-: Hi.
In this short tutorial video,
we're going to talk about strategic drivers and levers,
and specifically about the relationship between the two.
Now as we know from module three,
strategic drivers are five things that we consider
when we're doing our internal analysis of the organisation.
In module five, we're taking these drivers now
and basically saying,
well, what strategic option are we going to do?
How is the organisation going to maintain
or create a unique position in its industry?
And how is it going to get or continue to have
competitive advantage over its rivals?
So of course we can think about new market
the organisation can enter,
new products that they can create
or improving existing products,
which customers they're going to target,
are they going to sell more to who they know,
or are they going to go after new customer groups?
What channels are they going to use
'cause they have to get their product or their service
to their customer in an efficient and effective way?
And how will this come together
to create a competitive advantage?
When we get to the doing part now
there's three levers that we need to consider.
First is operational levers and that fundamentally is
what are the key activities that the organisation
needs to do to make the strategic option successful?
Organisation and people levers are a very important one
because this is about understanding the skills
and the capabilities required of the employees
in the organisation to deliver the strategy
and for it to be a success.
So not only is it about the tacit knowledge
and the explicit knowledge that we need to know,
it's also about motivation, it's also about the culture.
It's also about how are you going to get people
to come on the journey for the strategic option?
'Cause sometimes these are big changes to an organisation.
Finally, the third one,
pretty straightforward and a bit more focused.
It is simply well, what products or services
is the organisation able to build
in order to deliver a strategic option?
Of course, whatever you build or create
you are trying to deliver against customer needs, ain't you?
We're going to use an example to explain a bit further.
This is Tarifica Watersports.
So they're into kiteboarding,
they're a company that's going to release two new kites
as part of their kiteboarding range.
And it's a fast growing market that they operate in.
They believe that they can get their customers
who support them now to buy more,
but they also want to attract new customers
from the rival brands.
When they tested these kites,
the reason that they're making a big fuss about it
is that when they hit the water,
they immediately can be raised up in the air again
and this is really important for kiteboarders
because when you're five miles out from shore in the ocean,
and if you're kite collapses because the wind drops,
you won't be able to get it up in the air again,
otherwise you can be in a bit of trouble.
The company currently operates in Spain and Morocco.
It has got nine retail outlets.
It has some online sales but they're only 8% of total sales.
Their vision is to become Europe's
biggest kiteboarding equipment, supplier/retailer.
The new design does require
a different type of manufacturing
and it's going to be more expensive.
Currently they make their kites in Southern Spain.
So this is information that you would have drawn out
from a slightly larger case, but some key points here
to help us think about drivers and levers.
So in terms of the drivers,
are they going to be entering new markets?
Well, they want to be number one in Europe,
they're going to have to enter other countries in Europe.
It's a given, they're not going to be able to achieve this
just being in Spain and Morocco, so yes.
Are they creating new products?
Yeah, the information is again given to us,
they have some ready to go.
We could consider the BCG product market matrix here
and whether this product is going to be a question mark
because it's hopefully going to have a small market share,
but in a fast growing industry or segment,
a way that they can turn that into a star product.
Their target customers, as the information mentioned,
they have their people,
they've got now they want to sell more to,
but they also want to bring new people in.
Do they have a compelling value proposition?
Well, maybe they do because they have this kite
that reduces the risk, therefore the fear factor increases
security in the customer that when they're kiteboarding,
they can go further away from shore and be more confident
that if anything happened and the kite hit the water
they'd be able to easily get it up again.
Utilising effective channels.
Well, they only operate in two countries now
with retail stores, they need to go online.
They have to drive that part of their business
if they're going to achieve their vision.
So do they have a strategic capability?
Difficult to say, none of that information,
but probably no.
And the reason for that is how hard will it be
for somebody else to imitate or copy
their particular kite design?
We don't know if they have a patent on it or something else
that gives them intellectual property protection,
but it's likely they don't have
a strategic capability at the moment.
So how do we take these things which are giving us an idea
of what Tarifica Watersports want to do
and relate them to levers, the operational levers,
things like revenue, costs, growth?
Well, they want to increase their revenue per customer,
but they also want to grow their customer base.
So they want to increase their overall revenue
from new customers coming in.
Cost is an interesting one,
they have to do something about their manufacturing.
It's going to cost a lot more to make this,
are customers willing to pay the price.
We don't know, but we know that there's an operational lever
to be pulled on here about managing costs
and specifically around manufacturing.
They need to grow new markets and that brings,
as we know from module four challenges,
where you go into new markets,
even if they're just in Europe
and they have to deliver an effective online channel.
Of course, what do they need to do internally in the company
with their people in order to deliver this strategy?
They're going to need to build new skills.
Most likely we don't know for sure,
most likely to new manufacturing off shore
to somewhere where they can make these kites cheaper
and be able to compete.
Even though there'd be a better product,
if they five times the price, they may not sell that well.
Their e-commerce capabilities are going to have to improve.
They may have an okay site now, but only 8% of total sales.
So at least there's going to need to be new resources going in
or increase the resources, but maybe also new capabilities
and more upskilling in the e-commerce side of the business.
Now, of course, employees have to buy into the bigger plan,
they have to come on the journey with whoever the CEO is.
So when she gets up to talk to them,
then she also has had to have had conversations
with senior management and others about things like rewards,
recognition, recruitment,
how they're going to deal with adding, increasing,
expanding operations and increasing size of the business.
And she also has to consider the resistance to change
because it doesn't matter how big the change is,
people will be nervous about change.
Yes, I'm moving into module six there,
but it's got a relationship here
to organisational and people levers.
Finally with the practise service levers,
how they meet their customer's needs?
Well, we have a value proposition and it's reasonably good.
How long before this kite is going to be copied, we don't know,
but they have to consider that.
In terms of the products and services levers here,
one of the things is
when will this product bride end, (mumbles)
When will the kite advantage
in terms of the product innovation no longer be available?
How long have they got?
What are they going to do next?
Just an example there,
but something like access over ownership
instead of buying probably $4,000 worth of equipment
in terms of kite, board, harness, wetsuit, safety equipment,
lines, what about that you just access it when you need it?
So this idea of a disruptive type model,
a different revenue model,
but how will they come up with other ways to add value,
ongoing value to the product?
So this is how we split out
this idea of operational levers,
organisational and people levers
and product and service levers and relate them back
to the strategic drivers which we learned about
in module three.