Session II

Strategic Flexibility

Prof. Sushil
Department of Management Studies
Indian Institute of Technology Delhi
Hauz Khas, New Delhi – 110 016
profsushil@gmail.com
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 Concept of Systemic Flexibility
Thesis Antithesis
Systemic Flexibility

Synthesis
(Dynamic
interplay)

Free will or Freedom of choice

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 Strategic Flexibility at Cisco
• In the slow down it finds difficult to maintain 40% growth rate.
• But there is a silver lining. For example, Internet traffic is doubling every
Systemic Flexibility

100 days or so.

• Showing strategic flexibility to move into new markets: wireless and
optical communication.
• Moves quickly to acquire seven optical companies.
• Increased R&D spendings for 9% to 14% to develop new products.
• Strategic flexibility to cope with the threats moving into new spaces
quickly to tap the areas of opportunity.
• Also enhancing operational flexibility both by automation of internal
functions and outsourcing manufacturing (75%).
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 Flexibility Through Recentralization at HP
• HP- 83 product lines, 120 countries, 540 offices
• Low sales growth rate (4%) and stagnant revenues.
• Radical management experiment- reorganization with centralization as
Systemic Flexibility

opposed to a wave towards decentralization.

• Three-phased plan-Grouping front end into corporate sales and consumer
sales, backend into privates and computers.
• Phase I - Created awareness in 20 countries
- Merged ad campaign
- R&D towards radical innovations
• Phase II (year 2000) - consolidating 83 product divisions into four units, with
nine person strategy council.
• Phase III (2001) and beyond) - new market categories, comprehensive
offerings, subsidized computer centres and services.
• Boost growth from 4% to 15%.
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 Types of Flexibility

High Structural Strategic

Variety
Low Steady-state Operational

Low High
Speed

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Criteria for Classifying Types of Flexibility

Criteria for classification

Level of
decision-making Time frame Nature of Change
Operational Short term Stable Environment
Organizational Medium term Changes in direct
Types
of environment
flexibility
Strategic Long term Changes in indirect
environment

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Organizational Flexibility and the Associated
Managerial and Organization Design Tasks
Variety Speed

Managerial task:
dynamic capabilities

Paradox of duality

Organization design task:

controllability of the organization

Technology Culture
Structure

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An Advanced Strategic Framework of Flexibility
Managerial task
(variety and speed
of flexibility mix)
• steady-state flexibility
• operational flexibility
• structural flexibility
• strategic flexibility
Changing competitive
forces Changing
(dynamism, complexity, organizational forms
Unpredictability) Resolution of
• low competition paradox
• rigid
• moderate • planned
competition •meta-flexibility
• hyper-competition • flexible
organization design task
(controllability of the
organization)
• technology
• structure
• culture 9
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The Natural Trajectory of Routinization:
Decreasing Levels of Competition

High
flexible
organization
maturation

Controllability
planned
stagnation strategic
organization
focus

rigid chaotic
organization organization
Low
Limited Extensiveness of Broad
the flexibility mix

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The Reverse Trajectory of Revitalization:
Escalating Levels of Competition

High
flexible
Entrepreneurial
organization
revitalization
Controllability
Professional
revitalization planned
organization strategic
neglect

rigid chaotic
organization organization
Low

Limited Extensiveness of Broad

the flexibility mix

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Accumulation of Competitive Demands and
Conflicting Performance Criteria

Cost Excellence Efficiency Quality

Choice/
Speed Flexibility

Competitive Demands Performance Criteria

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 Change versus Continuity

Continuity Change
Systemic Flexibility

Past Future

Exploitation Exploration

Defend Prospect

Fend-off Uncontested
encroachment Market space

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• Continuity gives us roots; change gives us
branches, letting us stretch and grow and reach
new heights.
- Pauline R. Kozer

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 Major Continuity Forces
Flowing Stream Strategy

Core
Competence
Supply Chain and
Technology Distribution
Network

Infrastructure Culture

Customer Base
Performance

Continuity
Forces

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 Major Change Forces
Flowing Stream Strategy

Change Forces

Government
Globalization Policy and
Legislation

Mergers and
New
Acquisitions
Opportunities

Competition e-Business

Customer New
Needs Technology

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 Continuity-Change (C-C) Matrix
Flowing Stream Strategy

High Change Masters Synthesizers

Change Forces
(Wind) (Flowing
Stream)
c d

b a

Low Quick Encashers

(Mushroom)
Stabilizers
(Tree)
Low High

Continuity Forces

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 Flexible Strategy Matrix
Flowing Stream Strategy

Strategic Renewal Strategic Flexibility

and Transformation for Integrating
Opposites
High

Change Forces
c d

b a

Freewheeling and Incrementalism and

Experimentation Evolution
Low

Low High

Continuity Forces

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 Flowing Stream Strategy
Flowing Stream Strategy

• How to integrate continuity

and change to naturally grow
and open new vistas?

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 Eight Principles
Flowing Stream Strategy

Divert the continuity momentum. (Divert)

Have creative discontent to reach beyond existing

performance. (Partition)

Focus on customer requirements rather than

product/ service. (Integrate)

Have a flexible synthesis of multiple options.

(Integrate)

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 Eight Principles
contd…
Flowing Stream Strategy

Follow multiple routes and create a web. (Shift)

Institute processes for continuous vitalization of the

organization. (Integrate)

Overcome hurdles in flow. (Divert)

Merge into a blue ocean. (Shift)

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 Flowing Stream Strategy Framework
Partition
Flowing Stream Strategy

Factors for continuity &

factors for change

Restructuring

Divert
Momentum of Shift
continuity Flowing Burden of
to change. Stream continuity
Outsourcing
Strategy
Cannibalization Blue Ocean
Extending

Integrate
Continuity and change
by synthesizing multiple
options

Offering solutions
Reinventing
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Flowing Stream Strategy Steps in the Process

Continuity-
Assessment of Strategic
Change
continuity and factor
matrix
change forces deployment
mapping

Selection of Strategic
Implementatio
channels and crystal
n and learning
strategies analysis

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 Charting Strategic Trajectories
1. Strengthening/extending existing core competence and
Flowing Stream Strategy

acquiring new core competence

2. Strengthening/extending/repositioning existing brand and
create new brands
3. Different product-market combinations
4. Retaining existing customers and creating new accounts
5. Integrating existing customers needs and new opportunities
6. Develop competitiveness in existing bases of competition
and create new dimensions of competition
7. Exploit existing/promising technology and explore new
technology frontiers
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 VDB Assessment of Continuity Forces
Flowing Stream Strategy

Assessment Continuity Strategic

Forces Actions

Vital Customer base Use with a

change force

Desirable Core Partly modify

competence
Burden Outdated Drop
technology

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 Impact Assessment of Change Forces
Flowing Stream Strategy

Assessment Change Forces Strategic

Actions

High Impact New Technology Use with a

continuity force

Medium Impact E-Business Partly account

Low Impact Government Ignore

Policy

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 Strategic Factors
Flowing Stream Strategy

Customer Factors Firm Factors

•Cost •Financial Performance
•Choice •Customer satisfaction
•Delivery •Productivity
•Connectivity •Quality
•Service •Flexibility
•Speed •Risk
•Learning Level

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 Balanced Scorecard Adapted in Terms of Firm
and Customer Factors
Flowing Stream Strategy

Firm Factors

Financial
Performance Factors

Business Process
Customer Factors
Factors

Learning and
Change Factors

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 Strategy Landscape
(Merger of Air India and Indian)
Flowing Stream Strategy

Schedule

Frequency Convenience

Pre Merger

Domestic
Connectivity Post Merger

International
New Factor
Reach

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 Factor Strategy Diagram
(Merger of Air India and Indian)
Flowing Stream Strategy

(International Reach,
Raise Domestic Connectivity)

Maintain
(Convenience, Service
level, Schedule)
Reduce (Cost)

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 Flowing Stream Strategy Crystal
Flowing Stream Strategy

Key
Customer
Factors

Continuity Change
Forces Forces

Key
Firm
Factors

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 Channel Selection Matrix
Flowing Stream Strategy

High SHIFT INTEGRATE

Change Low PARTITION

DIVERT

Low High
Continuity

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 Channel Selection Matrix
Flowing Stream Strategy

High PARTITION INTEGRATE

Strategic Low DIVERT SHIFT

Flexibility

Low High
Strategic Leverage

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 Strategy Selection Matrix

Continuity Forces
Change Forces Customer Core Culture Technology Infrastru-
Base Compe- cture
tence

Globalization

Competition

New
opportunities
New technology Cannibalization

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CASE STUDY

IBM

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Summary of Impact of Continuity Forces
Impact of Continuity Forces

5.00
4.00
3.00
Values

2.00
1.00
0.00

Existing
Customer

Technology

Supply chain

culture

Performance
infrastructur

distribution
competence
Entrenched
base

Global

network
Core

and
e

Continuity Forces

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 Values

0.00
1.00
2.00
3.00
4.00
5.00
6.00

Globalization

New
Opportunities

Competition

Customer
Needs

New
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Technology
Change Factors
Impact Of Change Forces

e-Business

Mergers and
Acquisitions

Government
Policy and
Legislation
Summary of Impact of Change Forces

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 Mapping IBM on the
Continuity - Change Matrix
5

Change Masters (Wind) IBM

High Synthesizers
Change forces

( Flowing Stream)
2.5

Stabilizers
Quick Encashers
Low (Mushroom) (Tree)

1
1 Low 2.5 High 5

Continuity forces

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 Analysis and Strategic Actions for
Continuity Forces of IBM

Assessment Continuity Forces Strategic Actions

1 Customer base Use with change forces viz: Competition,

Vital 2 Existing culture Customer need and New Opportunities

1 Core competence
2 Existing infrastructure Modify to suit the emerging scenario
3 Technology presented by change forces of New
Desirable 4 Performance technology, Globalization, Mergers and
5 Supply Chain & Distribution Acquisitions and e-Business
Network
1 Outdated technology
Burden 2 Bureaucratic part of existing Drop
culture

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Analysis and Strategic Actions for Change
Forces at IBM

Assessment Change Forces Strategic Actions

Globalization This can be used with following continuity

Competition forces for getting better performance:
High Impact Customer needs Customer base
New Opportunities Innovation focus of IBM’s existing culture
New Technologies Core Competence

Government policies and

Legislations Partly account for when formulating future
Medium Impact Mergers and Acquisition strategies
e-Business

Low Impact ---- Ignore

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Key Strategic Channels Framework

INTEGRATE
High SHIFT
Change forces

2.5

PARTITION
&
DIVERT
Low

1
1 Low 2.5 High 5

Continuity forces

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