Lecture 2 - Strategic Entrepreneurship Flashcards
What are the 5 strategy environments?
Classical
Adaptive
Visionary
Shaping
Renewal
What are the steps of strategy renewal?
1) Operational turnaround (cost cutting, reallocation of internal resources etc)
2) Picking a new strategic approach for innovation and growth
What is the definition of Entrepreneurship?
The process by which individuals/ firm identify and pursue entrepreneurial opportunities without being immediately constrained by their current resources
What is the definition of Corporate Entrepreneurship?
The use or application of entrepreneurship within an established firm
What is the definition of strategic entrepreneurship?
Involves taking entrepreneurial actions using a strategic perspective
What are the 4 forms of strategic entrepreneurship? (Covin and Miles 1999)
1) Sustained regeneration
2) Organisational rejuvenation
3) Strategic renewal
4) Domain redefinition
What is the 4 questions to ask when trying to derive a new value curve?
4 questions to ask:
Reduce: which factors should be reduced below the industry standard?
Raise: which factors should be raised well above the industry standard?
Eliminate: which factors that the industry takes for granted should be eliminated?
Create: which factors should be created that the industry has never offered?
What are Ireland, Hitt and Sirmon’s (2003) steps for successful strategic entrepreneurship and thus competitive advantage? (IMPORTANT)
1) Entrpreneurial Mindset
Recgnising opportunities, alertness, goals
Entrepreneurial Orientation
Risktaking, innovativeness, proactiveness
Leadership
2) Managing Resources Strategically
Financial, human, and social capital
3)Apply Creativity and develop innovation
How does conventional logic differ to value innovation (Kim and Mauborgne 1997)?
Along the 5 basic dimensions of strategy:
1) Industry assumptions
2) Strategic focus
3) Customers
4) Assets and capabilities
5) Product and service offerings
How does conventional logic differ to value innovation in terms of industry assumptions?
value innovators dont take industry conditiond as set in stone, and instead look for blockbuster ideas no matter how the rest of the industry is fairing
How does conventional logic differ to value innovation in terms of strategic focus?
Conventional logic leads companies to compete at the margin for incremental share
Value innovation starts with an ambition to dominatethe market by offering a huge leap in value
Value innovators do not focus on competing, conventional logic does
How does conventional logic differ to value innovation in terms of customers?
value innovation builds on the commonalities in the features that customers value, as opposed to differences
How does conventional logic differ to value innovation in terms of assets and capabilities?
Value innovators often ask ‘what if we start anew?’ as opposed to working with what they have
Yet value innovators still leverage existing assets, they just arent constrained by them
How does conventional logic differ to value innovation in terms of product and service offerings?
Conventional competition takes place within clearly established boundaries defined by the products/ services that the industry traditionally offers
Value innovators often cross those boundaries, thinking in terms of the total solution buyers seek
value innovators are also not defined by the industrys definition of what should or should not be done
What questions should be asked when creating a new value curve?
- Which of the factors that our industry takes for granted should be eliminated?
- Which factors should be reduced well below the industrys standard?
- Which factors should be raised well above the industrys standard?
- Which factors should be created that the industry has never offered?
What is a value curve?
a graphic depiction of a companies relative performance across its industrys key success factors
When would a value innovator fall into the trap of conventional strategic logic?
When the competition tries to imitate a new value curve
When should managers resist innovation, and instead embark on geographical expansion amd operational impovements?
When a companies value curve is fundamentally different from that of the rest of the industry, and the difference is valued by most customers
Which firms are best at repeating value innovation?
Those that took advantage of all three platforms which value innovation can take place: product, service, and delivery
What are pioneers?
the businesses that offer unprecedented value and are the most powerful sources of profitable growth
Settlers are the businesses with the value curves that confom to the basic shape of the industry
What are migratiors?
Their potential lies somewhere in between pioneer and settler
such businesses extend the industry curve by offering customers more for less, but they dont alter its basic shape
How would a company find the right strategic style? (Reeves et al. 2012)
Assess the industry
Consider three critical factors: predictability and malleability (can we shape it?), and harshness (can we survive it?)
Put these two variables together and four broad strategic styles emerge: classical, adaptive, shaping and visionary
What does predictability mean?
how far into the future and how accurately you can forecast demsnd, corporate performance, competitive dynamics, and market expectations
What does malleability mean?
to what extent can you or your competitors influence those factors
What is a classical strategic style?
when you oeprate in an industry whose environment is predictable but hard for your company to change
Can work well as a stand alone function as it requires special analytic and quantitative skills
Works well in predictable environments (oil)
What is an adaptive strategic style?
Involves constantly refining goals and shift, acquire or divest resources smoothly and promptly
The goal is not to optimise efficiency, but engineer flexibility
Specialist fashion retailing is a good example
Explain how specialty fashion retailing is a good example of an adaptive strategy?
tastes change quickly, brands become hot overnight, no amount of data or planning will grant execs the luxury of knowing in advance what to make, so best bet is to produce, roll out, and test
Describe how Zara adopts an adaptive style?
Maintains strong relationships with external suppliers to design, manufacture, andshio a garment in a fraction of industry average time, allowing for experimentation
their style requires relationships among its planners, designers, manufacturers and distributors
What is a shaping strategic style?
Embraces short or continual planning cycles
Flexibility is paramount and little reliance placed on prediction mechanisms, instead strategy is often implemented as a portfolio of experiments
shapers focus beyond company boundaries, often by rallying a formidable ecosystem of customers, suppliers by defining attractive new markets etc
What is a visionary strategic style?
Considers the environment not as given but as something that can be molded to advantage
has more in common with a classical than an adaptive approach
establishes a clear goal, so strategists can take deliberate steps to reach it without having to keep many options open
What traps do companies sometimes fall into?
They tend to overestimate predictability and malleability
They dont feel competent in building adaptive capabilities needed to address unpredictability
Implementing adapative capabilities can be highly countercultural, yet classical strategies create a culture that prizes efficiency and eliminates variation by prioritising economies of scale and scope
How could a company get a better sense of the extent to which an environment can be changed?
Measure industry youthfullness, concentration, growth rate, innovation rate, and rate of technlogical change
When would a company have to manage more than one strategic style at a time?
if units within a company would benefit from operating in a strategic style other than the one best suited to the industry as a whole
Provide an example of a company that might adopt a classical strategy
Large, established companies in stable industries like oil,
examples include Coca Cola
Explain the characteristics of companies that adopt an adaptive strategy
Companies in this environment need to be agile, experiment rapidly, and adapt to changing conditions
What are the first steps that companies should consider if they are going through strategic renewal?
It is important to undergo an operational turnaround, focusing on cutting costs, reallocating internal resources, and improving efficiency
This is often followed by an approach that supports both innovation and growth
Define strategic entrepreneurship and highlight its importance in todays business landscape
Strategic entrepreneurship involves simultaneously opportunity seeking and advantage seeking behaviours and results in superior firm performance
It is vital because it combines innovation with strategic thinking, enabling firms to identify and exploit opportunities for growth and success long term
Explain corporate entrepreneurship and how it can be beneficial to established firms
Corporate entrepreneurship refers to the application of entrepreneurial principles within an established organisation
This is done to foster innovation, encourage risk taking, and drive new business ventures within the existing corporate structure, ultimately enhancing competitiveness
Explain the concept of value innovation and its relation to domain redefinition
Value innovation involves creating new value for customers by simultaneously lowering costs and increasing benefits, often by eliminating andf replacing existing attributes
This often leads to domain redefinition, as the company creates a new market space or segment
How does the concept of strategic entrepreneurship relate to the development of competitive advantage?
Strategic entrepreneurship is central to developing competitive advantage by fostering innovation, proactiveness, and effective resource management
By combining strategic vision with entrepreneurial actions, firms can create unique products/ services, or business models that give them an edge
Explain a classical business environment
Highly predictable industries with strong brands, high regulation, and limited technology change
Winning here means being big anf efficient
Explain an adaptive business environment
Characterised by unpredictability and technological disruption
Winning here mesns being flexible and experimentation oriented
Explain a visionary business environment
Predictable industries with a focus on innovation
Leaders of such companies are visionaries who are not locked into current solutions and traditional ways of thinking
Explain a shaping business environment
Despite unpredictability, innovators here create an ecosystem of many companies that collectively reshape the industry
Winning here is all about influencing, orchestrating and coevolving
Explain a renewal environment
Characterised by harsh conditions, when a company needs transformation
The strategy should aim not to create competitive advantage but to ensure survival by restructuring to free up and redistribute resources
Only when survival is achieved should an attempt to deploy another strategy be considered
What do fortune 500 remaining companies have in common?
They are ambidextrous, remain market focused and driven from the outside as opposed to being introverted
