By combining our Art and Science of Transformation® framework with a well-established strategic planning tool, firms can identify what needs to be done to ensure successful transformation.
“Strategic transformation” refers to the way in which a firm must select its most appropriate strategic positioning at any given time, and undergo the organizational transformation necessary for this to be successfully pursued. Strategic repositioning becomes necessary due to developments in the external environments in which firms operate, which make it difficult to remain competitive using existing strategies. Factors such as market competition, changing industry paradigms, shifting customer preferences and technological developments often result in a need for repositioning in three key strategic areas: products and services, customer/market segments, and geographic markets.
By combining the Art and Science of Transformation® framework with a well-established strategic planning tool, the (GE/McKinsey) Market Attractiveness/Business Strength Matrix, firms can improve the effectiveness of their strategic positioning process and identify what needs to be done to ensure a successful transformation. In the framework, science refers to the application of specialized tools, methods and techniques and the use of quantitative data, while art involves people-related or intuitive skills and the use of qualitative data.
Though the conventional use of the Market Attractiveness/Business Strength Matrix has often been mainly quantitative and science based, the application of art can help ensure that important qualitative or intangible influences on market attractiveness and business strength are effectively identified and measured. These might include, for example, employee engagement, customer trust, authentic business relationships, cultural distance, and brand perception.
The use of an art and science based strategic positioning process is important in informing business decisions and resource allocation, and also offers other organizational benefits. These include helping the organization to formulate a strategic vision and goals, and clearly communicate these to stakeholders; providing the basis for developing detailed strategic and operational plans; identifying how the organization needs to transform in order to achieve its new strategic direction, and providing the basis for planning and prioritization of specific transformation projects.
Strategic Repositioning and Transformation
The changing environments in which firms operate often make it difficult to remain competitive using existing business strategies. Evolving markets, new industry paradigms, shifting customer preferences and rapid technological change frequently result in a need for strategic repositioning in three key areas: products and services; target customer segments, and geographic markets. Organizational transformation then becomes necessary to ensure that firm’s culture, systems, and processes are properly aligned with the new strategic direction and that its fundamental purpose and core goals can be effectively pursued.
The Art and Science of Transformation®
Successful strategic transformation requires a holistic, organization-wide approach that acknowledges the linkages and interdependencies between the firm’s culture, systems and processes. However, transformation involves high risks and many initiatives fail.
The “Art and Science of Transformation”® framework is a strategic approach designed to minimize the risks of change and maximise the likelihood of a successful transformation initiative that delivers the intended business benefits.
This approach is based on the understanding that transformation requires the right combination of “art” and “science”, defined as the soft skills necessary for managing the people-related aspects of change (the “art”), and the effective application of project management tools and techniques (the “science”). The “art” of transformation also include the more intuitive or intangible skills often referred to as “acumen”.
A Recommended Approach to Strategic Positioning
The Market Attractiveness/Business Strength Matrix is a portfolio theory tool based on a three-by-three grid with its axes corresponding to the variables of market attractiveness and business strength (Figure 1). Its purpose is to assist in strategic planning and resource allocation decisions by analyzing the expected future importance to the firm of its various products, services and markets, over a three- to five-year timescale. The tool uses multiple factors to assess performance against the two main dimensions and allows users to determine what these factors should be.
Figure 1: Market Attractiveness/Business Strength Matrix
The conventional use of this strategic positioning tool has often relied too heavily on a “scientific” approach to strategy development, with an over-emphasis on quantifiable aspects of performance and a relative lack of attention to the more qualitative, people-related factors. As a result, lucrative market opportunities may be missed, organizational capabilities may go unrecognized and risk factors may remain undiscovered.
By combining the Art and Science of Transformation® framework with a well-established strategic planning tool, the (GE/McKinsey) Market Attractiveness/Business Strength Matrix, firms can improve the effectiveness of their strategic positioning process and identify what needs to be done to ensure a successful transformation. The value of art skills can be illustrated at the following key stages of the process as follows:
Selecting Products/Services or Markets for Assessment: When a company has little or no direct experience of producing a particular type of product or service, or operating within particular markets, it is important to supplement any available “hard” data with more intuitive art-based skills. For example, business acumen is important to help determine whether a new product line or market is likely to be a “good fit” for the organization quickly grasp the potential benefits and risks, and cultural/political awareness will be important to understand the characteristics of new international markets and the potential opportunities and risks involved in expanding into these.
Defining Market Attractiveness and Business Strength: When developing indicators of market attractiveness and business strength, it will be important to place as much emphasis on qualitative as on quantitative factors. For example, one important indicator of market attractiveness will be a measure of how closely the items being considered are to the firm’s fundamental purpose, defined in terms of how it meets basic human needs. When defining business strength, an art and science-based approach will be important in order to incorporate consideration of a firm’s “strategic capabilities”. These comprise the ways in which the organization has learned to effectively combine and integrate people-related skills and expertise with non-people related assets to develop a competitive edge.
Interpretation and Further Evaluation: Once items have been ranked in the matrix, a holistic, art and science based approach is important in order to understand the strategic positioning implications for the organization. This involves considering possible interdependencies, possibilities for leveraging expertise between areas, and the use of a dynamic perspective that anticipates likely changes over time. Further art and science-based data collection will often be necessary to refine the results, including more sophisticated analysis, modelling and forecasting techniques, as well as brainstorming sessions, and team discussions to provide improved insights into particular product areas and customer groups.
The Benefits of Strategic Positioning
An art and science based strategic positioning process offers several important benefits to an organization, including:
Informing Business Decisions and Resource Allocation: Having a clear strategy enables the organization to make trade-offs when deciding what to focus on and where to limit its activities and investments, in order to secure a competitive advantage.
Communications and Branding: The process of strategic positioning helps the organization to formulate a strategic vision, and set transformational and operational goals and objectives. These can then be clearly communicated to employees and other organizational stakeholders, to help secure their engagement with the goals and the inputs and involvement necessary for achieving them.
Strategic and Operational Planning: The strategic positioning process provides the basis for the organization to develop an integrated strategic plan based on the outcomes relating to both products/services and markets, and to use to develop an operating strategy and detailed plans. The operating strategy and plans will set out exactly how the service/product and market strategy will be achieved, including for example how new clients or customers will be generated, and the necessary staff resources and expertise to achieve this.
Transformation Planning and Implementation: Once the ideal operational model for the firm has been determined, the organization can identify gaps between this and its current operational model, and use these as the basis for developing “transformation projects”. Initiatives can be planned and prioritized within the available resources, so that they have maximum impact on the ability of the organization to effectively pursue its strategic goals as quickly as possible.