Strategy

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Strategy
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• Making strategy work is more difficult than the
  task of strategy making
• Lawrence Hrebiniak

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Todays Topics

• Strategy Effectiveness
• Maximizing Impact and Avoiding Pitfalls

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A little background.
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Three Reasons why Good Strategies Fail

• Execution
• Execution
• Execution
• Hallmark of a good strategy is a firms ability
  to translate it into action

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Execution ? Tactics
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Execution ? Tactics
Execution Getting Things Done
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Why arent strategies executed well?

• Fuzzy frame of reference
• Dysfunctional separation between strategy
  formulation and strategy execution
• Resistance to change
• Structural issues
• Poor communication
• Conflicting mandates reward systems
• Weak linkage among strategies
• Diffusion of resources and energy
• Lack of accountability

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Common denominator People

• The lifeblood of an organization, strategies are
  vessels that affect and are affected by living
  and breathing people.

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Levels of Strategy

• Corporate strategy
• Business-level strategy
• Marketing strategy

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Market Orientation

• Consistent and synchronized focus on customer
  needs and competitive advantage.

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But who is the customer?
Manufacturer
Wholesaler/Distributor
Retailer
Consumer
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But who is the customer?
Manufacturer
Wholesaler/Distributor
Retailer
Consumer
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And are functional areas really aligned?

• Operations
• Marketing / Sales

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Levels of Strategy

• Corporate strategy
• Business-level strategy
• Marketing strategy

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Brand
Field
Distributors
Retailers
Consumers
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Brand
Field
Distributors
Retailers
Consumers
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(No Transcript)
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As the pendulum swings..
CORPORATE
FIELD
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Brand Positioning/Strategy (Multiple Brands)
Brand Promotions
Media Services
Event Marketing
Field Marketing (Planning Integration)
Field Sales
Distributors
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Brand Positioning/Strategy (Multiple Brands)
Brand Promotions
Media Services
Event Marketing
Field Marketing (Planning Integration)
Ntl Retail Sales
Field Sales
Distributors
Retailers
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• Investment Model Excerpt

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Five Basic Criteria Were Used For Determining
Investment Markets

• Brand Volume 30
• MC/bbl 25
• Industry Volume 15
• Brand Share 15
• Brand Trend 15
• 12 MMT 7.5
• YTD 7.5

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Tier Breaks Were Established For Varying Levels
Of Investment

• Brand A example
• Tier 1 12 markets representing 35 of volume
• Tier 2 26 markets representing 25 of volume
• Tier 3 24 markets representing 15 of volume
• 60 75

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For Each Tier, An Investment Model Was
Established
For each Tier 1 Brand A market 1. Estimate the
cost of a XXXX TRP radio plan. 2. Assume that
XX of the local marketing investment is spent
against radio. 3. Derive a local marketing
spending target, i.e., divide Step 1 by Step
2. 4. Adjust spending targets upward if market
indexes highly on Hispanic population, LDAC-24
population growth, or is a designated competitive
target attack/defend market.
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Fixed Commitments and Shortfalls were Identified
and Accommodated
Brand B Example Contract spending in 4 markets
exceeds the total recommended local marketing
investment City A Covered cost of
contracts plus City B equivalent of XXXX
radio TRPS X X City C City D Covered
cost of contracts plus normal Tier 1 spending
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Brand A LOCAL MARKETING INVESTMENT STRATEGY

• General Overview
• Investment recommendation was based on a weighted
  average derived from the investment model plus
  added emphasis for the following brand
  imperatives.
• The template identified XX investment markets
  that account for XX of the brands volume.
• Six additional markets were added based on brand
  imperatives.
• The Brand A investment for 2001 is XX million or
  XX of the local marketing budget.
• Contracts account for XX (XX MM) of the
  investment.

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Brand A LOCAL MARKETING INVESTMENT STRATEGY

• Tier 1 Spending Path
• Allocate resources against complete array of
  local investment opportunities.
• Local radio
• OOH
• Marquis sports/music/event sponsorships.
• Activation funding budget.
• Hispanic programming/sponsorships.
• National promotion localization funding.
• Local fairs/festivals/sponsorship funding.
• Local ground-up promotions budget.

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Levels of Strategy

• Corporate strategy
• Business-level strategy
• Marketing strategy

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Multidimensionality

• Strategy begets strategies begets strategies
  begets tactics..
• Linkage?

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Destination, objectives, strategies,
measures(DOSM)

• Company D O S M
• Division D O S
  M
• Region D O
  S M
• Area
  D O S M

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Destination, objectives, strategies,
measures(DOSM)

• Company 2 4 6 12
• Division 4 6 12
  20
• Region 6 12
  20 30
• Area
  12 20 30 50

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Two problems

• Fuzziness and slippage along the line
• Somebody has to execute this stuff

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An Illustration
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It all comes down to choices

• The essence of strategy is what not to do.
  Michael Porter, What is Strategy, HBR
• Not choosing means creating managerial
  complexity that results in doing business with
  yourself, rather than with your customers
• Michael Treacy Fred Wiersema
• Discipline of Market Leaders

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Strategy is a means, not an end

• Mediocre strategy well executed trumps a great
  strategy poorly executed
• What are you willing to drop to get what you
  want?
• Have to be able to say NO

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Do a few, unique, things really well

• Define what success looks like
• Align the air war and ground war
• Mobilize troops
• Measure reward results
• Share accountability

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Impact I3

• Innovation X Integration X Intensity