Transcript European Financial Services

Focus on the Big Picture, Not the Numbers
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Focus on the Big Picture, Not the numbers
◦ Use the strategy canvas
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Blue Ocean strategies have three qualities
◦ Focus
◦ Divergence
◦ Compelling tagline
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Drawing the strategy canvas is not an easy
task
Four Steps
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Visual
Visual
Visual
Visual
Awakening
Exploration
Strategy Fair
Communication
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European Financial Services (EFS) is 150 year
old service that adopted this method of
developing strategy.
Because of the strategy it yielded a 30%
revenue boost in the first year.
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Problems
◦ Its common mistake to discuss changes in strategy
before resolving difference of opinion about the
current state of play.
◦ Executives are reluctant to accept the need for
change
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Compare side by side with your competitors
by drawing your “as is” strategy
See where your strategy needs to be changed.
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Explore the six paths to creating a blue
ocean.
1. Look across alternative industries
2. Look across strategic group within industry
3. Redefine the industry buyer group.
4. Look across to complementary products and
service offerings.
◦ 5. Rethink the functional-emotional orientation of its
industry.
◦ 6. Participate in shaping external trends over time.
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Observe the advantages of alternative
products and services.
See what factors your should eliminate,
create, or change.
EFS sent managers to find information about
how to create a blue ocean.
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EFS held a visual strategy fair where both teams
presented their strategy canvases
Attendees ranged from noncustomers to senior
corporate executives
12 strategies were presented and after each judge
was given 5 sticky notes to place next to their
favorite and explain why they did not vote for the
other value curves
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Results:
◦ 1/3 of what they thought were key competitive
factors, were marginal to customers
◦ 1/3 were not well articulated or had been overlooked
in the visual awakening phase
◦ Executives needed to reassess assumptions, such as
EFS’s separation of its online and traditional business
Following the strategy fair, the teams were able to draw
a value curve that was a truer likeness of the existing
strategic profile than anything they had produced
earlier.
By collapsing its online and traditional businesses into
one compelling offering, EFS substantially cut the
operational complexity of its business model, making
systematic execution far easier.
Eliminate
Raise
Relationship Management
Ease of use
Security
Accuracy
Speed
Market Commentary
Reduce
Create
Account executives
Corporate dealers
Confirmation
Tracking
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EFS gave every employee a one-page picture
showing its new and old strategic profiles so
that everyone could see where to focus their
efforts to create a compelling future.
The new picture became a reference point for
all investment decisions.
Only ideas that would help EFS move from the
old to the new value curve were approved.
When businesses presents their strategy
canvases to one another, they deepen their
understanding of the other businesses in the
corporate portfolio.
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Creation of the Value Innovation Program
(VIP) Center
Various business units come together to
typically discuss strategy canvases.
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A visualizing strategy can help managers see
future growth and profits.
Company’s are sorted into three different
categories.
Pioneers- Blue ocean strategist most powerful source of profitable
growth. Value curve diverges from competition.
Settlers- Have a “me to” approach to business, stuck in the red
ocean. Value curve conforms to the basic shape of the industry.
Migrators- “more for less business approach, offer improved value
but no innovative value. The try to extend the industries value curve
The
more settlers
the better
opportunity to
value-innovate and
create a blue ocean.
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Shift your future
growth to pioneers
Settlers generate cash
but marginal growth.
Pioneers have much
growth potential as a
offset of growth.
Managers should
manage their
portfolios wisely with a
balance between
profitable growth and
cach flows.
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Ideal Strategic Planning:
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Collective wisdom building
Conversational
Building the big picture
Creative component
Motivational/invoking willing commitment
Existing Strategic Planning:
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Top-down or bottom-up planning
Solely documentation-driven
Number-crunching exercises
Strictly analysis-driven
Bargaining-driven/producing negotiated commitment
-Aristotle