and yield sustainable, above- average profits. Makes competition difficult for rivals. In order to: To improve firm's financial performance. To strengthen firm's competitive position. To gain sustainable competitive advantage over rivals. 3 WHAT IS SUSTAINABLE STRATEGY? Failure to Choose No one goes to work intending to fail, but managers at many companies choose failure every day (by not having strategy). -- Michael Treacy & Fred Wiersma Managers often confused about choices. Try to imitate competitors' successful offers. Operational effectiveness is seductive. Organizational realities thwart choice-making. Trade-offs appear to constrain growth. 4 WHAT IS SUSTAINABLE STRATEGY? What is Strategy? "Strategy is the organization's conception of how to deal with its environment for awhile." -- Harvard Business Review Operational effectiveness is not strategy A company can outperform rivals only by establishing a sustainable competitive difference Competing on the basis of effective operations is unfeasible due to diffusion of "best practices." 5 WHAT IS SUSTAINABLE STRATEGY? What is Strategy all About? Strategy is all about What and How: What we want to be - our vision. What is leadership and How leadership influences organizational performance. How to realize our vision to outcompete our rivals. How strategy responds to economic and market conditions. 6 WHAT IS SUSTAINABLE STRATEGY? How do we get to Strategy? Ask ourselves: What is our present situation? Business environment and industry conditions Financial and competitive capabilities Where do we want to go from here? Create a vision for the firm's future direction How will we get there and stay there? Craft an action plan Review/update action plan regularly 7WHAT IS SUSTAINABLE STRATEGY? How do we get to Strategy? Ask ourselves: What is our present situation? Business environment and industry conditions Financial and competitive capabilities Where do we want to go from here? Create a vision for the firm's future direction How will we get there and stay there? Craft an action plan Review/update action plan regularly 7 WHAT IS SUSTAINABLE STRATEGY? Strategies Require Unique Activities Re-invent the rules of competition by: Adopting a unique strategic position vs. competitors "Understanding the competition and doing the opposite." Shaping every company decision and plan to comply with the chosen point-of-difference. 8 WHAT IS SUSTAINABLE STRATEGY? Strategies Require Unique Activities Competitive strategy is about being different Essence of strategy is offering unique reason to buy. 1. Lowest-cost (Walmart) 2. Differentiated value proposition (Volvo) 3. Best value (Toyota) 10 Which positioning niche does Volvo use? WHAT IS SUSTAINABLE STRATEGY? Sustainable Strategic Positioning Positioning is about carving out a niche vs. competitors 1. Variety-based position serves customers through its offerings. 2. Needs-based position serves customers' needs better than competitors can. 3. Access-based position serves customers through better access. 11 WHAT IS SUSTAINABLE STRATEGY? Strategy and Competitors Strategy is about competing differently from rivals Doing what they don't do or doing it better! Doing what they can't do! Doing that which sets the firm apart. Doing what is needed to produce a competitive edge. Strategic Rule of Thumb: "Understand your competitors and do the opposite!" 12 WHAT IS SUSTAINABLE STRATEGY? Amazon's Point of Difference Amazon positioning? Amazon point of difference? What is Amazon's strategy? How does it work? Can they sustain it? 13 WHAT IS SUSTAINABLE STRATEGY? Quest for Competitive Advantage To achieve a competitive advantage Meet customer needs more effectively o with a better solution or competitive advantage Meet customer needs more efficiently o at a lower price. To sustain a competitive advantage Give buyers lasting reasons to prefer a firm's solutions over its competitors'. 14 WHAT IS SUSTAINABLE STRATEGY? Sustainable Competitive Advantage To sustain a competitive advantage: 1. Develop valuable expertise and competitive capabilities. 2. Gain total company commitment to the constant quest for sustainable competitive advantage. 3. Become a highly respected organization through responsible corporate citizenship. 15WHAT IS SUSTAINABLE STRATEGY? Sustainable Competitive Advantage To sustain a competitive advantage: 1. Develop valuable expertise and competitive capabilities. 2. Gain total company commitment to the constant quest for sustainable competitive advantage. 3. Become a highly respected organization through responsible corporate citizenship. 15 STRATEGIC APPROACH CHOICES Low-cost provider Differentiation on features Focus on market niche Best-cost provider Four Sustainable Strategy Choices Build a competitive advantage 16 WHAT IS SUSTAINABLE STRATEGY? Which Strategic Approach? Build a competitive advantage by: 1. Striving to become the industry's low-cost provider (efficiency). 2. Outcompeting rivals on differentiating features (effectiveness). 3. Focusing on better serving a niche market's needs (efficiency and\or effectiveness). 4. Offering the lowest (best) prices for differentiated goods ( best- cost provider). 17 WHAT IS SUSTAINABLE STRATEGY? Common Strategic Planning Process 17 WHAT IS SUSTAINABLE STRATEGY? Is Our Strategy a Winner? The Strategic Fit Test Winning Strategy The Sustainability Test The Performance Test The Competitive Advantage Test 18WHAT IS SUSTAINABLE STRATEGY? Is Our Strategy a Winner? The Strategic Fit Test Winning Strategy The Sustainability Test The Performance Test The Competitive Advantage Test 18 WHAT IS SUSTAINABLE STRATEGY? Why Strategies Fail Structure Motivators Decision Rights Information 19WHAT IS SUSTAINABLE STRATEGY? Why Strategies Fail Structure Motivators Decision Rights Information 19 WHAT IS SUSTAINABLE STRATEGY? Will Clorox Strategy Work? With the acquisition of Burt's Bees, what is Clorox's apparent strategy? Do you think Clorox is a good parent company for Burt's Bees? Why or why not? What should Clorox do with the Burt's Bees brand to make sure the Burt's Bees brand continues to lead the market for all natural products? Do you think owning Burt's Bees will improve the Clorox brand image among consumers? Why or why not? 20 WHAT IS SUSTAINABLE STRATEGY? Will Clorox Strategy Work? 21WHAT IS SUSTAINABLE STRATEGY? Will Clorox Strategy Work? 21 WHAT IS LEADERSHIP? Role of Leadership Challenge of strategizing depends on leadership At core of leadership is defining and communicating company's unique position. Leaders provide discipline to make tough decisions. Improving operational effectiveness is a necessary part of management, but it is not strategy. Strategic agenda demands discipline and continuity. It's enemies are distraction and compromise 22WHAT IS LEADERSHIP? Role of Leadership Challenge of strategizing depends on leadership At core of leadership is defining and communicating company's unique position. Leaders provide discipline to make tough decisions. Improving operational effectiveness is a necessary part of management, but it is not strategy. Strategic agenda demands discipline and continuity. It's enemies are distraction and compromise 22 THE ROAD AHEAD What is leadership? Many styles and many types of leaders What is the "It" Factor and how important is it? The secret to successful strategy execution