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Long Range Planning

39/5 October 2006

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Charles Baden-Fuller Editorial

Strategy Workshops: Effective or Destructive?
Strategy Workshops are widespread among big and small firms, typically occurring once a year, lasting one day and involving senior managers discussing the future of the organisation. However, Hodgkinson, Whittington, Johnson and Schwarz suggest that these workshops are potentially damaging. It is widely recognised that junior managers and outside stakeholders have a key role to play in strategy debates, but they are rarely invited to these events. In contrast, strategy is all too often presented as a hierarchically driven set of ideas that cannot be seriously countered. The next time you are invited to a strategy workshop with the professed objective to “discuss strategy” check out if the group has outside stakeholders and junior managers and whether the workshop really will debate or just be a forum that does not permit debate and whose role is to give credibility to top management's vision. Of course top-management may be right, but there is a sense that they may stifle debate that allows a more refined and so better strategy choice. So if you are a stakeholder to an organisation that uses strategy workshops, look more carefully at the detail of what these workshops do in practice. Many are done in good faith and perform a valuable function, but a careful scrutiny will show that a few are just the wolf in a sheep's clothing.

New Product Development
We are very fortunate to have three papers that deal with issues of new product development and launch, two of which probe quite carefully the situation in Korea and the third which uses global comparisons. Jae-Hyeon Ahn, Dong-Joo Lee and Sang-Youn Lee examine statistically how 60 new product development projects were managed in 10 leading Korean companies. They show that many companies achieved superior performance along two dimensions of product performance and knowledge development. They identify a number of practices in New Product Development that should help firms improve performance.

Klas Eric Söderquist develops the ideas of the Koreans further by looking carefully at the experiences of 12 firms located in the US, Europe and Japan. He finds that “organisation” is a key influence of new product development effectiveness. He notes that there are three dominant modes of organising knowledge: project centred, functionally centred, and globally centralised. None is universally superior, and he carefully points the merits of each form and the key criteria that influences the optimal choice.

Bowon Kim and Kyungbae Park examine the dynamics of the Korean Telecoms market, and they trace the causes of failure among several recent entrants that have launched new products. They criticise the entrants for paying too much attention to price cutting as a method of trying to attract custom, and argue that paying attention to brand building would have achieved better results. These conclusions are supported by using simulation models based on real data from the telecom market's evolution.

 

Gerard P. Hodgkinson, Richard Whittington, Gerry Johnson and Mirela Schwarz The Role of Strategy Workshops in Strategy Development Processes: Formality, Communication, Co-ordination and Inclusion gph@lubs.leeds.ac.uk

It is increasingly common for the top management of organisations to take themselves off to distant hotels for brainstorming sessions to deliberate on the longer-term direction of their organisation, yet surprisingly little is known about these strategy workshops. Basic details such as who is involved, how often these workshops occur, to what end(s) they are organised and what effects they have are little documented. This article presents the first substantial exploration of the role of workshops in strategy development, through a survey of managerial experience of these events. The findings show that strategy workshops play an important part in enduring formal strategic planning processes; that they rely on discursive rather than analytical approaches to strategy formation; and they typically do not
include middle managers and other stakeholders in formal strategy-making. There is also evidence of personal development and improved working relationships with peers. The findings also point to some potential negative outcomes, namely that because strategy workshops tend to be organised by top management for top management they can demotivate and dent the morale of the excluded employees. Overall, the authors conclude that strategy workshops are important vehicles for the planned emergence of strategy, although they suggest that their effectiveness could be heightened by being directed by external facilitators. They also suggest that workshop discussion could be enriched if participation was broadened to include middle and line managers, as well as external stakeholders.

 

Klas Eric Söderquist Organising Knowledge Management and Dissemination in New Product Development: Lessons from 12 Global Corporations soderq@aueb.gr

New Product Development both demands and creates new knowledge. The challenge facing Knowledge Management is how to ensure the knowledge created in one development is recognised and stored, and then transferred and shared to become available for future projects to capitalise on. Using data from 12 large US, European and Japanese enterprises that regularly undertake multiple parallel product development projects which are global in scale and highly knowledge-intensive, this article reports on three different structures for how Knowledge Management is organised. Each is analysed for clarity of mission, how well it supports knowledge transfer and sharing, what tensions might attend its use, and which job rotation styles it fosters. It seems that each has its benefits and its problems, but the author posits some kind of hybrid ‘ideal’ structure, which might to leverage the positives and neutralise the negatives, as a worthwhile ambition for managers and academics alike.

 

Jae-Hyeon Ahn, Dong-Joo Lee & Sang-Yoon Lee Balancing Business Performance and Knowledge Performance of New Product Development: Lessons from ITS Industry jahn@kgsm.kaist.ac.kr

Success in new product development is seen as a key to companies’ ability to gain competitive advantage, and the profitability that follows. But too often, NPD performance is measured in business/market terms, and its potential for knowledge creation, while widely acknowledged, is not weighed properly in the scales. The authors urge the need to understand the mechanics of the trade-off between exploitation and exploration projects, maintaining that any company seeking to cover both its short and long term positions should aim to keep the two in balance. Through an empirical examination of data from sixty NPD projects mounted by ten of the largest Korean mobile phone companies, they show how superior knowledge performance in NPD produces superior performance in both business and knowledge dimensions in future projects. Among their recommendations for managers, the authors counsel against giving low priority to the technically challenging ‘trade-off’ projects, whose negative affect on business performance is countered by positive yields in knowledge performance terms.

 

Bowon Kim and Kyungbae Park Dynamics of Industry Consolidation and Sustainable Competitive Strategy: Is Birthright Irrevocable? BowonKim@kgsm.kaist.ac.kr

How can late entrants survive when the increased competition they bring to an industry leads to consolidation and shake-out? This article surveys the explosive growth of the Korean mobile phone industry after digital overtook analogue technology. A system dynamics simulation case analysis confirms previous research: birthright is the most important element of firm attractiveness, and reputation is the most important element of birthright. So are latecomers lacking a strong birthright doomed to fail in an industry shakeout? Not necessarily..! Noting that all the Korean latecomers chose incentives (in the form of handset subsidies) in their efforts to increase brand attractiveness, the authors use their model to conduct a ‘What-if?’ analysis of one of the firms that eventually failed. They conclude that targeted investment in reputation-building would have been a better course, and, at the right level, could have led to firm survival. They offer two alternative trajectories for such investmentdbalanced and penetrationdaccording to the firm situation, the latter costing more but yielding better financial results. But either strategy would have been preferable to just giving the phones away!

 

 

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