Strategic axis define the sources of value to a business, and how the businesses could reposition themselves in changing environment. Strategic axes not only define what an organisation does, but the extent to which it does it.

Examples of strategic axis could include Product portfolio, geographical extent, passenger proposition etc.

Organisation’s business model is also essentially defined by its sources of value or strategic axes. One important thing about strategic axis is it should be measurable, only then one can aim to change it going forward. It is a wonderful tool which provides current status and future targeted status in the same graph and provides a basis of discussion between the management.

More on this in the book:

Beyond Default: Setting Your Organization on a Trajectory to an Improved Future

Competitors may not be out to maximise firm value, or they may hold different beliefs about the business landscape or may behave in ways that have a hard wired component, reflecting inertia rather than purposeful choice. This framework helps to predict their behaviour by taking such possibilities into account.

Its three main components are 1) Goals, Stated and Latent , 2) Beliefs, Explicit and Tacit, 3) Routines and other sources of Inertia

Strategy and the Business Landscape

Key Performance Indicators you should know – Presentation you can use

Reference:Key Performance Indicators (KPI): The 75 measures every manager needs to know

Know your Enemy, Know yourself …

Game Theory is a critical and influential framework in strategic management and decision-making that finds extensive application in management consulting. It offers a structured approach to understanding competitive and cooperative interactions among rational decision-makers. In essence, Game Theory provides a mathematical and conceptual basis for analyzing situations where individuals or organizations make decisions that are interdependent, where the outcome for each participant depends on the choices of others.

Key Concepts of Game Theory:

1. Nash Equilibrium: A situation in a non-cooperative game where no player can benefit by changing their strategy while the other players keep theirs unchanged. It represents a state of mutual best responses.
2. Dominant Strategy: A strategy that is the best for a player, regardless of the strategies chosen by other players.
3. Zero-Sum Games: Situations where one participant’s gain is exactly balanced by the losses of the other participant(s). In contrast, non-zero-sum games allow for mutual benefit.
4. Cooperative vs. Non-Cooperative Games: Cooperative games are those in which participants can negotiate and enforce agreements, while non-cooperative games do not allow for agreements between the players.
5. Sequential Games: Games where players make decisions one after another, allowing for a consideration of the strategic responses of others.
6. Simultaneous Games: Games where players make decisions at the same time, without knowledge of the other players’ choices.

Applications in Management Consulting:

• Strategic Decision Making: Assisting organizations in anticipating competitors’ moves and reactions in a competitive market.
• Negotiation and Contract Design: Structuring negotiations and contracts to ensure favorable outcomes by understanding the incentives and strategies of all parties involved.
• Market Analysis: Analyzing market dynamics, including entry, competition, and pricing strategies.
• Operational Strategy: Applying game theory to operational decisions, such as supply chain interactions, to optimize overall performance.

Similar Tools and Methodologies:

1. SWOT Analysis: While Game Theory provides a framework for decision-making in an interactive context, SWOT Analysis helps in understanding internal strengths and weaknesses, and external opportunities and threats.
2. Porter’s Five Forces: Offers a broader view of the competitive environment by analyzing five key forces that shape every industry and market. This tool complements Game Theory by providing a detailed analysis of industry structure.
3. Scenario Planning: Unlike the predictive nature of Game Theory, Scenario Planning involves creating and analyzing multiple future scenarios to inform long-term strategic planning. It helps organizations prepare for various potential futures.
4. Decision Trees: A tool for mapping out various decision paths and evaluating potential outcomes and their probabilities. Decision Trees can incorporate elements of Game Theory by including decision nodes that consider competitors’ responses.

Game Theory’s applicability spans various domains within management consulting, from strategy and operations to negotiations and market analysis. Its emphasis on rational decision-making and strategic interdependence makes it an invaluable tool for consultants aiming to deliver sophisticated, data-driven recommendations to their clients.

Used by Senior Management to get a sense of their judgements in response to specific situations.

How it is different from long range planning ? Scenarios are structured with cause-effect relationships. Scenarios move the firm to middle of analysis and variables in the environment strategic to the firm are shortlisted. Interactions between the firm and the scenario are modelled over several time periods. Alternate futures or Scenarios can be developed.

Each scenario is story-specific pattern of strategic judgement and distributing it helps decision makers locate and align their judgment contributions.

Scenario Planning is a strategic planning method used to make flexible long-term plans. It is particularly useful in environments where the future is highly uncertain. The methodology involves identifying the key drivers of change in the environment, exploring how these drivers could evolve, and understanding the impact they might have on the organization. It’s a way to prepare for multiple future scenarios, including highly divergent ones, and to develop strategies that are robust across these various possibilities.

Key Steps in Scenario Planning:

1. Identifying Key Drivers of Change: This involves understanding the internal and external factors that could significantly impact the organization.
2. Trend Analysis and Research: Gathering and analyzing data on current trends that could influence these drivers.
3. Developing Scenarios: Creating detailed narratives about how the future might unfold based on different combinations and extremes of the key drivers.
4. Implication Analysis and Strategy Development: Exploring how each scenario could affect the organization and developing strategies that could succeed in multiple scenarios.
5. Monitoring and Review: Continuously monitoring the environment for signs that a particular scenario may be unfolding and adjusting strategies accordingly.

Similar Tools and Methodologies:

1. Delphi Method: Involves iterative rounds of questionnaires sent to a panel of experts. The Delphi Method focuses on consensus-building and is often used for technological forecasting.
2. SWOT Analysis: A framework for identifying and analyzing the internal Strengths and Weaknesses, and external Opportunities and Threats faced by an organization. While less about predicting the future, it helps in understanding the current strategic position.
3. PESTLE Analysis: Focuses on the macro-environmental factors (Political, Economic, Social, Technological, Legal, and Environmental) that could impact an organization. This is more about environmental scanning, an important part of scenario planning.
4. Cross-Impact Analysis: This method evaluates how different events might interact with and influence each other, which can be integral in developing more complex and interconnected scenarios.
5. Futures Wheel: A method for brainstorming direct and indirect future consequences of a particular change or trend. It helps in visualizing and understanding potential outcomes in a structured way.

Scenario Planning is particularly valuable for its emphasis on flexibility and its capacity to prepare an organization for a range of possible futures, rather than betting on a single forecast. It encourages strategic thinking that is both broad and adaptable, making it a powerful tool in the arsenal of strategic management.

• Stick to the knitting ( the business you know ) or get into repairing cars ?
• Helps support senior management’s strategic discussions and presents the strategist’s guidance
• Describes the firm as a portfolio of products and customers.
• Doesn’t talk about how categories are linked to value, or strategic time, or how long market segment would be developed.
• Aim is to leverage existing knowledge, facilities and relationships and avoid the “no-go” quadrant where conglomerates generally get into.

Porter’s five forces is one the most famous tools in Business world. It talks about:

• How managers can protect firm’s existing rent stream against competition, efficient market operations, or other processes. ( or attack others )
• 3 levels of analysis – i) Short term competitiveness – business rivalry , ii) Rent management against Suppliers and Customers ( Microeconomics ) iii) Slower scanning for new firms or technology ( substitutes ) ( Macroeconomics )
• Categories such as Regulation, labour unions, legislation not included.

• Too much uncertainty makes it impossible to generate closure, so things must be narrowed down
• It’s a prioritisation method – What to change? What to change it to? How to change it?
• At any given time, an organisation is limited from achieving its highest goal by a single constraint. The Theory of Constraints provides tools to help identify and break through the constraint.
• The Goal: A Process of Ongoing Improvement shows the struggle between competing interests, visions, and languages that collide when strategising.

SWOT is like a mirror held up to reflect a company’s self image. Management’s own assessment of its current resources and current relationships and how they might be changed.

Who are we ? Why we need to re-examine our strategy ?

Who do we want to be and when ? What happens when we make changes to our strategy

Handy tool to discuss strategic judgements, rather than objectively measured facts.

Used to generate discussion between Consultant and Management