Scenario-based strategy maps

Strategy maps are designed to help execute strategy and bring predictive qualities to key performance indicators by linking them according to perceived cause-and-effect relationships. However, in our experience strategy maps are often extrapolations of past performance and are seldom sufficiently linked to possible future states. In this article, we argue that scenario analysis could play an important role in the design of strategy maps, as it is an effective method to look at the future. Through the development of scenarios, organizations can think creatively about possible discontinuous future states and can prepare themselves for multiple plausible futures, not only the one they expect to happen. Therefore, scenario-based strategy maps could enable organizations to face strategic uncertainty in a more effective way and make them more sustainable in the longer term. This article highlights the strengths and weaknesses of strategy maps and scenario analysis, and outlines a method to develop scenario-based strategy maps both in theory and by presenting a significant example.     

We need to talk about strategy: How to conduct effective strategic dialogue

As researchers and consultants, we have spent the last few years helping a dozen major public and private organizations understand what went wrong with their strategic planning. We discovered that executives have a hard time with strategy because they are at a loss when the time comes to engage in strategic dialogue. Either their teams debate the organization’s values and goals when such issues should be settled, or they waste time on the details of specific projects that have yet to receive the green light. But whether the conversation is too broad or too narrow, strategy stays out of view. Drawing on recent developments in strategy-as-practice and decision-making literature, we propose a model that executives can follow to take control of strategy meetings and keep their teams on track. We ask them to focus on the right decision purpose, adjust the meeting’s communication style, and cast the right leader for the job. When these three simple rules are followed, the pillars of successful dialogue are aligned, and executives can finally talk about what matters most to them: strategy.     

Investing for strategic resources and its rationale: The case of outward FDI from Chinese companies

As more Chinese companies become engaged in foreign direct investment (FDI), particularly in industrial countries, a crucially important issue must be addressed: what is the motivation of Chinese outward FDI, and what is its rationale? Based on a detailed analysis of both primary and secondary data sources, this article argues that when investing in advanced economies, Chinese multinational corporations (MNCs) are motivated primarily by the quest for strategic resources and capabilities, and that the underlying rationale for such asset-seeking FDI is strategic needs. The examination of this premise will hopefully prompt business practitioners to think about this important issue in new and innovative ways, thereby identifying an appropriate policy and strategic response.     

Crossing the chasm: Leadership nudges to help transition from strategy formulation to strategy implementation

Top managers tend to focus on strategy formulation and planning but fail to embrace the problem-solving complexity of strategy implementation. This can lead to implementation failures that are reflected in misaligned organizations that seem to know where they want to go but cannot seem to get there. We posit that one reason for the ineffective transition from strategy formulation to strategy implementation is that planning is associated with a different set of thought processes and emotional experiences than is required for strategy implementation. We integrate research from management (strategy implementation and change management) with that from psychology (self-regulation and nudges) to identify the transition from strategic planning to implementation as a roadblock that prevents effective strategy implementation. We then present six leadership nudges that aid this transition. The first set of nudges are willpower-enhancing nudges that rely on increasing willpower to help transition from planning to implementation: Remove the distraction to plan, develop implementation intentions, and use verbal framing. The second set are desire-reducing nudges that work to decrease the desirability of planning and in so doing facilitate the transition to implementation: Highlight the end game, leverage a crisis, and celebrate small wins.     

Global software piracy: Trends and strategic considerations

The design, manufacture, distribution, and sale of software constitutes a rapidly growing and remarkably lucrative global industry. Leaders of most software companies understand that intellectual property rights (IPR) typically are vital to competitive advantage and company success. Theft of intellectual property (IP) in the form of software piracy is brazen, extremely costly, lowers incentives to innovate, and threatens the very existence of some companies. IP theft, therefore, is a daunting challenge for managers of software firms. In this article, we make several contributions that should prove helpful to software designers, managers, responsible users, and broad stakeholders of software innovation and use—that is, almost all of us. In doing so, we provide an overview of international legal, ethical, economic, and systemic considerations, and we share an analysis of the drivers of consumer software piracy. We then discuss strategic considerations and introduce a decision-making typology, which may help legitimate companies to devise strategies and tactics to manage their software IP in the face of widespread piracy.     

Leveraging knowledge-based resources: The role of contracts

Every firm faces the challenge of leveraging valuable resources in the form of the intellectual assets, know-how and expertise of itself and others around it. They can only achieve this through interaction with other idiosyncratically capable firms. But through interaction, resources, activities and actors themselves evolve in relation to each other. In this situation of complex business interaction and uncertainty, the conditions under which the respective knowledge and expertise can be leveraged often need to be expressed and manifested as joint consent between the involved parties. Designing an agreed platform for using knowledge-based resources of others poses a real challenge for many companies because the knowledge that firms need to access is inherently indeterminate and continually evolving. This study addresses this issue by investigating the role of contracts in leveraging knowledge-based resources. The study builds on an interactive view of resource leveraging in general and on ideas on knowledge-based resources in particular (Håkansson et al., 2009). The paper reports on empirical research conducted between 2003 and 2007 that examined real-world contracts in manufacturer-retailer networks. The study draws conclusions on the role of contracts in leveraging knowledge-based resources and more widely on the dialectic nature of resource transformation.     

Concurrent sourcing strategy of multinational firms in China: Drivers and performance implications

Concurrent sourcing is critical to multinational firms’ operations in emerging economies, such as China. Despite its prominence, research is lacking on the underlying conditions and performance implications of this strategy. We investigate the driving factors of multinational firms’ concurrent sourcing strategy and test whether concurrent sourcing outperforms other types of sourcing strategies. Our empirical findings suggest that multinational firms tend to choose concurrent sourcing under high levels of institutional regulations. Furthermore, the results show that concurrent sourcing generates better performance at high levels of uncertainties and the performance deficiency of concurrent sourcing can be mitigated when institutional regulations are high.     

Measuring firm performance: Bayesian estimates with good and bad outputs

Set in the airport industry, this paper measures firm performance using both desirable and bad outputs (i.e. airport delays). We first estimate a model that does not include the bad outputs and then a model that includes bad outputs. The results show important differences in the efficiency and productivity results depending on whether bad outputs are or are not included in the model. The differences reflect the resource cost to society and the potential cost to an airport if such externalities were internalized. Finally, the paper provides measures of shadow prices for the bad output, in our case airport delay, and discusses the results in terms of several interesting trends affecting US airports.     

Performance implications of cognitive complexity: An empirical study of cognitive strategic groups in semiconductor industry

This study extends previous strategic group research by empirically examining the performance effects of group's cognitive complexity in Taiwan semiconductor industry. Through computer-aided content analysis, this study derives themes from letters to shareholders as variables to assess the managerial cognitive complexity and uses thematic variations to find cognitive strategic groups during periods of market downturns, uncertainty and upturns. The study specifies three statistically reliable and accurate themes (operation, customer, and product) and identifies five types of cognitive strategic groups with different degrees of cognitive complexity on perceived strategic dimensions. The results indicate that cognitively complex groups with dual orientations toward customers and products sustain competitive advantages over time, especially during periods of market downturns and uncertainty.     

Roadmapping: (Missed) opportunities to overcome strategic challenges

Firms face various critical challenges when pursuing a coherent course of action that seeks to create value for the long term. They are required to balance myopic and hyperopic behavior. They must ensure coordination, adopt a holistic view of various functional perspectives, and foster commitment among key decision makers. They need to develop a credible and compelling line of reasoning that employees understand and can act on. Adopting the perspective of roadmapping as a strategy tool, this article advances the argument that roadmapping is especially suitable in helping firms to surmount these three critical strategic challenges. This article distills three core features of the roadmap: graphical representation, multi-disciplinary integration, and scaling. It then reviews the three critical strategic challenges and shows how roadmapping can help to overcome each of these. Following this explanation, the article describes ten key principles for effective strategic roadmapping that support firms in obtaining the strategic benefits promised. The article concludes with additional insights for practice with the intent of encouraging further exploitation of roadmapping’s potential.     

Allocation of scarce resources: Insight from the NFL salary cap

We examine the effects of variations in player compensation on NFL franchise performance from 1994 to 2004. Evidence shows that team success depends significantly upon both the actual and perceived fairness of pay distribution. Specifically, proficiency relative to that of competitors is high when compensation inequity across players, whether justified or unjustified, is low. This result suggests that franchises taking a superstar-approach to personnel decisions perform worse on average, most likely because of the dissatisfaction generated among relatively low-paid teammates.     

Stratography: The art of conceptualizing and communicating strategy

Representations of strategy tend to either be so generalized as to have little real meaning for employees, or go into such detail that people struggle to understand what is really required. The problem is this: a strategy not understood by those charged with implementing it is as bad as, or even worse than, not having a strategy at all. In 1983, a classic Business Horizons article by Karl Weick highlighted the importance of using graphical approaches to overcome strategy relation challenges; however, since then, little has been written regarding how managers might accomplish this successfully. Our article argues that individualized drawings of strategy, or what we term ‘stratography,’ could enable more effective conceptualization and communication of the strategic complexity that organizations face and the paths they are seeking to follow. Herein, we employ the latest thinking in cartography, educational philosophy, optics, graphic design, and military protocol to outline seven good practices of effective stratography.     

Transforming under deep uncertainty: A strategic perspective on risk management

Companies increasingly face the need for transformation in today’s rapidly changing business environment, characterized by major shifts in technology, regulation, and customer behavior. A lack of strategic risk insight and foresight leaves many incumbents insufficiently prepared in the face of such deep uncertainty. We argue that traditional risk management falls short because it predominantly focuses on strategy execution while leaving strategy formulation largely untouched. Moreover, an administrative-heavy risk management process can create strategic inertia and a misleading sense of control. In today’s dynamic business context, companies must not only increase the speed and impact of their strategy execution but also continuously explore the development of new strategies in response to disruptive events or emerging opportunities. Our research shows how leading companies develop a strategic risk management (SRM) capability to increase their resilience and agility in response to deep uncertainty. SRM takes a strategic, forward-looking perspective and focuses on strengthening processes, people, and practices for purposefully integrating risk into the strategy formulation process. This article offers a framework with three proven configurations of content and timing integration, risk management roles, and leading practices that enable effective SRM.     

Relational roles and triangle dramas: Effects on power play and sentiments in industrial channels

This study compares behavioral characteristics — power, influence, and satisfaction — in channels with different levels of commitment to long-term, collaborative exchange within the supply network to dealers in the office furniture industry. Supporting exchange theory and Emersonian power theory, power, influence, and satisfaction are positively associated with cooperation between traders. Furthermore, the data support expectations for how interaction processes in one dealer-supplier exchange are affected by the character of the dealer's linkages to another supplier in the network.The authors contributed equally to this research and are listed alphabetically. They thank Robert Dahlstrom, Sejo Oh, Fritz Russ, and Ann Welsh for comments on previous drafts of this article.     

Ethnic-immigrants in founding teams: Effects on prospector strategy and performance in new Internet ventures

We investigated differences in strategy and performance between new Internet ventures with ethnic-immigrant members in the founding team and a matched set of Internet ventures with non-ethnic-non-immigrant team members. Results showed that new ventures with an ethnic-immigrant presence in the founding teams tended to pursue a more aggressive prospector strategy than those with non-ethnic-non-immigrant founding team members. Still, performance of the two groups of ventures was comparable. However, the positive effects of ethnic-immigrant presence on founding teams depended on team size and average age of the founding team members.     

Friends,family, or fools: Entrepreneur experience and its implications for equity distribution and resource mobilization

Who helps entrepreneurs raise the resources they need and how much equity does an entrepreneur distribute in return? We use a sample of 611 entrepreneurs in the U.S. to examine why some entrepreneurs are more likely than others to distribute ownership selectively to helpers. We find that entrepreneurs with specific industry experience and start-up experience are able to provide ownership more selectively and raise more resources from their helpers. We refine the categorization of social ties further to make a distinction between professional and familial ties to show that the ownership distribution and types of resource contributions vary by the mix of ties in the entrepreneur's helper network. Our findings have implications for theories of resource assembly, social structure and entrepreneurship, and organization design.     

Best value supply chains: A key competitive weapon for the 21st century

All executives would like their organizations to perform better, and most seek ways to make that happen. This paper focuses on how supply chains — the series of activities through which products and services are created and then distributed to customers — can enhance firm performance. For the last couple of decades, most firms have emphasized maximizing speed or minimizing costs within their supply chains. In the current business landscape, however, a broader approach is needed. We describe the main advantages of developing best value supply chains as a tool for enhancing performance. These chains differ from traditional chains in important ways. Best value supply chains are used by organizations as a central element of strategy, not simply as a means to move materials. Rather than focusing primarily on speed or cost, best value supply chains are designed to deliver superior total value to the customer in terms of speed, cost, quality, and flexibility. Our contention is that organizations that develop best value supply chains will enhance their performance. We support this contention with examples from leading firms that reflect a best value approach.     

The influence of business strategy on new product activity: The role of market orientation

In this paper, we propose that business strategy influences new product activity both directly and indirectly via its influence on market orientation. Accordingly, we develop a framework linking firms' relative emphasis on cost leadership, product differentiation and focus strategies to firms' customer and competitor orientation as well as their new product development and introduction activity. We use this framework to develop a simultaneous equations model that is tested on survey data from 175 Dutch firms of varying size and across different industries in the manufacturing sector. The surprising findings are that a greater emphasis on a focus strategy results in a decreased emphasis on customer orientation and that competitor orientation has a negative direct influence on new product activity and an indirect positive effect via customer orientation. We discuss the implications of these findings for theory and practice.