Business portfolio and dynamic capability slide presentation

W8_S_1Slide_Dynamic_Capabilities_MBA501_T1_2017.pdf

Home >Business & Finance homework help >Operations Management homework help >Business portfolio and dynamic capability slide presentation

4/04/2017

Dynamic capabilities

Week 8 Workshop

MBA501 Dynamic Strategy and Disruptive Innovation

4/04/2017

• Do you agree with American

businessman Bill Gates when he says:

Small Group Discussion

Success is a lousy teacher.

4/04/2017

Small Group Challenge Ontario, Canada 2013

In groups, advise Jim and Mike what potential issues they should perhaps be contemplating at this point.

Jim Balsillie and Mike Lazaridis, co-CEOs of telecommunications

company BlackBerry Ltd feel as though their problems are far behind

them. Their company has been named by Fortune magazine as the fastest growing company in the world, with earnings exploding by

84% a year. The BlackBerry phone, with its full keyboard and push

email, is the premier mobile gadget on the market and a “must have” for email obsessed business customers. It is such a popular and

addictive device it has been nicknamed the ‘Crackberry’.

Although the iPhone is growing in popularity, Apple is specifically

targeting the consumer market and Jim and Mike sense the

BlackBerry’s dominance of the corporate market will remain unchallenged well into the foreseeable future.

4/04/2017

Resource based strategies

• Many organisations follow a resource

based strategy of accumulating

valuable technology assets and

guarding them aggressively

• However, this strategy is not enough to support a significant competitive

advantage

4/04/2017

Organisational capabilities

• Resources are not productive by

themselves

• To achieve a result, a team of resources

must work together

• An organisational capability is an

organisation’s capacity to deploy

resources for a desired result

4/04/2017

Competitive advantage

• Of primary interest are those capabilities that can provide the basis for competitive advantage

• A core competency is a capability fundamental to an organisation’s strategy and performance

• They are the capabilities that an organisation performs particularly well relative to its competitors

4/04/2017

Core competencies

• Core competencies or fundamental

organisational capacities are those that:

o make a disproportionate

contribution to ultimate customer

value, or to the efficiency with which that value is delivered

o provide a basis for entering new

markets

4/04/2017

Dynamic capability

• Rapid and unpredictable environmental changes require organisations to accumulate competitive advantage through knowledge creation processes

• Dynamic capability is an organisation’s ability to integrate, build, and reconfigure internal and external competencies to address rapidly changing environments

4/04/2017

Sense, seize, and transform

• Dynamic capabilities belong to three

clusters of activities and adjustments:

1. identification and assessment of an

opportunity (sensing)

2. mobilisation of resources to

address the opportunity (seizing)

3. continued renewal (transforming)

In groups, discuss what Blackberry did not sense, did not seize, and therefore did not transform.

4/04/2017

BlackBerry

• In 2013 BlackBerry was one of the most

prominent smartphone vendors in the

world with 85 million subscribers

• The company’s share price has since

fallen in value by over 90%

• BlackBerry now holds a miniscule 3% of

the smartphone market

• What went wrong?

4/04/2017

Raspberry

• BlackBerry’s decline has become a

case study about what happens when a

tech giant fails to cultivate dynamic

capabilities in a consumer-technology

market evolving at breakneck speed

• The company failed to sense that

consumers – not business customers –

would drive the smartphone revolution

4/04/2017

• Do you agree with English philosopher

Francis Bacon when he says:

Small Group Discussion

A prudent question is one-half of wisdom.

4/04/2017

Small Group Challenge Toyohashi, Japan 1899

Sakichi Toyoda, founder of Toyoda Loom Works, is working at home when his five year old son, Kiichiro, asks him what he is doing.

‘I’m trying to develop a useful learning tool,’ Sakichi replies.

‘Why?’ Kiichiro asks.

‘Because I want my company to learn more,’ Sakichi replies.

‘Why?’ Kiichiro asks.

‘Because the more we learn the more we grow,’ Sakichi replies.

‘Why?’ Kiichiro asks.

‘Because we can change, we must change,’ Sakichi replies.

‘Why?’ Kiichiro asks.

‘Because if we do not change we will not survive,’ Sakichi replies.

Kiichiro pauses for a moment. Then asks, ‘Why?’

In groups, help Sakichi find the answer.

4/04/2017

Three dynamic processes

1. Organisations and their employees need the capability to learn quickly and to build strategic assets

2. New strategic assets such as capability, technology, and customer feedback have to be integrated within the organisation

3. Existing strategic assets have to be transformed or reconfigured

4/04/2017

Learning quickly

• Learning is a process by which

repetition and experimentation enable

tasks to be performed better and

quicker

• Learning processes are social and collective and therefore require

common codes of communication and

coordinated search procedures

4/04/2017

Toyota

• Toyota is often described as one of the

world’s greatest learning organisations

• One of several learning management

principles used at Toyota is a method

called the “five why’s”

• This simply means asking the question

“why” as many times as possible to

determine the root cause of a problem

4/04/2017

Five why’s

Boss, there’s a puddle of oil on the shop floor. Ok, you better clean it up. Why is it there?

Because the machine is leaking oil. Please fix the machine. Why is it leaking?

Because the gasket has deteriorated. Let’s replace the gasket. Why has it deteriorated?

Because we bought inferior gaskets. Let’s upgrade specifications. Why did we buy them?

Because we got a good price. Let’s change our purchasing policies. Why the good price?

Because our purchasing agent is evaluated on

short term cost savings. Let’s change the evaluation policy for our

purchasing agents.

4/04/2017

Individual Challenge Consider a subject that you recently studied in which you did not

achieve a high distinction.

Apply the 5 Why’s to reach a conclusion as to why that was your result.

4/04/2017

Routines

• The organisational knowledge created

by learning resides in new patterns of

activity to solve problems or routines

• Collaborations and partnerships can be

a source for new organisational learning, which helps companies to

recognise dysfunctional routines and

prevent strategic blind spots

4/04/2017

General Electric

• The GE Work-Out process initiated by

CEO Jack Welch is a series of

structured and facilitated forums,

bringing people together across levels,

functions, and geographies to solve

problems and make decisions in real time

4/04/2017

Building strategic assets

• Similar to learning, building strategic

assets is another dynamic capability

• Strategic assets are those assets

needed by an organisation –

technological, structural, financial – for it to maintain its ability to achieve future

outcomes

4/04/2017

• Do you agree with American writer

Mark Twain when he says:

Small Group Discussion

Continuous improvement is better

than delayed perfection.

4/04/2017

Small Group Challenge Boston, US 1885

Frank Gilbreth, 17 year old bricklayer’s helper, has a problem. The

survival of his employer, the Widden Construction Company, is

entirely dependent on the speed with which the bricklayers he helps ply their trade.

The men indeed work very hard, bending over many hundreds of times a day to pick up bricks before buttering each one with mortar

and gently tapping it into place with a trowel. Although the bricks

themselves are not individually heavy - weighing in at only 2.3 kg each - Frank notices they can be cumbersome and difficult for the

bricklayers to initially grasp with their hands. He is aware that brick

masonry is a proud trade with long held practices and traditions but he wonders if there may just be a better way to lay bricks.

In groups, suggest an improvement Frank could make to the process of bricklaying.

4/04/2017

Integration

• The effective and efficient internal

coordination or integration of strategic

assets may also determine an

organisation’s performance

• The way production is organised inside an organisation can be a source of

differences in the organisation’s

capabilities

4/04/2017

Lean production model

• Lean production or lean manufacturing

is a systematic method for the

elimination of waste within a

manufacturing system

• Lean also takes into account waste created through overburden and waste

created through unevenness in work

loads

4/04/2017

Intel

• Five years ago the world’s largest

computer chip maker took 14 weeks to

introduce a new chip to their factory

• Since incorporating lean principles into

their production processes the company has reduced the chip introduction

timeframe to 10 days

4/04/2017

Kaizen

• Kaizen is Japanese for improvement

• It is an approach to production that

systematically seeks to achieve small,

incremental changes in processes in

order to improve efficiency and quality

• By improving standardised programs

and processes, kaizen aims to eliminate

waste

4/04/2017

Toyota

• The Toyota Production System

incorporates kaizen

• All line personnel are expected to stop

their moving production line in case of

any abnormality and, along with their supervisor, suggest an improvement to

resolve the abnormality which may

initiate a kaizen

4/04/2017

Six Sigma

• Six Sigma is a set of techniques and

tools for process improvement

• It seeks to improve the quality of the

output of a process by identifying and

removing the causes of defects and minimising variability in manufacturing

and business processes

4/04/2017

Amazon

• Amazon has an operational excellence

program that incorporates lean

production, kaizen, and Six Sigma

• Amazon has adopted a number of Six

Sigma concepts, including a deliberate effort to recruit the finest thought

leaders from an exclusive selection of

top business schools

4/04/2017

• Do you agree with German philosopher

Friedrich Nietzsche when he says:

Small Group Discussion

A thought, even a possibility, can

shatter and transform us.

4/04/2017

Small Group Challenge New Jersey, US 2000

William Weldon, CEO of pharmaceutical and medical device

manufacturer Johnson & Johnson, has a problem. The company is

losing market share in the increasingly competitive cardio-vascular disease market.

Johnson & Johnson produces two different kinds of remedies for treating cardio-vascular disease. The first is a stent, a product

manufactured by the Medical Device & Diagnostics Group that is

inserted into clogged arteries to hold them open and help blood flow more freely. The second is a series of drug therapies produced by

the pharmaceutical businesses that include medicines used to

reduce arterial narrowing and anti-clotting agents. Sales are falling steadily in both stents and cardio-vascular drug treatments.

In groups, recommend a course of action William could take to regain market share.

4/04/2017

Transformation of assets

• Fast-changing markets require the

ability to reconfigure the organisation’s

asset structure and accomplish the

necessary internal and external

transformation

• Change is costly, and so organisations

must develop processes to find high-

payoff changes at low costs

4/04/2017

Transformation capability

• The capability to change depends on

the ability to scan the environment,

evaluate markets, and quickly

accomplish reconfiguration and

transformation ahead of the competition

• This can be supported by

decentralisation, local autonomy, and

strategic alliances

4/04/2017

Decentralisation

• In a centralised organisational structure, the company typically has a headquarters where key managers make most of the important company decisions

• Decentralisation is the process of redistributing or dispersing functions, powers, people or things away from a central location or authority

4/04/2017

Illinois Tool Works

• Fortune 500 company Illinois Tool Works is made up of 400 decentralised business units

• There are no company wide, preset benchmark profit goals

• Instead, senior management imposes performance standards on the general managers of each unit based on the particular unit’s competition

4/04/2017

Local autonomy

• Local autonomy means an

organisation’s front line and local

managers have important decision-

making authority versus reserving all

critical decisions at the top

• This allows local managers to adapt