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Business Strategy for a Digital World Unit 6 Exponential Organisations...

Business Strategy for a Digital World Unit 6 Exponential Organisations From Strategy to Execution BSDW 2024 Unit 6 | © Brian Armstrong 2024 | Slide 1  Course Overview Setting the Scene “Traditional Strategy” “Digital Strategy” “Practical Strategy” Strategy as a Deliberate Introduction Process Emerging Theories and Session 1 Models Market Based Session Views of Strategy 2 Technological Disruption & Purpose, Vision and Strategy Strategy Session Resource-based 4 Other Aspects Session Views of Strategy 3 Abundance (and Strategy and Scarcity) growth Driving execution Session 6 Strategy as an Unconscious Process Session Dimensions and Platforms 5 layers of Strategy Emergent Strategy Leadership & Session Exponential Session 4 Governance Organisations 6 Entrepreneurial Strategy BSDW 2024 Unit 6 | © Brian Armstrong 2024 | Slide 2  Business Strategy Outline for a Digital World 1. Exponential Organisations 1. Origins & Definition Session 6 2. Massive Transformational Purpose 3. External Characteristics 4. Internal Characteristics 5. Implications Exponential 6. 7. ExOs and Large Businesses Successful examples and their relative performance Organisations 8. Relation to Strategy 2. From Strategy to Execution From Strategy to 1. Executive leadership – driving successful execution Execution 2. Organisational Architecture 3. Communication 4. Stakeholder Management & The Role of the Board BSDW 2024 Unit 6 | © Brian Armstrong 2024 | Slide 3  Business Strategy Outline for a Digital World 1. Exponential Organisations Session 6 1. Origins & Definition 2. Massive Transformational Purpose 3. External Characteristics Exponential 4. 5. Internal Characteristics Implications Organisations 6. ExOs and Large Businesses 7. Successful examples and their relative performance 8. Relation to Strategy From Strategy to Execution 2. From Strategy to Execution 1. Perspectives on the strategy process 2. Recap: Purpose, Values and Vision 3. Structural Considerations 4. The Role of the Board 5. Executive leadership – driving successful execution BSDW 2024 Unit 6 | © Brian Armstrong 2024 | Slide 4  Underlying Thesis “Today’s organizations are built for a linear world: hierarchical, centralized, closed, top down and focusing on ownership due to scarcity of people, resources, assets and platforms. They evolved one hundred years ago for an era of economies of scale and relative stability and predictability”. “Our environment is changing exponentially, mainly driven by exponential technologies and globalization. As a result, the world is becoming increasingly open and transparent and we are slowly moving from a world of scarcity to a world of abundance”. “Exponential Organizations was written as a guide to navigating the shifting business environment due to the introduction and proliferation of exponential technologies”. ”Exponential Organizations lays the framework for organizations to adapt and thrive in a world of abundance by diving into new organizational structures that leverage exponential technologies and a shifting global business mindset” Source: https://exponentialorgs.com BSDW 2024 Unit 6 | © Brian Armstrong 2024 | Slide 5  Key Point Key Challenge While the information-based world is We’ve learned how to now moving exponentially, our scale technology … organizational structures are still very linear (especially larger and older ones) Now it’s time to scale the organization: Linear vs Exponential Ø Strategy Ø Structure Ø Processes Ø Culture Ø KPIs Ø People Ø systems Source: Exponential Organizations : Why New Organizations are Ten Times Better, Faster, and Cheaper Than Yours BSDW 2024 Unit 6 | © Brian Armstrong 2024 | Slide 6 (and What to Do About it), by Salim Ismail, Michael S. Malone and Yuri van Geest, Singularity University, 2014  Key Point 25 EB/m Global Mobile Data Usage The information-based 20 world is now moving exponentially Global Mobile Data Traffic (EB / Month) 15 But our organizational 10 thinking and structures are still very linear (especially larger and 5 older ones) 0 Q1 2000 Q1 2001 Q1 2002 Q1 2003 Q1 2004 Q1 2005 Q1 2006 Q1 2007 Q1 2008 Q1 2009 Q1 2010 Q1 2011 Q1 2012 Q1 2013 Q1 2014 Q1 2015 Q1 2016 Q1 2017 Q1 2018 Q1 2019 Source: Ericsson Mobility Reports, 2010, 2012, 2014, 2016, 2018 BSDW 2024 Unit 6 | © Brian Armstrong 2024 | Slide 7  Key Point Exponential The information-based world is now moving exponentially Size / Impact But our organizational Disruption thinking and structures are still very linear Linear (especially larger and older ones) Complacency Source: Based on Exponential Organizations : Why New Organizations are Ten Times Better, Faster, and Cheaper Than Yours (and What to Do About it), by Salim Ismail, Michael S. Time Malone and Yuri van Geest, Singularity University, 2014 BSDW 2024 Unit 6 | © Brian Armstrong 2024 | Slide 8  Definition An Exponential Organization (ExO) is one whose impact (or output) is disproportionally large — at least 10x larger — compared to its peers because of the use of new organizational techniques that leverage exponential technologies Source: Exponential Organizations : Why New Organizations are Ten Times Better, Faster, and Cheaper Than Yours (and What to Do About it), by Salim Ismail, Michael S. Malone and Yuri van Geest, Singularity University, 2014 BSDW 2024 Unit 6 | © Brian Armstrong 2024 | Slide 9  So what can Universities learn from “Exponential Organisations” An Exponential Organization (ExO) is one whose impact (or output) is disproportionally large — at least 10x larger — compared to its peers because of the use of new organizational techniques that leverage exponential technologies Massive Transformative Purpose External Characteristics Internal Characteristics SCALE IDEAS BSDW 2024 Unit 6 | © Brian Armstrong 2024 | Slide 10  MTP: Massive Transformative Purpose Exponential Organizations think Aim BIG Capture hearts, minds, imaginations and ambitions of those both inside and (especially) outside the organization. Generate a cultural movement: the MTP is so inspirational that a community forms around the ExO and spontaneously begins operating on its own, ultimately creating its own community, tribe and culture Examples: TED: “Ideas worth spreading.” Principle Google: “Organize the world’s information.” Martin Seligman, a leading expert on positive psychology, differentiates between three states of happiness: X Prize Foundation: “Bring about radical breakthroughs for the benefit of humanity.” the pleasurable life (hedonistic, superficial), Quirky: “Make invention accessible.” the good life (family and friends) Singularity University: “Positively impact the meaningful life (finding purpose, transcending ego, working one billion people.” toward a higher good) Source: Exponential Organizations : Why New Organizations are Ten Times Better, Faster, and Cheaper Than Yours (and What to Do About it), by Salim Ismail, Michael S. Malone and Yuri van Geest, Singularity University, 2014 BSDW 2024 Unit 6 | © Brian Armstrong 2024 | Slide 11  External Characteristics S Staff on Demand In years past, having a large workforce differentiated your enterprise and allowed it to accomplish more. Today, that same large workforce can become an anchor that reduces maneuverability and slows you down. C “If you build communities and you do things in public, you don’t have to find the right people, they find you.” Community & Crowd “At the top of every one of these communities is a benevolent dictator.” You need strong leadership to manage the community, because although there are no employees, people still have responsibilities and need to be held accountable for their performances. A Algorithms Almost all business insights and decisions of tomorrow will be data-driven. AI and algorithms mitigate and compensate for many of the biased heuristics in human cognition: L Non-ownership is the key to owning the future—except, when it comes to scarce resources and assets. Leveraged Assets When the asset in question is rare or extremely scarce, ownership is a better option. But if your asset is information-based or commoditized at all, then accessing is better than possessing. Engagement creates network effects and positive feedback loops with extraordinary reach. E Engagement Gamification techniques to leverage: o Dynamics: motivate behavior through scenarios, rules and progression o Mechanics: help achieve goals through teams, competitions, rewards and feedback o Components: track progress through quests, points, levels, badges and collections Source: Exponential Organizations : Why New Organizations are Ten Times Better, Faster, and Cheaper Than Yours BSDW 2024 Unit 6 | © Brian Armstrong 2024 | Slide 12 (and What to Do About it), by Salim Ismail, Michael S. Malone and Yuri van Geest, Singularity University, 2014  Internal Characteristics I Filtering and matching processes to bridge SCALE externalities with internal IDEAS control frameworks Algorithms & automated workflows that route external inputs to the right people at the right time internally Interfaces A key to its scalability is self-provisioning—interfaces to customers completely automated so that there is no manual involvement. D Real-time, automated, embedded and pervasive Essential company and employee metrics and short feedback loops Dashboards Accessible to everyone in the organization. Lean value & growth metrics + learning metrics + OKRs E Lean Startup methodology of testing assumptions and constantly experimenting with controlled risks Experimentation Culture enables risk-taking and failure. Processes are constantly being tweaked with fast feedback loops. A Flat organisation Autonomy Self-organizing, multi-disciplinary teams operating with decentralized authority. A prerequisite for permissionless innovation Reduce the distance between obtaining (and processing) information and decision making S Migrate from having to look up information to having it flow through your perception Social Technologies Leverage community to build out ideas Social Technologies are comprised of 7 key elements: Social objects; 2) Activity streams, 3) Task management, 4) File sharing, 5) Telepresence, 6) Virtual worlds, 7) Emotional sensing Source: Exponential Organizations : Why New Organizations are Ten Times Better, Faster, and Cheaper Than Yours BSDW 2024 Unit 6 | © Brian Armstrong 2024 | Slide 13 (and What to Do About it), by Salim Ismail, Michael S. Malone and Yuri van Geest, Singularity University, 2014  Implications 1. Information accelerates everything 2. Drive to Demonetisation 3. Disruption is the new norm 4. Beware the “Expert” 5. Death to the 5 year plan 6. Smaller beats bigger (aka. Size does matter, just not the way you think) 7. Rent, don’t own 8. Trust beats control; Open beats closed 9. Everything is measurable and anything is knowable Source: Exponential Organizations : Why New Organizations are Ten Times Better, Faster, and Cheaper Than Yours BSDW 2024 Unit 6 | © Brian Armstrong 2024 | Slide 14 (and What to Do About it), by Salim Ismail, Michael S. Malone and Yuri van Geest, Singularity University, 2014  ExO Strategies for Large Organisations Education Board Management Transform Leadership Diversity Leadership SKills ExO Lite Disrupt [x] Partner, Invest, Implement ExO Edge ExOs Acquire ExOs principles across the Black-Ops org. (eg. Dashboards, Model Google [x] autonomy, Incubators automated interfaces Partner with Accelerators … Hackerspaces Source: Exponential Organizations : Why New Organizations are Ten Times Better, Faster, and Cheaper Than Yours BSDW 2024 Unit 6 | © Brian Armstrong 2024 | Slide 15 (and What to Do About it), by Salim Ismail, Michael S. Malone and Yuri van Geest, Singularity University, 2014  Best ExOs Source: Exponential Organizations : Why New Organizations are Ten Times Better, Faster, and Cheaper Than Yours BSDW 2024 Unit 6 | © Brian Armstrong 2024 | Slide 16 (and What to Do About it), by Salim Ismail, Michael S. Malone and Yuri van Geest, Singularity University, 2014  ExO Performance Improvement Source: Exponential Organizations : Why New Organizations are Ten Times Better, Faster, and Cheaper Than Yours BSDW 2024 Unit 6 | © Brian Armstrong 2024 | Slide 17 (and What to Do About it), by Salim Ismail, Michael S. Malone and Yuri van Geest, Singularity University, 2014  Critiques of ExOs “Pre-selection" in measures of outperformance Claim that these are Necessary & Sufficient Conditions for success − Countless start-up failures − Successes which don’t do this − Even some of their examples have faded Sampling errors − Survivorship bias − Selection bias BSDW 2024 Unit 6 | © Brian Armstrong 2024 | Slide 18  ExOs and Strategy Strong on real- time, pervasive Continuous feedback and Light on external External Context Appraisal analysis and adjustment positioning, acknowledges critical capabilities. Internal Context Execution Plans & Delivery Strong on execution Purpose Values & environment and Strategy Vision techniques SCALE Strong focus on MTP Leans on Emergent and Entrepreneurial IDEAS schools of strategy Goals and Lots of Learning Organisation Objectives thinking embedded BSDW 2024 Unit 6 | © Brian Armstrong 2024 | Slide 19  Business Strategy Outline for a Digital World 1. Exponential Organisations 1. Origins & Definition Session 6 2. Massive Transformational Purpose 3. External Characteristics 4. Internal Characteristics 5. Implications Exponential 6. 7. ExOs and Large Businesses Successful examples and their relative performance Organisations 8. Relation to Strategy 2. From Strategy to Execution From Strategy to 1. Executive leadership – driving successful execution Execution 2. Organisational Architecture 3. Communication 4. Stakeholder Management & The Role of the Board BSDW 2024 Unit 6 | © Brian Armstrong 2024 | Slide 20  The Strategy Development and Execution Process Environment analysis Segmentation & market definition Industry structure Emergent strategy Participant behaviours and insight Dashboards, measures Continuous External Context Appraisal Market-based view of Strategy Organisational Strategy Analysis Execution Plans & Ideology & Choices Delivery Resource-based view Portfolio / participation strategy Why we exist – organisational purpose of Strategy SMART goals and objectives Differentiation and cost strategy Executive leadership Non-negotiables – Values Competency strategy Organisational architecture Vision How we see ourselves in the future (macro-level) Internal Context SWOT & TOWS Culture and climate “BHAGs” Business model (esp. Platforms) Agility Leadership ∩ strategy Strategic “Ploys” Change management Sources of cost & differentiation advantage Governance Organisational learning Communication Resources & capabilities Citizenship Scenario & contingency analysis Stakeholder management Core competences Digital transformation and maturity Dynamic capabilities (IDEAS & SCALE) BSDW 2024 Unit 6 | © Brian Armstrong 2024 | Slide 21...  The Strategy Selected topics Development on Strategy and Execution Execution Process SMART goals and objectives Executive leadership Organisational architecture Culture and climate Agility Covered in Digital Transformation and Change Management Course Change management Communication Stakeholder management Digital transformation and maturity (IDEAS & SCALE)... BSDW 2024 Unit 6 | © Brian Armstrong 2024 | Slide 22  The Strategy Selected topics Development on Strategy and Execution Execution Process SMART goals and objectives Executive leadership Organisational architecture Culture and climate Agility Change management Communication Stakeholder management Digital transformation and maturity (IDEAS & SCALE)... BSDW 2024 Unit 6 | © Brian Armstrong 2024 | Slide 23  Strategy Cascade: Levels of strategy Corporate-level Portfolio design, diversification, vertical integration, geographical strategy Market positioning, achieving cost and differentiation advantage, resource strategy, Business-level product portfolio, ”learning” strategy strategy operating model, diversification Marketing Functional Pricing Sales and channel strategies Service R&D Technology Support functions, etc. BSDW 2024 Unit 6 | © Brian Armstrong 2024 | Slide 24  The Strategy Development and Execution Process L0 Purpose, Values, Objectives Organisational Ideology L0 strategy External Context Internal Context process L-1 Purpose, Strategy Analysis, Values, Objectives, Choices & Plans L-2 Purpose, External Context Internal Context Values, L-1 strategy Execution & Continuous Objectives, Strategy Analysis, process Delivery Choices & Plans Appraisal External Context Internal Context L-2 strategy Strategy Analysis, Execution & Choices & Plans process Continuous Delivery External Context Execution & Strategy Analysis, Internal Context L-3 strategy Continuous Appraisal Choices & Plans Delivery Appraisal Execution & Delivery Continuous Appraisal process BSDW 2024 Unit 6 | © Brian Armstrong 2024 | Slide 25  Executive Leadership – Driving Successful Implementation “The most successful companies did not seek complete consensus, but neither did they go to the other extreme of having one person call all the shots. Instead, they followed a policy of ‘qualified consensus.’” The Strategy (Implementation) Loop “In novel situations, the best interpretation is rarely obvious, and the obvious one is often wrong. Therefore, the discussion leader must ensure that participants feel safe to put forth alternative interpretations.” “Managers who master the four types of discussions will be able to spot emerging opportunities, seize them and make midcourse corrections more effectively than others who stumble through those steps.” Source: Closing the Gap between Strategy and Execution by Donald N. Sull, reproduced in “Top 10 Lessons on Strategy”, MIT Sloan Management Review BSDW 2024 Unit 6 | © Brian Armstrong 2024 | Slide 26  The Strategy Selected topics Development on Strategy and Execution Execution Process SMART goals and objectives Executive leadership What is organisational architecture Organisational architecture Broad types of structure Culture and climate Internalisation vs externalisation Agility Centralisation vs decentralisation Change management Strategy cascade Communication Stakeholder management Digital transformation and maturity (IDEAS & SCALE)... BSDW 2024 Unit 6 | © Brian Armstrong 2024 | Slide 27  What is organisational architecture? Source: From Armstrong and Lee (2023), Digital Transformation and Maturity, Silk Road Press, Chapter 11. The focus of MBV How do these relate to strategy   execution? Organisational Strategy, Environment Vision/Mission (PESTLE) Structure/ systems † External Processes Outcomes Re Culture Competencies cip ˆ „ for… ien ts ‡ ƒ Technology Internal ‚ Focus of the RBV Co-creation ‰ A focus of emergent strategy BSDW 2024 Unit 6 | © Brian Armstrong 2024 | Slide 28  Broad types of structure 1. Functional Structure Functional Structure Customer Centric Structure Inbound Logistics Consumer 2. Customer Centric BUs Product Development Premium Consumer Production SME 3. Product Centric BUs Sales Enterprise Distribution Government Service Wholesale 4. Geographic BUs Corporate functions … … … 5. Matrix … 2+ dimensional matrix across any of the above dimensions Product Centric Structure Geographic 6. Hybrid Industrial Machinery Gauteng One model in parts of the business and another in Consumer Machinery Western Cape other parts of the business (e.g functional for core Precision products KZN production and corporate services; geographic or Rest of South Africa customer-centric for sales and service) Fixed line “Africa” Mobile 7. ”Financial” BUs (portfolio assets) ISP & VAS … … BSDW 2024 Unit 6 | © Brian Armstrong 2024 | Slide 29  Some Considerations for Structural Choice Structure of Customer Base Location and structure of Core Competences Top Entity value creation hypothesis (financial investor vs entrepreneurial creator vs value chain integrator….) Innovation and agility emphasis Customer intimacy vs efficiency tradeoff … … BSDW 2024 Unit 6 | © Brian Armstrong 2024 | Slide 30  Internal vs External Internal, external or hybrid Source: From Armstrong and Lee (2023), Digital Transformation and Maturity, Silk Road Press, Chapter 11. structures / systems? Relative balance of internal & external: Internal structures & systems External structures & systems Value Big internal decisions Specificity Alliances and outsourcing Workgroup & work design Frequency Vertical / horizontal acquisitions Performance management Opportunism Independent or semi-independent Rewards sub-unit Other decisions Startup or spin-off Information systems Contract people / systems (on- Knowledge systems demand talent, consultants, system Etc. subscriptions, temps, etc.) Outcomes/results vs. How to define business units task/behavior focus Levels of decentralization/centralization High vs. moderate engagement Separation of decision rights systems Designing individual’s roles for maximum productivity BSDW 2024 Unit 6 | © Brian Armstrong 2024 | Slide 31  The ”Distant” Diversification Markets Ansoff Matrix New Markets Market development Transformational / Disruptive Innovation and innovation Adjacent Outside the core Markets business strategy Source, Brian Armstrong Incremental New categories Innovation or Substitute Inside the core Products Product Existing business development Markets Market Adjacent penetration Products Existing Products New Products BSDW 2024 Unit 6 | © Brian Armstrong 2024 | Slide 32  Organise for and empower innovation… Use of company assets Core Business Competitors Innovation activity BSDW 2024 Unit 6 | © Brian Armstrong 2024 | Slide 33  Centralised vs Decentralised Source: From Armstrong and Lee (2021), Digital Business, Silk Road Press Chapter 17.2 Relative advantages of centralization vs. decentralization Source: (Brickley et al., 2004) Advantages of decentralization Disadvantages of decentralization Effective use of ‘local’ knowledge (e.g., teams at the customer Potential agency problems (i.e., individuals taking advantage of interface may understand local tastes, preferences & price their relative freedom): control/monitoring systems to avoid sensitivities, or local managers may understand local culture of this may be expensive their employees better) Coordination costs & failures: teams or individuals empowered Conservation of management time: senior management focus to act differently leads to variety & potential discoordination on strategy Less effective use of central information Training & motivation for empowered managers or employees Digitalisation tends to promote more decentralisation: Agility, flattening, permissionless innovation,.... But specialised Centres of excellence also often necessary BSDW 2024 Unit 6 | © Brian Armstrong 2024 | Slide 34  Process Architecture As Per Dutta & Manzoni (1999: 66) Source: From Armstrong and Lee (2023), Digital Transformation and Maturity, Silk Road Press, Chapter 11. Strategy development process Example: Customer interface process 2nd Level sub-processes for order Customers fulfillment core process Suppliers Pre-sales order taking Integrated Order Depot inventory processing supply chain fulfillment Seeding process process Routing decision making Pre-sales and seeding delivery Commercial transaction processing Infrastructure & capacity development process BSDW 2024 Unit 6 | © Brian Armstrong 2024 | Slide 35  The Strategy Selected topics Development on Strategy and Execution Execution Process SMART goals and objectives Executive leadership Organisational architecture Culture and climate Simplicity and clarity Agility Consistency ad repetition Change management Authenticity: be real and practical Communication Speak to the heart Stakeholder management Digital transformation and maturity (IDEAS & SCALE)... BSDW 2024 Unit 6 | © Brian Armstrong 2024 | Slide 36  Communicating the Strategy Communicating strategy must be done in a very purposeful way. Many companies do not pay enough attention to this, and sometimes with disastrous results. Please read this paper, paying attention to Lessons of Strategic Communications at the end of the article. See: The Strategic Communication Imperative Paul A. Argenti, Robert A. Howell and Karen A. Beck http://marketing.mitsmr.com/PDF/STR0715-Top-10-Strategy.pdf BSDW 2024 Unit 6 | © Brian Armstrong 2024 | Slide 37  Clarity of Purpose Core Ideology q Core Values q Core Purpose Envisioned Future q 10 – 30 year BHAGs (Big, Hairy, Audacious Goals) q Vivid Description Source: James C. Collins and Jerry I. Porras. Adapted From Chapter 11 of the Paperback Version of “Built To Last” (Harper Business, 1996) BSDW 2024 Unit 6 | © Brian Armstrong 2024 | Slide 38  Example of a “Plan on a Page” for the business segment of typical major telco Our Purpose 1. Deliver the Present: 12/13 plan 3. Create the Future To help businesses thrive in a Defend: Maximise performance on existing Service Integration competitive world, by providing products world-class networked ICT Converged Personal infrastructure services ‒ Voice usage: Drive unified communications; Fixed Line Telephony Communication maximise voice revenues ‒ Broadband & ISP improvement, esp. in SMBS Data Connectivity Unbounded Connected Systems ‒ Churn management Product Our Vision ‒ Bandwidth upselling Journeys Broadband + ISP Personal IT as a Service From “Incumbent” to “Market ‒ Managed customer VoIP migration Leader” Hosting Cloud: “Everything as a Service” Grow: Key New Products ‒ Grow Business Mobile ‒ ICT: Iaas and Saas Productisation; volume and Core Fibre ICT Our Aspiration value sales Competences Agile Systems To be the leader in fixed & ‒ SMBS bundles, office-in-a-box converged communication and ‒ Grow prime contractor Mobile network services to the Business market (no. 1 player) ‒ Global Services To transform the way IT is ‒ Fibre: Fibre campaigns Foundation Evolve our Skills delivered in the country, through the Cloud (top 2 Player) Game Game changer: grow into adjacent areas; i.e. LAN, Changer Cloud (Saas & Iaas), UC and IS outsourcing 2. Improve the Business i on s $ billoperating inGross Our Strategy e n u e Revenue projections +7% p.a 1.“Deliver the Present”: Tactical Product Planned Rev (R Bn) revenue Leadership 1.1 Plans to deliver dependable Impact performance – for customers and ICT (additional) shareholders ICT (current BP) 2.“Improve the Business”: Customer Market Flawless Fibre migration Improve operationally to defend Relationship FMC & Mobile Excellence Leadership Service traditional business, drive Legacy Data profitability, and as a platform for Legacy Voice growth Leadership Note: additional ICT 3.“Create the Future”: build the & Org. revenue consist of:: Cloud, LAN, UC and IS foundation for Profitable Growth Effective- and deliver our aspiration ness BSDW 2024 Unit 6 | © Brian Armstrong 2024 | Slide 39  The Strategy Selected topics Development on Strategy and Execution Execution Process SMART goals and objectives Executive leadership Organisational architecture Culture and climate Agility Change management Communication Stakeholder management Digital transformation and maturity (IDEAS & SCALE)... BSDW 2024 Unit 6 | © Brian Armstrong 2024 | Slide 40  Who are the stakeholders Economic Social / Political Technological Community Internal Shareholders Regulators Key adopters Local communities Employees Banks Government and Standards agencies Lobbyists, activists & governmental NGOs Customers agencies Complementors Suppliers Local authorities Distributors Labour organisations Source: Exploring Strategy, 11th edition Text and Cases (2017), Johnson et. al., Pearson BSDW 2024 Unit 6 | © Brian Armstrong 2024 | Slide 41  Stakeholder mapping Level of Attention Criticality Low High Communication channel quality Hierarchical power Cognitive capacity Influence/informal power High Control of key resources Control of key knowledge Keep Satisfied Key Players Power Minimal Effort Keep Informed Low Source: Exploring Strategy, 11th edition Text and Cases (2017), Johnson et. al., Pearson BSDW 2024 Unit 6 | © Brian Armstrong 2024 | Slide 42  The Role of the Board of the Firm The King IV Report on Corporate Governance for South Africa™ prescribes that the governing board should appreciate that an organisation’s core purpose, its risks and opportunities, strategy, business model, performance and sustainable development are all inseparable elements of the value creation process. King IV clearly articulates the responsibilities of the governing board, which is to steer an organisation strategically in line with its core purpose and values by approving as well as monitoring an informed short, medium and long-term strategy whilst taking into account risk and opportunities. Source: Melanie TeBrugge — Senior Board Consultant, Kilgetty Statutory Services BSDW 2024 Unit 6 | © Brian Armstrong 2024 | Slide 43  Achieving an Effective Board’s Role Source: Modified from How Strategic Is Your Board? by Didier Cossin and Estelle Metayer, taken from “Top 10 Lessons on Strategy”, MIT Sloan Management Review Determine the Board’s Role Agree what we mean by ”Strategy” BSDW 2024 Unit 6 | © Brian Armstrong 2024 | Slide 44  The Board’s Role should be Context Dependent Repeating patterns that have clear Simple Context cause and effect. Allows for fact- based management Multiple inter-related cause and Complicated Context effect. Establishing facts and relationships requires expert input Full of ambiguities and un- Complex Context predictability that go far beyond a complicated context Full of turbulence and shifts that are sometimes hard even to identify. Chaotic Context Outcomes are highly uncertain, and no one, not even experts, can assess them well. This creates tensions and conflicting points of view. Business Context Source: Modified from How Strategic Is Your Board? by Didier Cossin and Estelle Metayer, taken from “Top 10 Lessons on Strategy”, MIT Sloan Management Review BSDW 2024 Unit 6 | © Brian Armstrong 2024 | Slide 45  A Recipe for Business Success Strategy Prospering in the 4th IR Execution People Magic happens here BSDW 2024 Unit 6 | © Brian Armstrong 2024 | Slide 46  Business Strategy for a Digital World End of Session 6 BSDW 2024 Unit 6 | © Brian Armstrong 2024 | Slide 47