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MGT451_VideoTranscript_Mod01_P1 Simplify Your Strategy(1)

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♪ Noise in Background with words 'The Management Tip' ♪ ♪ Noise in background with words 'Simplify Your Strategy' ♪ Why is it that great strategies end up having no impact on an organization? Now the typical answer is 'we had a great strategy, just had lousy execution'. That's a cop out. The reality is, in most cases, when a company fails to execute its strategy the strategy itself is a large part the problem. Now for a strategy to influence action it must be remembered. To be remembered it must be understood, and to be understood a strategy must be simple. Any strategy that's too complicated to execute isn't a strategy, it's a book report. How can you distill a thick complicated strategy document down to its simple essence that can be understood, remembered and acted upon? You can do this by answering 3 simple questions. A strategy is defined as how firms create, capture, and sustain economic value. An economic value, in simple terms, is just the gap between what your customer is willing to pay for your good or service, and the cost of producing it. Strategy, then, is about the things that will move these needles: significantly increase willingness to pay, and hold it there or significantly cut costs, and hold it there. Typically, in most organizations, it's not a hundred or a thousand things that will move the needles. It's a couple of things, and getting clarity on those key drivers of value creation is the first question that you have to answer to simplify your strategy. The second question you have to answer to simplify your strategy is what are the critical few challenges? Now, this is not a laundry list exercise to fill up flip chart, after flip chart about everything that we have to do. No, no, no, this is about a management team coming together and coming to a shared agreement, our 3, 4, 5 obstacles that if we could overcome them would ensure we could create economic value. And these could be external obstacles, competitive dynamics, regulation; they can be internal: a risk-adverse culture for instance, lacking capabilities. The important thing though is managers come to a shared understanding of what those obstacles are. The third question you have to ask and answer to execute our strategy is what are our must win battles? It's one thing to understand how to create value, it's another to get agreement on the obstacles, but how you translate insight into action is by understanding what are the couple of battles that we have to win? Company wide, in the midterm, next couple - 2, 3, 4, 5 years - that if we could win these battles we'd be assured we could overcome the major obstacles to value creation. If, as a management team, you can take your complicated strategy and distill it down to its simple essence: value creation, critical challenges, must win battles, You can bridge the gap from strategic insight to effective execution. ♪ Music in background ♪ Simplify Your Strategy ♪ Music in background ♪ 1. Clarify the key drivers behind value creation. ♪ Music in background ♪ 2. Identify critical challenges ♪ Music in background ♪ 3. Determine your must-win battles ♪ Music in background ♪ The HBR Channel - Harvard Business Review

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Duration: 3 minutes and 15 seconds
Language: English
License: Dotsub - Standard License
Genre: None
Views: 14
Posted by: christineward on Apr 1, 2016

Simplify Your Strategy(1)

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