july 2018 – dec 2018

innovation in sa

Innovation in SA organisations driven by C-level support, new report finds

The Steinhoff Saga Management review - University of Stellenbosch Business School

July – December 2018

Innovation in SA organisations driven by C-level support, new report finds

innovation in sa

  • FEB 2019
  • Tags Innovation, management, sustainability, growth, report, strategies

9 minutes to read

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Turf wars, office politics, lack of alignment and budget pressures the dominant innovation obstacles in South Africa.

South African business leaders are putting innovation front and centre in their organisational strategies to help drive sustainable growth. This was one of the key findings in a new pilot study tracking South African public and private sector organisations’ innovation management capabilities.

The State of Innovation Report 2018 – 2019 was conducted by the Creative Leadership Collective, a consortium of executives and senior managers tasked with driving innovation within South African organisations, and the University of Stellenbosch Business School (USB). Paul Steenkamp, co-founder of the Creative Leadership Collective and co-author of the study, says the current trend toward prioritising innovation comes at a critical time in the country’s history.

“To solve the problems we face as a country and continent, we can’t afford to do the wrong things right from an innovation perspective. We need to think and act differently, and leaders need to create a more empowering culture within their organisation. Encouragingly, South African public and private sector organisations have taken note: management commitment and support for innovation is perceived to be on the up.”

“Despite the rapidly growing knowledge base, managers in Southern Africa require knowledge, skills and attitudes to deal with our challenges and context.”

SA businesses prioritising innovation despite lower maturity rates

The State of Innovation Report 2018 – 2019 includes five stages of innovation maturity, ranging from 1 (ad hoc innovation with no formal focus or follow-through) to 5 (optimised innovation that is scalable, driven by empowered employees).

”Our research found that none of the participating South African organisations were at stage 5, and only 8% were stage 4,” says Steenkamp. “Nearly 80% of South African firms are either at the Emerging or Defined stages of innovation, where there is some awareness and effort, or some degree of formalised strategic programmes linked to customer or business objectives. This is consistent with global trends: in the 2018 Benchmarking Innovation Impact Report, nearly 60% of global respondents placed themselves in the first two categories. Only 4.1% believed they had reached the highest stage of innovation maturity.”

“An organisation’s capacity to manage innovation tends to improve over time, but only when there is clear leadership to manage specific issues limiting innovation at the various stages of maturity,” says Steenkamp.

Measuring innovation

The report uncovered the key metrics that participating South African organisations currently apply to measure the success of their innovation efforts. “Customer-related metrics emerged as the most important measure for South African innovation success. Two-thirds said they measure innovation by the growth in number of new customers buying their product or increasing the number of customers repeatedly using their products or services.

According to a Walker study, customer experience will overtake price and product as the key brand differentiator by 2020. “However, in the public sector, innovation priorities relate more closely to enabling public sector organisations to be better prepared for future challenges around food security, health, and water,” says Steenkamp.

“To solve the problems we face as a country and continent, we can’t afford to do the wrong things right from an innovation perspective. We need to think and act differently, and leaders need to create a more empowering culture within their organisation.”

Improved collaboration, skills transfer

The United Nations Conference on Trade and Development (UNCTAD) notes in its Technology and Innovation Report 2018: Harnessing Frontier Technologies for Sustainable Development the importance of skills and education in taking advantage of so-called frontier technologies: artificial intelligence, Internet of Things and other emerging technologies that are driving much of the advances in the digital economy. “Organisations that are open to the learning process outperform those that are not. However, our research found a lack of collaboration between the private sector and institutions of higher learning,” says Steenkamp.

Study co-author Dr Awie Vlok of the USB said most managers would like to improve their innovation performance but lack the knowledge and skills to do this.

“Studies on innovation and leadership are not new but research on the competencies of leaders to bring about innovation is still new. Innovation thought leader, Prof Clayton Christensen from Harvard Business School, only referred to innovation as the new science of success in 2002 and in 2004 the McGraw-Hill group introduced the notion of the Innovation Economy. Scholarly interest has since increased, while popular media feature innovation celebrities and their perspectives.”

Despite the rapidly growing knowledge base, managers in Southern Africa require knowledge, skills and attitudes to deal with our challenges and context. This report conveys important insights into the views of those taking part in the survey, and future surveys will expand on these.”

 

Click here to read the full report

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A Seat at the Table: Capacities and Limitations of Private Sector Peacebuilding.

The Steinhoff Saga Management review - University of Stellenbosch Business School

July – December 2018

A Seat at the Table: Capacities and limitations of private sector peacebuilding

  • Ben Miller, Prof Brian Ganson, Sarah Cechvala and Dr Jason Miklian
  • FEB 2019
  • Tags Reports, Leadership

11 minutes to read

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Ben Miller, Prof Brian Ganson, Sarah Cechvala and Dr Jason Miklian

Can the private sector help to build peace?

This report presents the findings of a two-year learning project about engaging the private sector as new peacebuilding actor.

The project’s point of departure is the marked transformation in the discourse on the role of companies in conflict environments. Understanding of the management of social impacts has grown as consensus builds that companies must avoid negative societal impacts as a matter of both risk management and responsible corporate citizenship. That is why companies should, for example, avoid complicity in human rights violations or operational impacts that create social and environmental harm. And that is why a growing number of scholars, governments, NGOs and multilateral agencies argue that businesses should act in ways that also contribute to peace.

Within this context, the project documents a wide range of company practices, connects these to the theories and assumptions on which different approaches are built, and assesses evidence of impact on key drivers of conflict and peace.

This project was undertaken by CDA Collaborative Learning (CDA), the Africa Centre for Dispute Settlement at the University of Stellenbosch Business School (ACDS), and Peace Research Institute Oslo (PRIO).

Key takeaways of the project from different perspectives

Key takeaways for companies that aspire to help build peace include the need to start from a firm foundation: nuanced understanding of conflict dynamics and conflict-sensitive business operations that both mitigate risks of exacerbating conflict and build credibility with other actors. Companies can then mobilise their networks and resources to catalyse positive relations between other actors in the context, facilitate constructive action together with other peace-minded actors, and influence decision-makers in questions of conflict and peace – realising that their strength as peacebuilders comes less from their ability to change conditions on the ground than from their ability to help positively shape power relationships and institutional arrangements that underlie conflict.

Key takeaways for peacebuilders include the need to deal with companies as with any other actor in a conflict environment: engaging realistically based on the perceptions, interests and incentives of a particular company within its context today while working toward a more peace-positive mind-set and role for the future. This is facilitated by examining the intersection of peacebuilding with a variety of corporate agendas and constraints in conflict environments, as well as by understanding the comparative advantages of companies as peacebuilding allies: as access points to key people, conveners and actors able to help increase the voice and legitimacy of disenfranchised parties. It is also facilitated by understanding a company as a heterogeneous entity in which different levels, functions and leaders may have different interests in, and appetite for, peacebuilding action.

Key takeaways for policy actors include the imperative to distinguish between private sector policy and action that creates external social value, on the one hand, and that which builds peace, on the other hand. To the extent that policy actors aspire to change key driving factors of conflict and violence sufficient to achieve “Peace Writ Large,” there is a need to analyse the key drivers of conflict and peace, conceptualise strategies for addressing conflict dynamics and supporting peace dynamics that include a private sector role, and act in collaboration with like-minded actors. In support of business and peace efforts specifically, policy and donor support may usefully focus on space and support for multi-stakeholder dialogue on questions of conflict and peace; accelerating the conflict-sensitive business practice agenda; and applying a conflict lens to policies related to private sector promotion — with particular attention to possible unintended negative impacts of private sector promotion on those most affected by conflict.

Full report

A need for better evidence about business as a peacebuilding actor

Increasingly, the private sector is seen as an engine of development, an inhibitor of fragility, and as a category of actors that has an ability to shift conflict dynamics in a manner that favours peace in fragile and conflict-affected states. Some scholars, NGOs, governments and multilateral institutions are suggesting that there is a unique and as yet untapped role for the private sector to advance peace and curtail fragility. Yet, there is little reliable or practically useful evidence about what specifically private sector actors might do to fulfil it.

Policy makers, peacebuilders and companies themselves are uncertain about what should be asked of companies regarding peace. Can the job creation and economic growth to which private sector actors contribute be seen as peacebuilding? Can ongoing efforts to adhere to global standards of performance, to advance the Sustainable Development Goals, or improve the impact of CSR efforts be seen as part of peacebuilding? Can the ways in which core company operations and other activities are undertaken be seen as part of peacebuilding?

Lack of clarity about these issues has significant implications for the way resources are mobilised and initiatives are implemented. Faulty assumptions can lead to the misallocation of resources, or worse, outcomes that intensify conflict.

Finding a way forward

The question at the heart of this project relates to the effectiveness of companies’ efforts to reduce conflict and build peace. What works, and what does not work? This framing relies on a distinction between “working in conflict” and “working on conflict”.

Conflict sensitivity is an approach to operations in conflict settings that does not necessarily have peace as a specific goal; it rather aims to enable operations to go forward in a way that reduces the intensity of conflict and, where possible, supports peace.

Our analysis identified patterns across the case studies that suggest that companies can in fact operate in ways that help establish or sustain peace, or to mitigate conflict. However, the patterns suggest that this happens in ways that are quite different from those posited by the exponents of a private sector role in peace, and that it happens more infrequently and with much greater difficulty than the excitement among policy actors would imply.

What are the key lessons from this project?

  • Private sector enterprises in fragile and conflict-affected contexts are neither intrinsically peace-positive nor intrinsically peace-negative.
  • Companies that create positive impacts on peace and conflict demonstrate both exceptional abilities and exceptional willingness.
  • A company that contributes to peace is not categorically different from other peacebuilding actors.
  • Private sector companies are more likely to act when the presence of conflict or the absence of peace impacts their ability to establish or maintain operations.
  • There appear to be limitations on the scope of impact of an individual company.
  • Company efforts to build peace suffer from the same challenges and shortcomings as those of other peacebuilding actors.

The report concludes with briefing notes on the implications of the findings for the actors:

  • Briefing note for individual companies: understand conflict dynamics, focus on conflict-sensitive business operations, collaborate with other peace-minded actors, ensure more effective engagement internally, and focus on effective peacebuilding roles and means.
  • Briefing note for peacebuilding practitioners: understand corporate language and perspectives, consider company constraints, capitalise on a company’s comparative advantages, and multiply entry points for company change.
  • Briefing note for policy actors: create opportunities and institutionalise support for dialogue and collective action, use multiple leverage points to promote conflict sensitivity at the enterprise level, and ensure that private sector promotion policies are conflict sensitive.

Full report

  • Prof Brian Ganson is head of the Africa Centre for Dispute Settlement at USB. He is one of the co-authors of A Seat at the Table: Capacities and Limitations of Private Sector Peacebuilding.

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strategic architecture

A strategic architecture perspective to stimulate strategising in organisations

The Steinhoff Saga Management review - University of Stellenbosch Business School

July – December 2018

A strategic architecture perspective to stimulate strategising in organisations

strategic architecture

Prof Marius Ungerer

  • OCT 2018
  • Tags Reports, Management

32 minutes to read

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Prof Marius Ungerer

Strategy is about more than wishing for a better future

It is part of our nature to plan for tomorrow and think about what we will do at some point in the future. We do this because we have options. There is no way in which we can predict the future with 100% accuracy. Yet, we must exercise choices and make decisions to move forward, often amidst great uncertainty.

Yes, the future will happen despite our plans. But if we do not plan, we may end up further away from what we had hoped.

Take Victor Frankl as an example. During World War II, he spent two years in camps where death seemed more worthwhile than life. Yet people, including himself, survived. The only explanation that Frankl could find for this phenomenon was that those who had survived had something to live for. It is no wonder that he defined an optimally functioning individual as somebody with a healthy future directedness. This applies to all living systems, including organisations.

Often, we do more than just wish things would happen in a certain way. We make plans to influence events, to nudge things in the direction of a preferred future state – one where we have more control over what happens to us.

Organisational strategy development and execution – also called strategising – is a continuous process of thinking and learning through various dialogues, where viable futures are uncovered, and sustainable strategies are developed using a variety of strategy tools, processes and approaches. Indeed, the roots of a viable future are found in a robust strategic architecture.

Yes, the future will happen despite our plans. But if we do not plan, we may end up further away from what we had hoped.

But what exactly is strategy and how is it created?

In a post-modern context, it is accepted that there is no single strategy tool or model that will lead to a sustainable competitive advantage. There is no quick fix. Instead, organisations are increasingly opting for dynamic strategy processes in which eclectic blends of models and techniques are combined to meet their specific needs.

It seems like most organisations follow a combination of two strategising processes – a rational planned approach and an emergent process approach. The rational planned approach refers to the belief that the future can more or less be determined by our intentions and plans, while the emergent perspective holds the view that the business world is so unpredictable that a business can only capitalise on opportunities as these present themselves in the short term.

Strategy expert Henry Mintzberg (1987:12) reminds us of the complexities associated with strategy: “Strategy is not just a notion of how to deal with an enemy or a set of competitors or a market, it draws us into some of the most fundamental issues about organisations as instruments for collective perception and action.”

Strategy formulation and execution have no end line, but have many humble beginnings and rebuilds, based on the inspiration, foresight and future aspirations of people relating with one another in a particular context. This means that strategy is a pattern of behaviour in a stream of actions that have consequences for the survival of the organisation in its competitive environment. This pattern emerges in the day-to-day activities of the organisation.

Strategy can therefore be described as the collective, emerging pattern – based on strategic choices – an organisation consciously exhibits and executes over time to ensure its sustainable endurance by differentiating itself in unique ways to create value for stakeholders. Strategy is about explaining how an organisation wants to move forward and how it wants to advance the interests of stakeholders.

This perspective on strategy recognises that it does not have static processes or content, and that it represents a system of value creation with mutually reinforcing parts. Therefore, strategy making represents a dynamic future-orientated process that delivers organisational thinking, convictions, and artefacts as a result of ongoing strategic decision-making to enhance the unique strategic position and differentiation features of the organisation, serving the needs and aspirations of multiple stakeholders.

An effective strategy reflects a compelling reason for the existence of the organisation, explains strategic choices and differentiation positions that are difficult to imitate, gives clarity on activity systems for value creation, implements appropriate metrics to monitor progress, and makes stakeholder sensitivity a lived reality.

… an optimally functioning individual [is] somebody with a healthy future directedness. This applies to all living systems, including organisations.

Strategic architecture

A strategic landscape is the broad external and internal context of an organisation. How organisations define or “construct” their own strategic architecture forms an important part of strategy and the strategic landscape in which these organisations operate. Gary Hamel and C.K. Prahalad (1990:13) described a strategic architecture as the road map of the future that identifies which core competencies to build. Kiernan (1993: 7) added another view, explaining that a strategic architecture represents that invisible intellectual, philosophical, and even normative “DNA” which programs and lends coherence to virtually all important business decisions, whether they be strategic or operational.

Building on these two views, a strategic architecture can be seen as an organisation’s core logic for creating sustainable value, and therefore forms the foundation of the organisation’s competitive potential. It describes the context and the terrain that an organisation intentionally defines or constructs to achieve a desired end. It also influences the current competitive behaviour of the enterprise and may, therefore, explain why an organisation seems not to be competitive in current terms. The departure point is that competitive behaviour and potential can be altered and influenced when an organisation redefines its strategic architecture. A strategic architecture view of an organisation creates a platform to enable strategic choices by hardwiring these into the organisation. It underpins the success or failure of any strategy; therefore, it should be richly and concisely constructed and designed.

Hamel and Prahalad said organisations should create their own internal competitive environments rather than adapt existing ones. They found that highly successful organisations are differentiated from the rest because they creatively innovate around, and leverage off, their core competencies or capabilities. It seems as if such organisations are less obsessed with their competition and rather more concerned with reinventing themselves. This is in contrast to organisations that attempt to fit or adapt to their environments, often by following their competition.

Ungerer believes competiveness is internally generated and that an organisation must construct or reconstruct its fundamental underlying strategic architecture in order to be competitive.

Strategy is about explaining how an organisation wants to move forward …

The seven building blocks of a strategic architecture view of an organisation

A strategic architecture view of an organisation enables leaders to confront the brutal facts and to act on the implications thereof. According to Ungerer, the main building blocks of a strategic architecture perspective of an organisation are:

  • Virtuous strategic leadership
  • The internal and external strategic landscape and context
  • Strategy formulation
  • Multiple futures
  • Strategy execution
  • Strategy renewal and innovation
  • Entrepreneurial leadership

The seven building blocks are all inter-related. From a systemic point of view, the strategic architecture of a firm contains the key elements in a strategy system, but the system can only flourish if all the parts are connected in a virtuous way. This means continuously raising the each of these aspects of strategic thinking: the quality of our thinking about where we are and where we want to be; the quality and quantity of our options and choices; clarity about our strategic architecture; the robustness and sustainability of the strategy; how easy it is to execute the strategy; and the quality of monitoring and feedback on progress. Figure 1 outlines the inter-relatedness of the building blocks of strategic architecture.

Building block 1 – virtuous strategic leadership

Strategic leadership is seen as a key capacity for giving life, meaning and momentum to the strategy and strategising activities of an organisation, within ethical boundaries.

Here, Ungerer supports the view of Phil Rosenzweig (2007:156) who said that leadership and culture are perhaps better understood as attributions based on performance rather than causes of performance. Strategic success is not based on a single cause but is the result of a number of variables interacting in a virtuous way.

Research confirms that strategy decision-makers should focus on developing their individual and collective capability to choose the winners from among the many available strategic options, and to consistently execute these strategic choices in an excellent way.

Ungerer quotes Jim Collins (2001:11) as saying: Greatness is not a matter of circumstances. Greatness, it turns out, is largely a matter of conscious choice. Strategic leadership is a necessary – but not sufficient – condition for organisational success in the long run, given the complex nature of strategy.

Leadership is viewed from a post-heroic perspective, and as an organisational capacity that should be spread wide and deep in organisations; it can never be the exclusive task of a few executives at the “top” of the organisation. This implies a distributed leadership capacity as a crucial part of managing in the 21st century, where leadership is conceived of as a collective social process.

Responsible leadership practices are advocated to foster sound moral decision-making. This theory emphasises the importance of leadership modelling by showing the way or setting a positive example. The argument is that ethical ability is not something for the puritans, but an empowering way of leading oneself and others in a world that responds to moral guidance and exemplary role models.

Building block 2 – external environment context analysis and internal organisational analysis

This building block refers to the analysis and synthesis of both external and internal factors that can influence the strategic landscape and context of an organisation.

Using the external environment as the reference point for a strategic analysis is based on the traditions and assumptions associated with the industrial organisation model which states, among others, that the external environment of an organisation represents the major factors that will influence current and future strategic decisions and actions.

This implies that the strategies that are formulated and implemented for an organisation to generate above-average returns are limited by the characteristics of, and conditions present in, the external environment. Data-driven and facts-based strategic decision-making is a key departure point for successful strategy analysis and synthesis.

strategy … represents a system of value creation with mutually reinforcing parts

To analyse the external environment, one would need, among others, global and macro trend enquiries, industry investigations, competitor evaluations and customer studies. Various frameworks and tools can be used to capture global and macro trends, external opportunities and external threats.

The focus of an industry analysis is to extract industry-related information first and then interpret the industry trends for future foresights about the industry developments and implications for a specific organisation. A good strategy analysis should cover and be concerned with the structural evolution of an industry as well as with the firm’s own unique positioning and future competitiveness within that industry. Frameworks like the following are relevant here: an industry-dominant economic features analysis; an industry profitability, profit pool and market share analysis; an industry competitive forces analysis; and industry driving forces analysis; an industry key success factors analysis; an industry value chain analysis; and an industry issues analysis.

Understanding the competitive positions and potential strategic moves of competitors in a competitive space creates insights on an organisation’s own strategic options and choices. Competitive intelligence can be gained through a general competitive analysis, a strategic competitor group map analysis, a profile of competitors, a competitive relative evaluation against the industry success factors, and an exploration of coopetition possibilities.

The dot-com crash of 2000 reminds us of the importance of attracting and retaining repeat paying customers for a business to survive in a competitive arena. Meeting, exceeding and anticipating customer needs and trends using a customer-centric view are part of an ongoing strategising process. In this context, the frameworks that can be used to stimulate customer insights include customer economic value progression, e-customer demands, market segmentation, customer empathy maps, customer channel phases and customer relationships analysis.

Analysing the internal environment of an organisation forms part of Building block 2. The internal environment of an organisation represents the strategic arena that is under full control of the leadership. This strategic space represents both the resource strengths and weaknesses of an organisation.

The internal analysis builds on the external analysis. In an internal analysis the focus is on highlighting the resources competitiveness of an organisation and its internal value chain, its financial viability and track record, governance, and finally its internal risks and mitigation actions. Frameworks and tools include developing a resource-based view of strategy by doing a core and distinctive competence analysis, developing an internal value-chain analysis and analysing organisational culture as a source of competitive advantage. It also includes analysing the six capitals, finances, governance and internal risks.

Building block 3 – strategy formulation

Strategy formulation and development practices refer to the core strategic options and choices that inform business model choices.

In Figure 1, strategy development is positioned as the central strategic process that informs and is formed by four related strategic building blocks (external and internal strategic landscape factors, multiple futures, strategy execution, and strategy renewal realities). This implies that strategy formulation and development cannot be done in isolation, and that they are linked to other building blocks in the strategic architecture. Central to the definition of strategy is the capability of leaders in an organisation to make sound and well-founded strategic choices. The strategic choice domains related to strategy formulation and competitive positioning fall into three categories:

  • Identity choices: These choices relate to the identity and aspirational descriptions of an organisation.
  • Strategic competitive choices: These choices relate to the high-level generic strategy options, grand strategy options and functional strategy options
  • Business model choices: These choices relate to the organisation’s choice of a business model.

Identity choices include narratives on the aspirational agenda of an organisation. The strategic aspirations of an organisation manifest in articulations about its vision, mission and values. The aspirational and identity descriptions of an organisation set the boundaries of the strategic (vision and mission) and moral (values) landscape in which it wants to operate. These descriptions relate to the basic reason for being and they represent future ideal and guiding aspirations for an organisation – its core business philosophy.

An effective strategic architecture will move organisational thinking to a higher level.

The main questions to explore around organisational identity are: Who are we as an organisation? And what do we want to be? The strategic choices associated with these decisions have a direct impact on the chosen strategic landscape or playing field of an organisation and the values that are emphasised and represent lead indicators on how the game of business will be played and what moral boundaries exist.

Formulating the aspirational statements for an organisation on its own will not position an institution for competitive benefits. Eloquent aspirational descriptions of an organisation alone are however not sufficient for competitive success.

The embedding of organisational values as part of the individual and team performance enhancement systems of an organisation is a best practice. The revitalisation and ongoing socialisation of these aspirational descriptions with newcomers, new stakeholders and new partners through various interaction mechanisms is an ongoing quest of strategic leadership.

Once the aspirational descriptions of an organisation have been developed, these must be translated into holistic guiding views of the strategic orientation of the firm. Only then can other strategy execution processes kick in (see Building block 5 – the enablement of strategy execution through strategy mobilisation, strategy translation and strategy monitoring processes).  This implies that the longer-term strategic goals of an organisation should be based on a set of core strategic choices about how the firm plans to best compete in a chosen marketplace.

The strategic competitive choices of an organisation can be divided into four levels:

  • The identity and aspirational strategic choices: This typically includes the vision, mission and values.
  • Generic strategic choices: This typically includes competitive positioning strategy options, value discipline choices, digital/physical orientation choices, industry-based strategic style choices and foreign market entry options.
  • Grand strategy choices: This includes Competence-based growth strategies, External orientated growth strategies, Strategic space growth strategies, and rationalisation strategies.
  • Functional strategy choices: This includes R&D engineering strategy, IT strategy, human capital strategy, marketing and sales strategy and the finance strategy.

These strategic competitive choices are used to stimulate dialogue as part of an ongoing strategy conversation to deepen understanding of the competitiveness of an organisation’s strategy.

The third category of strategic choices leaders need to consider refers to the business model of an organisation. A business model is a model, an abstraction or a representation of the value creation and value capturing logic of the business. Business models and strategy broadly revolve around the same concepts but exist at different levels of abstraction. Strategy can be seen as a domain, whereas a business model is a tool relevant to the domain. Strategy is a more high-level, over-arching, broad, intangible and soft concept, whereas business models are more specific and tangible, yet still conceptual.

Strategy places more emphasis on issues regarding the core aspirational descriptions of a business (vision, mission, values and goal-setting), its competitive positioning and environment, competitors and competition, value capturing, and the creation of a competitive advantage.

Business models, on the other hand, are mainly concerned with customers, value creation, cooperation and partnerships, and the means by which the business sustains itself. Business models seek to depict the way that value is created and delivered to customers, and how revenue is generated. A business model is therefore the strategy of the business distilled into a conceptual blueprint of its value creation and capturing logic.

… a strategic architecture can be seen as an organisation’s core logic for creating sustainable value, and therefore forms the foundation of its competitive potential

Leaders need to make business model choices about these 12 strategic aspects of an organisation: customer retention, targeted customer segments, customer relationships, delivery channels, value propositions, key activities in an activity system, key resources, key partners, key metrics, cost structures, revenue streams and the competitive advantage of the organisation.

The strategic choices and decisions about the different business model components cannot be made in isolation because they are interrelated and informed by the other strategic architecture building blocks.

Building block 4: Development of multiple future views

At the very core of strategy work is the realisation that an organisation is, at any one moment in its life, faced by many possible futures. Scenarios constitute a way of thinking more comprehensively about the future – to learn from the future. Scenario building and planning establish a visual interactive dialogue process to develop innovative foresight. Peter Schwartz (1996:4) defined scenarios as a tool for ordering one’s perceptions about alternative environments in which one’s decisions might be played out. Learning about possible futures, and the signposts along the way to these futures, enables decision-makers to manage long-term risks better and proactively seize emerging opportunities.

The objective of the scenario-building process is two-fold. First, by looking into the future with all its uncertainties, it is a sense-making exercise to better understand the status quo. Second, it is a tool for long-term strategic direction setting.

Research indicates that exposing decision-makers to scenario development processes significantly enhances their ability to deal with uncertainty. Research has shown again and again that the use of scenarios can improve the decision-making process and help to identify new issues and challenges that may arise in the future. Researchers have also reported a reduction in over-confidence bias by challenging prevailing mind-sets, a reduction in the framing bias where both positive and negative effects are considered, and a reduction in the confirmation bias by being exposed to a variety of data shows that scenarios assist in influencing a broad range of mental models held by decision-makers.

Well-developed scenarios focus the minds of decision-makers on the most critical decisions required to “elbow” the organisation towards a more desired future.

Building block 5: Strategy execution: translation, mobilisation and monitoring

This building block refers to the enablement of strategy execution through strategy mobilisation, strategy translation and strategy monitoring practices.

Strategic leadership is seen as a key capacity for giving life, meaning and momentum to the strategy and strategising activities of an organisation, within ethical boundaries.

Strategic thinking, as described in strategic building blocks 1 to 4 above, needs to be translated into strategic action to ensure the implementation of strategy. Organisations generally struggle to implement their strategies because of multiple challenges – ranging from a lack of tangible strategic planning processes and resource constraints to a lack of focus and prioritisation, to organisation culture such as low action orientation and destructive internal competition.

The imperatives for excellent strategy execution capabilities in a fast-changing world are clear. Organisations that execute first, win, and a well-entrenched strategy execution capability has become a competitive advantage. Strategy tools and processes that enable strategy execution include the following:

  • A strategy map reflecting key strategic goals and measurements
  • A balanced scorecard indicating enterprise-wide strategic measurements to achieve the aspirations of the organisation
  • A strategic business plan showing the key strategic initiatives within a time scope (short, medium and long term)
  • An enterprise business performance monitoring process that includes quarterly dialogues at enterprise and business unit levels to evaluate progress and initiate proactive corrective actions, if required
  • An individual performance management system to link strategic goals and initiatives to individual KPAs.

Building block 6 – strategy renewal and innovation

This building block refers to the use of strategy renewal and innovation practices to bolster the competitiveness and sustainability of an organisation.

At the very core of strategy work is the realisation that an organisation is, at any one moment in its life, faced by many possible futures

The continuous reinvention of an organisation to stay relevant in its chosen strategic landscape is at the centre of sustainable competitiveness. Reasons for the high obsolescence rate of business models can be found in the ongoing changes in external business environments, increased consumer activism, ongoing new technology inventions and innovations, the heightened impact of special interest groups (like environmental activists and religious fundamentalists), the struggle for political power between traditionally rich and poor countries, and increased pressure on global trade barriers and incentives. Organisational strategies need to reflect the realities of both local circumstances and emerging global patterns – a tall order indeed.

Rosenzweig (2007:104) reminds us that high performance is difficult to maintain, … high profits tend to decline … Rivals copy the leader’s winning  ways, new companies enter the market, consulting companies spread best practices, and employees move from company to company. He explains that risks are related to uncertain customer demands, unpredictable competition, and changing technology (Rosenzweig, 2007: 145-147).

The continuous growth of the strategic options and choices for a business form part of its strategic innovation process to create an internal market for ideas. To stimulate new thinking on current strategies, a variety of strategy innovation tools and frameworks is available. This includes the blue ocean strategy, business model innovation, sources of e-value, new market-space creation, breaking through stall-points and decline, and the development of inorganic growth strategies through alliances, and mergers and acquisitions.

Another essential part of the strategy renewal agenda is to inspire leadership thinking with ideas on how to innovate current management practices to ensure an alignment with the changing strategic context and workforce expectations.

 

Building block 7: Entrepreneurial leadership

The building blocks of a strategic architecture perspective (see Figure 1) are anchored in strategic leadership and entrepreneurial thinking and practices. The strategic entrepreneurship perspective on strategy integrates opportunity seeking on the simultaneous consideration of an organisation’s initial internal situation and external opportunities to gain competitive advantage. Discovery theory and creation theory are both used to explain how entrepreneurs take action to form and exploit opportunities. Discovery theory states that a heightened alertness by entrepreneurs about exogenous shocks such as changes in competition, technology and customer preferences is used to stimulate opportunity seeking, while creation theory indicates that entrepreneurial action is endogenously created by exploring ways to produce new products or services.

This strategic architecture building block supports both entrepreneurship and intrapreneurship orientations as drivers of economic growth. Entrepreneurship represents activities like starting a new venture with the associated risks and rewards of being an owner, while an intrapreneurship orientation promotes entrepreneurial activities within the boundaries of an existing business to turn an idea into a profitable finished product or service through assertive risk-taking and innovation.

A strategic architecture perspective can be developed for both profit and not-for-profit organisations if the leadership aspiration and will exist …

A discussion of strategic architecture features

Strategy praxis involves diverse conversations and interaction episodes between the stakeholders of an organisation. A strategic architecture perspective on an organisation assists and stimulates dialogues about the various aspects of the building blocks and their interrelatedness. The idea is to use the strategic architecture building blocks as a reference baseline to facilitate critical reflections on strategic choices and execution progress for motivating ongoing improvements and facilitating stakeholder alignment. When innovations on aspirational descriptions, business models and competitive repositioning are considered, the strategic architecture baseline is used to evaluate strategic viability, fit and alignment.

At first glance a strategic architecture view might look overwhelming and complicated. The creation of different building blocks and the deepening of strategy praxis in these domains is not a one-time event but developed over time within the strategic rhythm of the organisation as influenced by its leadership preferences, strategic cycle, stage and needs.

The strategic architecture perspective should not be viewed as a framework for hard strategy work based on hard data from market research only. It highlights the social side of strategy through a focus on strategic leadership (Building block 1) as the key to making strategy alive and to mobilising people for involvement and participative decision-making, e.g. during strategy translation events. Other softer strategy issues are also addressed through an entrepreneurial strategy thinking approach (Building block 7) that fosters a dynamic can do attitude where obstacles are turned into possibilities and both incremental and radical innovation are promoted. Exposure to scenario development processes (Building block 4) sensitises decision-makers to a range of cognitive biases such as over-confidence, framing and confirmation. A market-focused strategy needs to be underpinned by cold, hard numbers and business facts, as well as involved and motivated people with a thorough understanding of the strategic intent and goals of the organisation. The strategic architecture perspective promotes a strategy process that embraces both a data-based and fact-based outside view (Building blocks 2 and 6) and a sensitivity towards the social side of strategy.

A strategic architecture view is more suitable for organisations with a focused business portfolio with related core business lines than diversified conglomerate business portfolios with low inter-dependencies. This is because leveraging internal resource synergies and capabilities to support multiple end-markets based on a shared strategic orientation galvanises strategic efforts and impact.  Neither the need to share resources nor a common strategic focus and orientation is prevalent in diversified conglomerate portfolios – a key assumption is creating a shared view on a strategic architecture for an organisation.

A strategic architecture perspective can be developed for both profit and not-for-profit organisations if the leadership aspiration and will exist to create and deliver outputs to meet and exceed stakeholder needs and expectations.

Research on the use of the elements of a strategic architecture perspective by JSE-listed companies in six industry clusters (banking, construction, energy, insurance, mining and retail), as reported in their annual and integrated reports, indicates a relatively high usage and disclosure level of 67%. This means that for the six industry clusters combined, companies are disclosing on average about 67% of the potential aspects associated with a strategic architecture perspective.

Strategy architecture disclosure indicators that are under-reported include competitive strategy and strategy execution details. This is understandable, because a too open strategy disclosure approach can arguably involve risks, such as diluting competitive advantage; for example, disclosed information on strategy could be used by a company’s competitors to outmanoeuvre it, or to pre-empt first-mover advantage. A strategic architecture perspective should be used externally in the public domain with due care not to forego strategic competitive advantages.

Moving from complexity to clarity

Winston Churchill said: It is not enough that we do our best; sometimes we need to do what is required (Churchill, 1997). In a complex business world we need to seek solutions at a higher level of complexity to first make conceptual progress before operational progress. A strategic architecture perspective assists leaders to work through the strategic complexity to arrive at simplicity in the form of clarity on external and internal strategic leverages, strategic aspirations, core strategic choices, plausible multiple scenarios, focused strategic goals, and success measurements to guide strategy execution and ongoing strategy renewal and innovations for proactive strategic decision-making through various dialogues with key stakeholders.

Strategy, as the act of producing greater certainty for stakeholders … is necessary but not sufficient for organisational survival.

In this paper the arguments highlight the following key assumptions:

Strategic architecture increases the changes of organisational success. A strategic architecture view on an organisation facilitates alignment and focus on the core strategic choices the organisation makes to achieve success. The successful execution of both planned and emergent strategies relies on clarity about the future strategic aspirations and options of an organisation.

Thorough analyses enhance the strategic architecture. An organisation’s strategy formulation and development cycle should at least be informed by a thorough fact-based external and internal analysis. As the strategy practices of an organisation mature over time, multiple strategy building-block domains, as described above, will inform and shape the strategy development process cycle.

Resource capabilities are key to the strategic architecture. Organisations achieve their ultimate ambitions through their internal resource capabilities to execute their strategic plans. The resources at an organisation’s disposal represent their action potential – setting the boundaries for strategic moves to consider.

People make or break strategies. It is imperative to foster a people-centric approach during strategising processes, practices and praxis to ensure maximum support, enthusiasm and momentum for the strategic journey.

Thinking paradigms dominate. The dominant paradigm of the strategy-makers will have a decisive influence on how – and by whom – strategy is made. Strategic and entrepreneurial leadership are key enablers that infuse energy, perspective and ambition into the strategic development and execution journey of an organisation.

An effective strategic architecture will move organisational thinking to a higher level. Strategy and the disciplines associated with “good” strategy-making, as described in this paper, still form the basis for moving organisations to a higher level of conceptual and pragmatic understanding of their current realities and future aspirations and possibilities. Strategy, as the act of producing greater certainty for stakeholders at any point in time on what to expect and what to do, is necessary but not sufficient for organisational survival. We need leaders with the necessary wisdom who display both the moral will and the moral skills to lead us into an uncertain future (where there are fewer guarantees).

  • Prof Marius Ungerer lectures in Organisational Strategy, Leadership and Strategic Management at the University of Stellenbosch Business School. This report provides an overview of his strategic architecture perspective to stimulate strategising in organisations. It is based on his inaugural address as full professor, delivered at USB in May 2018.

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SABPP

The SABPP Women’s Report 2018: Women blue-collar workers

The Steinhoff Saga Management review - University of Stellenbosch Business School

January – June 2018

The SABPP Women’s Report 2018: Women blue-collar workers

SABPP

  • Prof Anita Bosch
  • JUL 2018
  • Tags Reports, Women

10 minutes to read

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What does the future hold for women blue-collar workers? This is the theme of the 2018 edition of the SABPP Women’s Report, with USB’s Prof Anita Bosch as editor published a collection of research papers on various aspects of fairness impacting women in the world of work.

Chapter 1, written by futurist Dr Lize Barclay, is titled Rise of the machines: Friend of foe for female blue-collar workers? Artificial intelligence is developing at a rate that had several of the world’s leading technology thinkers create a charter for ethical development of AI. But how will the Fourth Industrial Revolution and automation affect women blue-collar workers? Over and above upskilling, there is the artisanal niche with a growing demand for ethical, responsible and sustainable homemade products and handmade goods. Technology as the support system for female blue-collar workers could boost sales, enhance accuracy, limit downtime, and open up possibilities for more customers and products. Blue-collar workers should be made comfortable with technology. They should be assured that they are not destined only for pink-collar positions, but for a world of well-paid artisan jobs available to them.

Blue-collar workers should be made comfortable with technology.

In Chapter 2, Dr Tessa Wright from the Queen Mary University of London takes a look at how to increase women’s representation in the construction sector based on a project in the UK. The Women in Construction (WiC) project was established in 2008 to provide opportunities for women to work on the construction of London’s Olympic Park, and, due to its success, has continued to support women into construction employment. This chapter focuses on the lessons from the WiC project that could be adopted more widely by employers and other stakeholders who wish to increase women’s participation in the sector. Today, the WiC project offers a model for how women can be assisted to gain employment in the notoriously male-dominated construction sector.

The WiC project offers a model for how women can be assisted to gain employment in the notoriously male-dominated construction sector.

In Chapter 3, Nthabiseng Moleko, a lecturer at USB, says technical vocations offer a way forward for blue-collar workers. It is clear that we need to increase women’s economic participation as women are currently the highest recipients of social welfare. The employment of women in STEM (science, technology, engineering and mathematics) sectors is lower than that of men. However, entry into STEM positions requires education, skills and training. Technical and vocational education is typically offered by the former technikons, now referred to as Universities of Technology, Technical and Vocational Education Training (TVET) colleges, and universities. The level of participation by women in these sectors remains low, with only 35% representation at management and professionally qualified levels. TVET colleges remain under-utilised in driving broader national economic priorities, and it is crucial to strengthen linkages between labour market entrants from TVET colleges and employment opportunities in these sectors, particularly for women. It is also important to retain women in these sectors to promote diversity and limit their exit due to adverse conditions. It is about recognising the full humanity of women and removing the barriers that prevent us from making our best unique contribution to the development of our country.

TVET colleges remain under-utilised in driving broader national economic priorities…

In Chapter 4, USB’s Dr Babita Mathur-Helm explores the lack of HR management interventions for women blue-collar workers. Compared to men, women blue-collar workers are consigned to low wages, unmotivating job terms, and unpleasant employment conditions. These inequalities adversely affect human resources practices relating to women, for example policies, decision-making, job enactment, hiring, training, pay and promotion. This chapter therefore aimed to identify the conditions under which women blue-collar workers do their jobs and receive rewards that may or may not motivate them. Among others, it was found that paid leave is a significant motivator for women blue-collar workers. Money is not the main motivator for women blue-collar workers, but they do desire security in the form of retirement plans and health benefits. In South Africa today, women workers continue to face challenges such as higher unemployment, lower income, and less access to assets. Poor HR practices related to women blue-collar workers are causing a lack of motivation, dissatisfaction, disengagement, and health problems, which affect their performance. HR practitioners need to understand the choice of rewards that are real motivators of job performance for women blue-collar workers, who prefer job security over monetary rewards.

Money is not the main motivator for women blue-collar workers, but they do desire security in the form of retirement plans and health benefits.

In Chapter 5, Prof Hugo Pienaar, Prinoleen Naidoo and Lerato Malope look at labour law and the trial and tribulations of women blue-collar workers. Women in blue-collar industries still experience significant discrimination and victimisation. The root cause of these injustices is employers’ failure to distinguish equality from equity. This is in direct contrast to the values of the South African Constitution and the non-sexist agenda of the labour movement. Employers are encouraged to adopt a proactive approach in dealing with these systemic problems, as dealing with them on a case-by-case basis is not only a financial risk, but also undermines their constitutional duties.

Women in blue-collar industries still experience significant discrimination and victimisation. The root cause of these injustices is employers’ failure to distinguish equality from equity.

Prof Anita Bosch lectures in Women at Work, Human Capital Management and Leadership at the University of Stellenbosch Business School.

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