Business strategic formultation

Business Strategy Formulation: Theory, Process, and the Intellectual Revolution

Anthony W. Ulwick

QUORUM BOOKS

Business Strategy Formulation

Business Strategy Formulation
Theory, Process, and the Intellectual Revolution
Anthony W. Ulwick

QUORUM BOOKS Westport, Connecticut • London

Library of Congress Cataloging-in-Publication Data Ulwick, Anthony W., 1957– Businessstrategy formulation : theory, process, and the intellectual revolution / Anthony W. Ulwick. p. cm. Includes bibliographical references and index. ISBN 1–56720–273–X (alk. paper) 1. Strategic planning. I. Title. HD30.28.U44 1999 658.4'012—dc21 99–13714 British Library Cataloguing in Publication Data is available. Copyright 1999 by Anthony W. Ulwick

All rights reserved. No portion of this book may bereproduced, by any process or technique, without the express written consent of the publisher. Library of Congress Catalog Card Number: 99–13714 ISBN: 1–56720–273–X First published in 1999 Quorum Books, 88 Post Road West, Westport, CT 06881 An imprint of Greenwood Publishing Group, Inc. www.quorumbooks.com Printed in the United States of America

The paper used in this book complies with thePermanent Paper Standard issued by the National Information Standards Organization (Z39.48–1984). 10 9 8 7 6 5 4 3 2 1

Dedicated to my wife, Heather Lee, and our son, Anthony—my sources of love and inspiration.

Contents
Preface Acknowledgments Introduction 1. The Intellectual Revolution 2. Transforming the Thinking Process 3. Structuring the Process of Strategy Formulation 4. DesiredOutcomes: Redefining the Concept of ‘‘Requirements’’ 5. Defining the Desired Competitive Position 6. Integrating Structure and Information into a Process for Strategy Formulation 7. Engaging in the Intellectual Revolution 8. Case Studies and Evaluations 9. Executing Concepts of Strategy Appendixes A. Capturing and Prioritizing Desired Outcomes 163 173 177 ix xv xvii 1 17 37 55 79 99 117 133 143

B.Prioritizing Predictive Metrics C. Using Predictive Metrics

viii

Contents

Glossary Bibliography Index

189 197 199

Preface
When joining IBM in 1980, I was proud to be associated with such a respected and profitable organization. Working in the personal computer division was especially exciting as we were breaking new ground. The IBM PC was one of the biggest success stories of thedecade. After its release, we worked on the development of other IBM products. They became known as PCjr, PS2 with Micro Channel Architecture and OS2. As you might guess, after putting in long hours over many years, we were sickened by the fact that these products were dismal market failures. I found it hard to believe that IBM’s product and business strategies could be so incredibly flawed. Costlymistakes like these should never be made. As a result, I began to inquire as to how IBM’s PC strategies were formulated and was shocked to find out what little effort was put forth in this area. It was apparent, however, that IBM was not alone. Many organizations failed to put enough concentrated effort into their strategic planning and product planning processes and often faced unfortunate results.The 1980s gave way to many strategic failures including New Coke, the NeXT desktop computer, Pepsi AM, dry beer and others. It was obvious that businesses could operate much differently. It was at that point that I made a commitment to myself to find, or create, a strategy formulation process that would prevent organizations from making such costly strategic errors. Over the next five years I spentmost of my time studying the theories, ideas and methods that shaped the field of strategy formulation. I studied the works of experts in the field including Michael Porter, Gary Hamel, C. K. Prahalad, Kenchi Ohmae, Igor Ansoff, Ken Andrews, Alfred Chandler, Henry Mintzberg and others. I studied various approaches to qualitative research, quantitative research, market segmentation, decision making...