RBL Lecture 3 Strategizing PDF

RESPONSIBLE BUSINESS LEADERSHIP STRATEGIZING Prof. dr. Rob van Tulder RSM - a force for positive change  SEQUENCE OF PRESENTATIONS Lecture Literature Lecturer Date Chapter 1...

RESPONSIBLE BUSINESS LEADERSHIP STRATEGIZING Prof. dr. Rob van Tulder RSM - a force for positive change  SEQUENCE OF PRESENTATIONS Lecture Literature Lecturer Date Chapter 1 Ferran & L1: Introduction “Management in Tuesday Sept 3, 16:00-17:45 Jelmer context” Chapter 4 L2: Sustainability “Sustainable Ferran Thursday Sept 5, 11:00-12:45 management” Chapter 5 Rob van L3: Strategizing Monday, Sept 9, 13:00-14:45 “Strategizing” Tulder Chapter 3 L4: Responsibility “Responsible Ferran Monday Sept 16, 13:00-14:45 management” Chapter 6 Daan L5: Entrepreneuring Tuesday Sept 24, 13:00-14:45 “Entrepreneuring” Peeters Chapter 2 Muel L6: Ethics Friday Oct 4, 11:00-12:45 “Ethical management” Kaptein  BOOK AND RSM EXTENSIONS PART III – business case + Partnering strategy CHAPTER 5 PART II – STRATEGIZING – wicked problems and SDGs → Preparation for exam → Preparation for workshop POSTERS AND MORE INFORMATION: VISIT THE WEBSITE https://www.principlesofsustainablebusiness.nl/  COMPONENTS LECTURE 4 Brief introduction of myself Strategizing – phase 1 and value proposition Analyzing context – SWOT and wickedness Formulating strategies – CSR 1.0-4.0 Executing and evaluating – why the SDGs?  STRATEGIZING PROCESS: PHASE 1 Credit: Slidemodel.com 6 Responsible competitiveness The achievement of a competitive advantage as an above-average value creation for wider stakeholders. Irresponsible competitiveness The achievement of a competitive advantage at the cost of their stakeholders. 7 Vision statement Delineates what management ultimately wants to achieve. Mission statement Defines what management and its organization is and does at a certain point in time, typically including market, customers, products, processes and values. Strategic objectives and goals Translate vision and mission to medium and long run operational goals. 8 SO….. WHAT ABOUT THE VALUE PROPOSITION? BUSINESS MODEL → VALUE PROPOSITION https://www.youtube.com/watch?v=QoAOzMTLP5s Vintage ads – values: safe, early Values: sporty, health, cool  New controversies, new value propositions? Online gambling  New controversies, new value propositions? Crypto – ponzi scheme  New controversies, new value propositions? Vaping? CEO STATEMENT https://www.youtube.com/watch?v=p42ZMNjRQ6k  Analysing value proposition: poor-rich “Poor value proposition”: avoid harm “Rich value proposition” General characteristics Instrumental, simplistic, managerial, risk Resilient, inspirational, entrepre-neurial, aversive, quantitative and easy to risk taking; qualitative, societal orientation measure; company oriented only (also) Marketing Sell as much as possible; customer is cost sell consumer value minimizer only and greedy support latent demand (for higher needs) Finance Profit maximization; cost minimalizing; Enable the financial means for a company creating increased shareholder value to thrive; (biggest return on investment) Purchasing/ https://www.youtube.com/w supply Purchase as cheap and as flexible as Empower suppliers (for instance through chain possible (no commitment to suppliers) atch?v=_39b8e5PXWw innovation) to contribute to your value creation process HRM Produce with the least number of people Organize an inspired and committed staff the highest possible output Strategic management Being the biggest, the first, amongst the Being the most innovative, creating the first in the sector most value for society,Chapter 9 solving particular societal problems (3 billion **; ***); being the best in something CASE OF MARKET FAILURE: BEING TOO BIG? → Why? Moral hazard problem  Value proposition: poor-rich SUSTAINABLE BUSINESS STRATEGIES “Poor value proposition”: avoid harm “Rich value proposition”: doing good General characteristics Instrumental, simplistic, managerial, risk Resilient, inspirational, entrepre-neurial, aversive, quantitative and easy to risk taking; qualitative, societal orientation measure; company oriented only (also) Marketing Sell as much as possible; customer is cost sell consumer value minimizer only and greedy support latent demand (for higher needs) Finance Profit maximization; cost minimalizing; Enable the financial means for a company creating increased shareholder value to thrive; (biggest return on investment) Purchasing/ supply Purchase as cheap and as flexible as Empower suppliers (for instance through chain possible (no commitment to suppliers) innovation) to contribute to your value creation process HRM Produce with the least number of people Organize an inspired and committed staff the highest possible output Strategic management Being the biggest, the first, amongst the Being the most innovative, creating the first in the sector most value for society, solving particular societal problems (3 billion **; ***); being the best in something “The purpose of companies [organizations] is to add value to society. Profits are a means to an end, not an end in itself. “  COMPONENTS LECTURE Brief introduction of myself Strategizing – phase 1 and value proposition Analyzing context – SWOT and wickedness Formulating strategies – CSR 1.0-4.0 Executing and evaluating – why the SDGs?  STRATEGIZING PROCESS: PHASE 2 Credit: Slidemodel.com 22 Inside-out linkages describe how the internal environment influences the external environment. Outside-in linkages describe the influence of external factors on the internal company environment. 23  THE RESPONSIBLE MANAGEMENT SWOT ANALYSIS: THEORIES RESOURCE BASED VIEW OF THE FIRM: Level 1 STAKEHOLDER THEORY: Level 2 - 4  EXAMPLE SDG2 (HUNGER/FOOD SECURITY)  HUNGER AS ‘WICKED PROBLEM’? Simple Complex Wicked EASY TO SOLVE RESISTS SOLVING RESISTS DEFINING Clear problem with a The problem and Problem and clear solution solution are not solution not clear but can be understood and intervention understood with levels keep shifting when 1 2 3 4 time we try to define them Technical Organizational Societal → contested NEXUS CHALLENGE: SDG 2 Source: PWC NEXUS: DIRECT – INDIRECT LINKS EXTENSION: ISSUE CONTEXT..... WICKED PROBLEMS ANALYSIS Chapter 4+5  LEVEL 1: FAILURE 1. GOVERNMENT FAILURE 3. POSITIVE EXTERNALITIES  LEVEL 2: FAILURE 2. NEGATIVE EXTERNALITIES 3. POSITIVE EXTERNALITIES  LEVEL 3: FAILURE 3. POSITIVE EXTERNALITIES  LEVEL 4: FAILURE 4. COLLECTIVE ACTION SO............WICKEDNESS? 1 2 3 Institutional 4 void Trust gap  COMPONENTS LECTURE Brief introduction of myself Strategizing – phase 1 and value proposition Analyzing context – SWOT and wickedness Formulating strategies – CSR 1.0-4.0 Executing and evaluating – why the SDGs?  STRATEGIZING PROCESS: PHASE 3 Credit: Slidemodel.com 36  THE ‘STRATEGY HIERARCHY’ Corporate-level strategies answers the question ‘In how many markets do I want to compete and how many stages of my value chain activities do I perform myself?’ Business-level strategies gives guidance on ‘How to manage a strategic business unit competing on a certain product market’. ‘How do single business functions support the overarching strategic objectives?’ is the question to be answered by the functional level strategies. 37  CANVAS → CANVAS+ The business ecosystem Key Key activities Value Customer Customer Cost structure + partnerships propositions relationships segments The most important things a company The bundle of products and Type of The groups of must do to make its people or Social costs services that create relationships business model organizations work value for a specific customer segment, the company The network of aims to reach and which solves a suppliers and Key resources Channels and serve customer problem partners or satisfies a need How a company Environmental costs The most important communicates assets required to The reason why with and reaches Revenue streams + make a business customers turn to his customers to model work one company over deliver the value another proposition Social benefits Cost structure Revenue streams The cost incurred to operate a business model The cash a company generates from Environmental benefits each customer segment  REFRAMED CANVAS+ MODEL The business ecosystem Key partnerships Key activities Value propositions Customer Customer relationships segments LEVEL 1: create value LEVEL1: design value Key resources Channels Cost structure Revenue streams LEVEL 1: capture and scale value Social costs Social benefits LEVEL 2: Negative externalities LEVEL3: positive externalities (spread value) (destroy value) Environmental Costs Environmental Benefits LEVEL 4: sharing value (net impact) csr executive  BUSINESS MODELS + BUSINESS CASE http://www.robvantulder.nl/projects /global-business/global-business- moocs/ www.principlesofsustainablebusiness.nl/ cases csr executive  THE BUSINESS CASE FOR SUSTAINABILITY/CSR The discussion on sustainability often concentrates on the question whether it ‘pays to be sustainable’. This is also known as the search for the ‘business case’ for CSR or sustainability. ✓ Level 1: inactive → market failure ✓ Level 2: reactive → negative externalities ✓ Level 3: active → positive externalities ✓ Level 4: proactive → systems and ‘commons’ solutions → Represents levels of “Societal Logic” Four societal levels of “CSR logics” 4 3 2 1  FOUR BUSINESS CASES FOR SUSTAINABILITY: INACTIVE Corporate Self Responsibility: CSR = profit LOGIC: max. or cost ❑ COST REDUCTION THROUGH reduction ECOLOGY ❑ COMPLIANCE TO LAWS (NO COSTS) ❑ NOT BEING “IRRESPONSIBLE” CHALLENGES: ❑ SHORT-TERM ❑ ECOLOGY>SOCIAL>ECONOMIC ❑ NOT VERY ENTREPRENEURIAL Four societal levels of “CSR logics” 4 3 2 1  FOUR BUSINESS CASES FOR SUSTAINABILITY: REACTIVE LOGIC: Corporate Social Responsiveness: ❑ Reputation is major part of value CSR = limit rep. ❑ Limits losses when problems appear losses ❑ Dealing with ‘negative externalities’ CHALLENGES: ❑ improvisation rather than solution ❑ PR: window dressing; philantrophy ❑ greenwashing → internal effects From inactive to reactive Four societal levels of “CSR logics” 4 3 2 1  FOUR BUSINESS CASES FOR SUSTAINABILITY: ACTIVE LOGIC: ❑ Social enterprise: Entry strategy Corporate Social ❑ Big companies: purpose-driven Responsibility: CSR = strategic & ❑ Linked to future growth markets moral (entry) (needs) → positive externalities CHALLENGES: ❑ Niche: scaling → valley of death ❑ System does not change → crowding out responsibles ❑ Internal alignment in big companies Four societal levels of “CSR logics” 4 3 2 1  A CORPORATE PERSPECTIVE? “ I cannot thrive as a business in a society that fails.” http://www.youtube.com/watch?v=RcxIksJFMs4 → End lecture  FOUR BUSINESS CASES FOR SUSTAINABILITY: PRO-ACTIVE Corporate Societal LOGIC: Responsibility: ❑ Fix the system in order to thrive CSR = systemic & new economy ❑ First mover advantage ❑ Business is always about networking CHALLENGES: ❑ Creating the right partnerships ❑ Negative frames in society ❑ Intention >>>> Realisation  Proactive Company Mottos…… http://www.youtube.com/watch?v=PNPs4X_UTvY Follow your heart, use your head http://www.youtube.com/watch?v=R05I1WPk_Q8  COMPONENTS LECTURE Brief introduction of myself Strategizing – phase 1 and value proposition Analyzing context – SWOT and wickedness Formulating strategies – CSR 1.0-4.0 Executing and evaluating – why the SDGs?  STRATEGIZING PROCESS: PHASE 4 Credit: Slidemodel.com 54  Executing and evaluating: partnering 1 = Competitors - market 2 = Value chain 3 = NGOs – buyers - coopetition 4 = Governments - regulators 4 3 2 1 p.220 Softwiring implements professional management strategies throughout the organization´s social fabric. Hardwiring of a professional management strategy refers to its implementation into the organizational infrastructure. 56  CH.4: “SUSTAINABLE MANAGEMENT” → “SDG MANAGEMENT” From Triple-P: (People Planet Profit) John Elkington To Quintupple-P: People Planet Prosperity Peace Partnering FROM NEGATIVE TO POSITIVE FRAMES https://www.youtube.com/watch?v=RpqVmvMCmp0  OPPORTUNITY… 59  TOO SLOW: NEEDED A DECADE OF ACTION 2019: “Our world as we know it and the future we want are at risk. Despite considerable efforts these past four years, we are not on track to achieve the Sustainable Development Goals by 2030. We must dramatically step up the pace of Implementation” (SG Guterres - 2019) 2020: “Had we been further advanced in meeting the SDGs, we could better face this challenge - with stronger health systems, fewer people living in extreme poverty, less gender inequality, a healthier natural environment, and more resilient societies” https://www.youtube.com/watch?v=DdLqiTvFwJk  WRAPPING UP: PRINCIPLES OF STRATEGIZING (1/2) The goal of professional strategizing is the achievement of responsible competitiveness, the achievement of a competitive advantage in the form of an above-average value creation for wider stakeholders. The strategizing process consists of four types of practices 1) shaping objectives 2) analyzing context, 3) shaping strategies, and 4) evaluating strategies. Mission and vision statements are a ‘lighthouse’ for any strategizing activity and therefore should integrate social and environmental in addition to economic aspirations. → define the value proposition: poor - rich The three strategic environments are the company´s internal environment, the industry, and the macro-environment. In each environment, professional management factors play a crucial role. → Institutional context consist of ‘state’ – ‘market’ – ‘civil society → Considers the complementary dimensions of ‘value’ : public value – private value – civic value – common value 62  WRAPPING UP: PRINCIPLES OF STRATEGIZING (2/2) The strategy hierarchy consists of corporate strategies for a company with several strategic business units; the business unit strategy; and the functional strategy. Professional strategizing can create valuable diversification advantages on the corporate level, support strategic positioning for business units, and support functional strategizing contributions to the overall organizational strategy. Executing professional management strategies is based on ‘hardwiring’ them into organizational structure, and ‘softwiring’ them into the human community. → Understanding of ‘wicked problems’ and ‘wicked opportunities’ as frame to develop responsible competition strategies → Aligns with the Global Agenda for positive Change = SDGs and nexus challenges 63 GOOD LUCK!