Change Implementation Techniques for Creating a Sense of Urgency

Technique 2.28 Checking for Strategic Decay

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Over time, all strategies face the inevitability of decay. There are 4 reasons for this, ie replication, supplantation, exhaustion and evisceration. You need to check your strategies

. Replication (as strategies get replicated, they lose their distinctiveness and their power to produce above-average returns)

Some questions to ask to help understand replication of strategies

i. Are our strategies losing their distinctiveness?

ii. Does our strategy defy industry norms in any important ways?

iii. Do we possess any competitive advantages that are truly unique?

iv. Is our financial performance becoming less exceptional and more average?

. Supplantation (good strategies often get supplanted by other strategies. With an increasingly connected economy, there is a increasing trend for new strategies to become old sooner)

Some questions to ask to help understand supplantation of strategies

i. Is our strategy in danger of being superseded?

ii. Are these discontinuities (social, technical or political) that could significantly reduce the economic power of our current business model?

iii. Are there other business models that might render our current model irrelevant?

iv. Do we have strategies in place to co-opt or neutralise these forces of change?

. Exhaustion (as markets become saturated, customers get bored, or optimisation programs reach the point of diminishing returns, strategies can become exhausted)

Some questions to ask to help understand exhaustion of strategies

i. Is our strategy reaching the point of exhaustion?

ii. Is the pace of improvement in key performance metrics, such as cost per unit or marketing expense per customer, slowing down?

iii. Are our markets getting saturated?

iv. Are our customers becoming more fickle?

v. Is our company's growth rate decelerating or about to start doing so?

. Evisceration (with the Internet, customers are reaping the benefits in productivity, ie better value for their money, such as lower prices and/or improved products and services, such as in the travel industry with airlines, hotels, etc)

Some questions to ask to help understand evisceration

i. Is increasing customer power eviscerating our margins?

ii. To what extent do our margins depend on customer ignorance or inertia?

iii. How quickly and in what ways are our customers gaining additional bargaining power?

iv. Do our productivity improvements fall to the bottom-line, or are we forced to give them back to customers in the form of lower prices or better products and services at the same price? (source: Gary Hamel et al, 2003)

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