Video Transcript: Lecture 1
Hello everybody. My name is Matthew Earnhardt, and I am joining you on this wonderful journey of discussing strategic management. So when you think about strategic management, it is so complex. I mean, it's just so complex, and there's so much to it. So really, with these next series of lectures, our goal is to just introduce some terms, kind of give you some ideas, kind of talk about what strategic management is, and give you a very, very, very good and comprehensive overview, and help you think strategy, which will help you with your other classes. And I think you'll find some of the things that you've learned in your other classes in this class as well. So I just wanted to let you know that you know these, this, this video, the textbook that we're using, all the supplemental materials that we will provide you there. They're all meant to give you a picture. But the learning does not stop there. Certainly the learning continues. And you can look things up. I use Google Scholar, so I scholar.google.com, and I'll type in things like strategic management, and I read some articles out there. But there's certainly other ways. And if you need resources, feel free to reach out to us. Reach out to me, and I would be more than happy to explain something further or really get into dive into the material with some very intense theoretical examples. So you know, please feel free to reach out, and we will provide you anything you need, but this will give you a good, comprehensive overview of what strategy is. So you know, the textbook defines strategy a certain way, and we will certainly discuss that. By the way, we are discussing Chapter one this week, a mastering strategy. It is both in art and it is a science, and we'll talk about that, but, but when we think about strategy, I want to boil it down to one thing and one true key concept, and that is, strategy is about gaining a competitive advantage, and how a firm gains that competitive advantage is different ways. So I will give you a couple examples. So Apple has gained a competitive advantage in their space, and one of the things that Apple will says is we do not have to be the cheapest in the market. We are going to we are going to gain our competitive advantage through a ecosystem that is tied together, that's very closed. So Android is very open. Other people can come in, they can develop those kind of things, but we're going to have a closed ecosystem. This is apple, and we are going to focus on good design. We're not going to have the latest and greatest technology, but we are going to focus on good design and functionality. And that's how Apple, that's their competitive strategy. And one of the things to think about that when it comes to Apple is that, you know, Apple is not cheap, like I I'm doing a calculation right now, and I probably have probably about $5,000 worth of Apple products just right here, between my my iPad, my phone, my computer, my watch. You know it's it's Apple is not a cheap product, but for me, and where they've gained their competitive advantages, I got into the ecosystem with one of the first iPhones, and then I wanted everything I can to kind of help me in that area and keep that same ecosystem. So I have too many books, too many movies, too many songs
on my iPhone. Now to where it makes sense for me to switch over to Microsoft products, which I tried for a while, the company Acer. If we're going to stick in the computer realm, the company Acer has tried a different strategy, a different competitive strategy, remember to gain that competitive advantage. So Acer strategy is, is, hey, 80% of people need basic functionality. They need to be able to surf the internet. They need to be able to do word processing. They don't do any heavy video editing, like we do here at CLI. You can see, you know, it's quite the little setup right here in the studio. I'm looking at a camera. I have a lights all over the place. There's, there's an Apple computer over there, which is used because of, you know, when you're doing video editing, Apple has the best software. Acer said most people aren't going to do that. Most people don't need to be in a studio doing all this stuff. So what our strategy? G is going to be to gain our competitive advantages. We're going to offer well made products that work at a lower price point. And we will partner with Walmart. We'll partner with other companies, other other businesses, to get our products in there so people can find them. When you think about marketing, you think about the four Ps, you know, product and placement and those kind of things. Certainly that is part of strategy, and we will talk about that in class as well. But Acer said, we do not need to compete with Apple. They are a competitor because we're both selling computers, but we don't need to compete with them. Compete with them. We can get our competitive advantage in a very, very specific space. So, so what is the definition of strategy? Well, strategy can refer to a plan or a set of coordinated actions, certainly. But it also talks about competitive advantage. The book talks about Tesla, and asks if Tesla is going to make it, and then frame strategic management within that frame, we're not going to talk about that. What I will say about Tesla, if you don't know what they are, they make electric cars. They were one of the first in the space, but they focus heavily on innovation and technology and design and making cool products. They're kind of like the Apple of electric vehicles, if you will. If you're familiar with Apple products. So, and by the way, driving the Tesla is very weird. I do not have a Tesla myself, that I have driven my friends, and it's really weird how, and anybody who has a Tesla could probably tell you, but it's really weird how you, when you normally are driving, and you let off the gas, you just kind of coast in a Tesla. You stop, so you kind of have to, like, you have to put your foot on the gas and put your foot off the gas, but you can't just let off the gas. It's kind of, it's kind of strange. But anyway, this isn't, this class isn't about Tesla. This is about strategic management. So let's just, let's just talk about some key takeaways. So remember that strategic management focuses on firms and different strategies that they will use to become successful. So Apple has a strategy and Acer has a strategy, and they're different strategies, and that's okay each firm or organization or business, and we use all those terms interchangeably. Each one will use a different method to find success. Something else to think about is that in order
for a company to be successful, you got to know where you're going, so strategic planning and planning for the future, and having that 3, 5, 10 year outlook, one year plan. You know, certainly having those goals, that vision and mission to values which we'll talk about are very, very important to remain having success and maintaining a leader in the competitive marketplace. Because, remember, you're fighting for market share, and ideally what you want is you want 100% market share. So you want every single person to buy an iPhone. You don't want anybody to go and buy an Android. You want everybody to buy an iPhone. And that's okay. That is your goal. That's fine. I mean, that's not realistic goal, but that could be a goal. So one of the things that you need to remember, or we need to remember we, is that organizations and businesses may need to alter their strategy as conditions change. So a good example of this is COVID 19, right? So in March of 2020, I emailed before that, in February of 2020 March 2020 certainly by April 2020 right around then, a lot of government started to shut down, and a lot of a lot of people were out of work, and a lot of businesses had to learn how to adapt and how to change their strategy in order to make income to stay in business. So, so what are some examples of that? Well, one of the examples of that could be a distillery, a distillery that was making alcohol. I shifted from making alcohol, started making hand sanitizer. And, you know, much to my annoyance, when I go into a place and I use hand sanitizer and it smells like very strong alcohol, you know, I personally do not like that, but it works like it cleans you, you know, I don't want to walk around smelling that like that, but that is a strategy that that distilleries used, and they had to change their strategy, and they had to shift their strategy to be successful. So one of the things, and when you think about strategic management. You think about planning, you have to be adaptable. So if you learn nothing else over these next 12 modules, I want you to think about adaptability and the importance of adaptability. One other example of it and Christian leaders, was good enough to give me a little a little swag bag here. But one of the things that I got, and another thing that was a result of COVID that resulted in radical change, is clothing companies started to make face masks, right? So this was a strategy as well before COVID. If you lived in the United States, the only time you would find these kind of face masks is if you were, you were in the medical profession. So people weren't making cloth masks. They certainly weren't making it with, you know, with their businesses on them. And by the way, I love this, Christian leaders Institute study online. So they weren't making them, they weren't making face masks that were personalized. And you could get a face mask with your dog on it, right? Those things were not happening, but they are now, and that's because firms recognize that they needed to adapt, that they needed to change, that they needed to do something different in their strategic plan to meet their goals and stay competitive and stay in the organization, I'm sorry, to stay in the marketplace, not close their
organization. So the textbook talks has a couple exercises, and I think these are pretty good. And so I'm just going to answer one of these from my perspective. And then, you know, I want you to, I want you to spend some time thinking about these yourself. And one of the things that the textbook asks is, have you developed a strategy to manage your career? Should you make it more detailed? Why or why not? So that's one question. I think that's a very personal question, and I want you to spend some time answering that. The other question, and I really like this question, this question I'm going to answer, is, what businesses that you visit regularly seem to have the most successful business model? What makes the business model work? So I can think of tons of examples, and there's examples from Apple, which I just talked about, but one of the one of the things that I really like in my day is breakfast. It's one of my favorite meals. And in the United States, there's so many breakfast places, and there's chains, and there's and there's local shops, and there's franchises, and there's just all kinds of places that you can go to get breakfast, and everybody's competing. So one of the places that is my absolute favorite is called snooze, and it's primarily out west. It started in Denver, Colorado, that's where I was familiar with it. And then spread and they have places in Dallas, Texas and Austin, and they have places in Phoenix, Arizona, and I think there are some places in California anyway, it's primarily out west. The thing about snooze that makes them great is what snooze has said is, listen, there's a lot of really, really good breakfast places out there. But what we're going to do is, we're going to give you a good environment. We're going to give you a little bit of a of a different lifestyle, kind of a relaxed vibe. But what else we're going to give you is we're going to give you really, really, really good pancakes, and that's what we're going to be known for. So you're going to go into snooze and you're going to eat a pancake. Their blueberry Danish pancake is the best pancake in the world, and they said, This is what we're going to be known for, is our pancakes, and then we're going to build our strategy is to have really good pancakes draw people in, and then we're going to and then we're going to do our menu around that. So, you know, I just realized that one of the things I can do here is I can bring up snoozes menu and I can show you. So I'm going to do that. So let me switch cameras. Let me bring this up. Okay, so snooze. So snooze is known for pancakes, but you can see here, you know, certainly they have other offerings, and you know they focus on responsibly sourced and food that's very prepared, but you can see. Here, those are some, some delicious pancakes that they make. And I'm just going to, just going to focus on this one for a second, a little more pancake. You know, who wouldn't want to eat that? But, but they have all kinds of different pancakes, and they are known for that. And as I said, they started Colorado. I actually own this shirt right here, but you can kind of see the vibe of the restaurant. But they're a business that I think has a really good strategy, which is, we're a franchise model. We are going to build up our
business by using the franchise model, but, but we, all of our stores, are going to be the same, and we're going to focus on having really, really good pancakes. And I will tell you, in Denver, Colorado, the line around there's a snooze on it's on Colorado Boulevard. It's in Denver. It's right before you get downtown. If you're going down Colfax, if you've never been to Denver. This wouldn't mean anything to you, but if you know Denver, live in Denver, been to Denver, then you'll know what I'm talking about. Or going to Denver if you go down Colfax Avenue, which is the longest road in America, fun fact, and you make a left on Colorado, down on the left hand side, there is a snooze and it's right next to a UPS Store. And the interesting thing about this snooze is at 7:30am the line is wrapped around the entire building, including the UPS store, including there's a pizza shop there, and I think there's a candy shop as well, wrapped around the entire building at 7:30 in the morning because people want delicious pancakes. So that is, that is an example of a business in my mind, that does it very, very well and has a very good strategy. We're going to be good at pancakes. We're going to offer things around pancakes. We're going to give an experience, and we're going to be the go to where people are going to stand in line for an hour and a half to come to our restaurant because they love our pancakes so much. So the book talks a lot about strategic planning, and what is your intended strategy versus your emergent strategy versus your realized strategy. And they use an example of Avon, but what I wanted to talk about is this concept of intended strategy, realized strategy, emergent strategy, unrealized strategy. And think about how you have to adapt and change your strategy so so you may, you may remember, if you've looked at it, you can see this chart, and it's the model of what your unintended strategy is, what your unrealized strategy is, your delivered strategy and your realized strategy. So what I want to say about that is, remember that the intended strategy is what the organization wants to do. That's what they intend to execute. So you know, they're they're part of the strategic plan, but just because you intend to do something doesn't mean it's going to come to fruition. There's a lot of external and outside forces that are at play here, which are going to change your strategy, your model, the way you do business. So again, going back to my, I don't want to pull it out again, but going back to my face mask, you know, was a clothing company's intended strategy to create face mask. No, no, what? They didn't want to start out as a face mask company. They want to do a clothing company and and they had to adapt their model because of what was happening. Emergent strategy is unplanned strategy that arises in response to unexpected opportunities or challenges. So again, COVID, so using that mask is an emergent strategy, or switching from creating alcohol to using that alcohol and creating hand sanitizer, even though I personally don't like that. A lot of people do and it's hand sanitizer and it keeps you safe. And then realized strategy. It's the strategy that actually happens. So you know, you realize that you have the intended strategy, then you have what
your what your other parts your strategy, and then you eventually you realize a strategy, and that's what you follow, and that needs to be changed and adapted. So at my organization, four years after we had a change in leadership, that person came in and developed a strategic plan, and we noticed that we did not implement every area of our strategic plan, especially around things out of our control. So our realized strategy. Was different from what our intended strategy was. Now we have just gone through another five year strategic plan update, and we just went through this planning exercise, and we're still going through, in fact, we're socializing it with our employees now, but, but as we went through that now we have our real life strategy, which helped inform our future strategy going forward, and I'll tell you right now that that strategy is going to need to be modified. We're not going to be able to do everything we want to do. It's just going to happen. That's the way things are. So as a firm again, adaptability is key. If you don't adapt, you die. So that's something to to think about, remember unrealized strategy is the abandoned parts of the end of the intended strategy. So for instance, we had very robust marketing push on our strategic plan. We realized that we could not. We could not. There were some other factors, which we talk about forces a lot when we're talking about strategic management, but there were other forces at play that we couldn't realize that strategy, so it became an unrealized strategy. So what's the key? What's the key takeaway is many people will come up with strategies that they hope to they follow to be successful, that there's going to be things that happen that give rise to new opportunities and new challenges and and then these emerging strategies are used to change their path, and the real life strategies are part of both the intended and the realized strategy. So does that make sense? I hope so. The book goes into further detail, but I certainly wanted to talk about it. So the book does a good job here, and I don't really want to focus a lot of time here, but strategy has been around for a very, very, very long time. In fact, in the Bible, strategy is discussed in detail. The book talks about Moses, and he had quite the challenge of leading Hebrews out of Egypt, and he began delegating authority and doing some things, and that strategy as well, how you manage, how you lead your people, we will be talking about strategic leadership as well in this class, is part of your strategy. You know? I think one of the things is that that we need to realize is we often can't execute a strategy alone. We need a team of people to help us. They bring different diversity and different perspectives and different thoughts and different ideas and all those things work together to make the organization or the firm or the business or whatever term you want to use to make them successful. So I thought this was very interesting, and I just want to focus in on this real fast, this idea. I don't want you to to gloss over it in the book, but strategic management borrows many ideas from ancient uses of strategy over time. So remember that there's, there's an idea from ancient times that is destroying one's enemies for the effective use of resources. And again, when we
talk about competitiveness, when we talk about competitive advantage, when we're talking about strategy, this is what we are talking about. We are talking about the idea that you have a competitive advantage and your strategy is superior to your competitor strategy, which is going to help you win. You know, we don't like to think of I personally don't like to think of things in terms of a zero sum game where there's winners and losers, but when it comes to strategies, you definitely want a competitive advantage. So I just wanted to mention that, you know, obviously military strategy is a big part of this, but, but you know that that form of strategy is different from what strategic management is as a field of study. So one of the things that I want to just point out is that the book talks about the interdisciplinary nature of strategic management, and that's absolutely true. So if you think about strategic management as a field of study, you know the book mentions like that includes physics and literature and literature and chemistry, Computer Science and Engineering and other things, and literature. And all these things are part of a good strategy, strategic management field. And that's true. Remember that strategy and strategic management and planning and executing and all these things, they. Um, they they are interdisciplinary, and they can be focused not just in the business world, but in our personal life as well. So that's one of the other things that I want to make clear, that as you're going through these lectures, these modules, as you're reading this, this material, you know, if it has a focus in your personal life, or it has a focus in your business life, you can apply it to other areas of your life as well. So you know, Ford is a key person, and again, I'm not going to read the book, but what I do want to say is that let's remember that strategic management has been around for a very long time. Moses certainly is the example used in the book. Certainly, Jesus had a strategy. The disciples had a strategy after Jesus was crucified for evangelizing the world. Strategy has been around for a very long time. And these lessons that that, you know, that were taught in the Old Testament, that Jesus taught us, certainly through conflicts and military, wars and things like that, and through philosophers from every single different area, we had a good understanding of what strategy is. So, you know, there's some questions here that that I think you should spend some time answering and thinking about, certainly thinking about, as you read the chapter, like, what do you think was the most important event related to strategy in ancient times? You know, I'll leave that up open for your interpretation. I would, I would argue for myself, the spread of Christianity is was a very interesting strategy. And you know, as a Christian, I'm fully invested in evangelizing the world, as I know you all are. So that is something that I personally find compelling. But you can answer that on your own, for yourself. So, you know, one of the things that I want to point out is that there are some criticisms about strategic management, and one of the criticisms is it's hard to plan for the future when the future is so unpredictable. And one of the things that is that you, if you take any of my other classes, or get to know
me, you'll hear me say a lot, is businesses like stability, businesses like predictability. So that's, that's a term you'll hear me say, or that's a phrase you'll hear me say over and over and over again, is business like stability? Businesses like predictability. But there's a criticism around strategic management, because it says, How can you plan for the future when you don't know what's going to happen people, I mean, I'm sure there was somebody maybe. I mean, somebody always predicts something, but, but nobody could have seen COVID Coming. Nobody could have fully prepared for countries around the world, shutting down for the travel agency, getting decimated by 90% for a reduction in travel. Nobody could have anticipated these things. And the question is, how do you plan the future is so unpredictable? Why do you waste waste your time preparing and making plans in the future when the future is so unpredictable. Well, I would argue you need a place to go, right, and that if you keep your vision and you keep your goals specific, but you keep it, you surround that vision, you're always working toward that vision, which is an aspirational view of where you want to be, then you can always do strategic planning, and you can always work toward that goal. The other thing is, you know, is that it's important to think critically about the strategic planning process, to think critically about your business. Certainly, the most successful people in the world are constantly thinking about how to be better, how to gain that competitive advantage, what their strategy is, how to deal with people, all those things they're constantly, constantly, constantly working on that I met with somebody last night who one of the questions they said to me, and this is a highly successful organization, and one of the questions they asked me was, hey, what can we do better? Where we should where should we be going in the future? What should we be doing now, I would argue that they have a pretty robust plan about where they are going, and yet they said to me, what can we do to get better? Where should we be going? So they're constantly reevaluating their place in the marketplace, where to go and what to do to get there. So that's a that's very powerful, and that's something that we need to consider, we need to think of. So we will be going through the strategic management process in very, very, very, very big detail, very detailed approach to going through that process. But again, remember, this is an overview. So we're not going into all the detail that we can, but you need to understand the strategy and performance. You need data to inform where you're going to go, what you're going to do, and you need to understand your mission and vision and how they shape the firm strategy as well. And then one of the ideas around scanning the environment, understanding those external influences and those and those forces that that are on your business is a SWOT analysis, strengths, weaknesses, opportunities and threats. We will be going through that this class as well. Just remember that that you need to know where you're going, and then you need to have a strategic formation. And you need to under understand how to form a strategy.
So you know, again, the book for strategic formation talks about Apple, which I talked about in my introduction, where they talk about the integration of products and how everything works seamlessly together, and that's one of their strategies, and that's their formation is around that. So remember that strategic management is a process that we need to manage change so you have to constantly be environmentally scanning and understanding what's going on in the environment, or you will be in trouble. So make sure that you understand change and that you take appropriate action and that you're not afraid to pivot, like my mask example, or the hand sanitizer, example. Sometimes when the environment and environmental factors and environmental forces come on, you you have to pivot your strategy. So you know, the goal is survival. The goal is to gain a competitive advantage over the other people in your space, and the goal is to make sure that you're constantly monitoring performance. So we will be going through all that in this, in this book, and in the next lesson, we will be talking about assessing organizational performance that will align with the textbook as well. We're going to be talking about mission, vision and values, about what those mean about competitive advantage. We'll be talking about competitive advantage in more detail, and we'll be talking about assessing organizational performance as well, and what it means to assess it, and what tools exist to do so. So before we close, as we will do every single time, I just want to take a moment to pray, so please join me in prayer. Heavenly Father. Thank you so much for this class. Thank you so much for the individuals that will be going through these next 12 modules with with me, and this journey that we're about to have together. Lord, I pray that as we discuss strategic management, that we can help assimilate the concepts that we are learning into our Christian worldview and use it to be powerful disciples for you Lord, so help us not only to learn about strategy within organizations, within businesses, within firms, but also organizational strategy within our personal life and especially within our spiritual life as well. So Lord, I pray you'll bless this class. You'll help them to be able to focus over next 12 modules, over these lectures, and you will help me to communicate the message that you will have me communicate in Jesus' name. We pray. Amen. Thank you so much. I'll see you back here for our module two, where we will be talking about assessing organizational performance. Thank you.