Final project = Give strategic advice to a company
After a long semester studying 2 dozen frameworks to breakdown problems, my strategy students have a final assignment due on Tuesday 8pm. They choose a company and give them strategic advice. The wrinkle is that the paper needs to be 3 pg (1,500 word). It would be easy to write a rambling 10 page diatribe, but an executive memo requires strong opinions, loosely held.
What does strategic advice look like?
- How can you help this company to create / maintain a sustainable competitive advantage?
- Or in Peter Drucker talk, “how to prepare today for an uncertain tomorrow?”
The following are advice, resources, emails, tips I’ve given students over the last month:
1. Which company?
It’s really your choice. It can be a company you admire, plan to work for, or one you’ve read about. You may consider a mega-trend (e.g., 3D printing, hybrid work-from-home, electric vehicles) and then down-select one of the companies who is leading that effort. It’s helpful to choose a publicly traded companies because you can down analyst reports, investor relations presentations, and compare with some of their other publicly-traded rivals.
2. What makes a great executive memo?
This is what I put in the syllabus:
- Provide a concise situational analysis, highlight the critical issues, explain why they are important, and guide the reader through the logic. Be succinct.
- Provide clear, actionable recommendations; what should they do?
- Demonstrate the logic on how you reached those conclusions.
- Answer the question: “so what?”
- Support arguments with analysis, data, and evidence
- Craft the message in an easy-to-follow and persuasive way
3. Research quickly
Sent this 8 min video on how to research smart (and lazy):
- If they are publicly-traded, go to the company’s website and download investor relations presentations
- Download the annual report to shareholders
- Listen to the most recent earnings webcast; what do the CEO and CFO tell analysts?
- Watch / listen to recent interviews with the key executives from the company: CEO, CFO
- Many consulting firms and investment firms publish free research on emerging trends
- Google the “search term” + “pdf” for reports on the topic; narrow the search to the past year
- Google the “search term” + “.org” to find non-profit, governmental industry groups focused on that topic
- Read news (and Wikipedia) to understand the basics, then keep digging to find more useful references
- Use Finviz.com as a convenient (and free way) to identify the other companies within the industry
- Gather primary data through interviews, surveys
- Can you use HBS case studies?
4. Investigate the company’s core competencies
Strategy is about creating a sustainable competitive advantage. Fighting an unfair fight. Finding an economic moat that fits your set of activities. Finding customers who are inclined to love what you do, and how you do it. Strategy is about trade-offs and deciding what you will not do. Who is the company now, and if they follow your advice closely, where will they be in 5 years? What does success look like?
4. Put things into buckets
Consultants love buckets. It helps us simplify complex situations, and structure our thinking.
- What are the company’s strengths, core competencies (resources and capabilities?) How do you know?
- What are the key trends influencing their current financials and market positioning?
- What are the supply chain factors (buyers, suppliers, new entrants, rivals) to be most focused on? Why?
- What are they key challenges to tackle? How do we know that?
6. Use strategy frameworks
Frameworks are not perfect, but can be useful ways to simplify problems.
- Business unit strategy = set of activities, economic moat
- Industry changes = industry lifecycle, types of innovation, disruptive innovation
- Company growth = founder’s mentality, organizational design, culture, commander’s intent
- Corporate strategy = where to compete, test of diversification, ways to unlock value
- Cost structure = fixed cost vs. marginal costs; experience curve, learning curve
- Customer segmentation = willingness to pay vs. price; STP (segmentation, targeting, positioning)
- New market entry, creation = blue ocean, technology adoption lifecycle
Figure out which 2-3 strategy frameworks which might help you think about their future. It’s not a contest to say more, it’s a contest to focus the reader’s attention on the right things.
7. Create the appendix first
When a student team has done the work and they are halfway through writing the paper, this can be good advice. Figure out what frameworks and analyses you definitely want to do. Then go ahead and go deep and create the appendix charts, graphs, tables. The reverse-engineer those points back into the body of your paper. It’s design thinking to be willing to DIVE DEEP, then also bring it back up a level into the body of the paper.
8. Get feedback from others
It’s always helpful to let other people read, critique, and improve your work. Here is a sample of feedback I gave to a half dozen teams over this week:
Team 1: Car Company
- Yes, you can focus on X problem, but also need to help the reader understand why you are focusing on X? Why is X so important, vs. Y and Z.
- Who are they as a company, what makes them truly different?
- Think about the frameworks you might use and reverse engineer the story.
- Use data point to quickly get through industry analysis. . “the global car industry is an oligopoly where the top 5 manufacturers have ___% market share”
Team 2: Personal hygiene product company
- Since this company essentially invented the category, blue ocean might be a good framework to think of
- If they have high market share, they are probably interested in growing the market, not just keeping a high share
- If democratization of the product (more people using it, like Khan) is a core part of their mission, they then are probably willing to make longer-term sacrifices
Team 3: Fast food retailer
- What is their market position? Seems like 2 companies own that part of the market, sounds like Coke/Pepsi duopoly to me. What does that imply?
- Since they are a franchise model, it’s hard to implement all the rules, policies, brand consistency = makes sense
- Why not reach out on Linkedin to 1-2 people you know, or send a simple email with 2-3 questions? Their quotes will be great “data” for you to use
- Remember, if there are really 2 big companies, they “What is Strategy” = trade-offs, how are they positioned vs. their big rival? What should they NOT do?
Team 4: Movie theater chain
- The secular decline of movie theaters is a fact. a) you need to decide how much more you think it will drop because that will help you determine how big of a company it should be. . . b) you are likely not going to be able to change the behavior of everyone. . . (e.g., there are SO MANY substitutes now).
- So, if you can’t really control the fall of the movie theaters, what can you control?
- Who do they want to be? How do they position themselves vs. their biggest rival?
- What is their core competency? What are they uniquely good at? How to do more of that?
- Whatever you are recommending, you need to be able to pay for it (balance sheet) through cash, stock or bonds.
Team 5: Delivery app
- Love that you are thinking about the supply chain. Who’s involved? Who makes the money?
- What’s the areas of differentiation with other delivery apps? If there are not many, that’s a problem?
- Yes, you idea XYZ is a BIG idea, like it. . .but you need to figure out how to pay for it. . maybe $7B in bonds. . .which you need to have some conviction. Is it okay to propose that they make a big investment? Yes. However, you need to show a) how the company NEEDS to be decisive and make a decision, or else they are in trouble b) how this could give them a strategic competitive advantage
- Sure, but isn’t that just a marketing tactic that other delivery apps could also offer?
Team 6: Streaming service
- What is the core problem they are facing?
- Sure network effects apply. What is the definition of network effects? Do they have member problem or usage problem or a willingness-to-pay problem?
- What is their core competency? What makes them different from rivals X and rivals Y?
9. Be smart with your time
a) Research: If you / your team have not determined the company or done the primary research, please start immediately. This is not a research project, but you need to know enough about the company and industry to have a point of view. Strategy is about what you will do today to prepare for an uncertain future. Whether it’s omni-channel retail, Internet-of-Things, regionalization of supply chains, rising interest rates, or changing consumer trends – you need to know enough to put together a strategy for the company.
b) Focus: Identify the things you COULD talk about, and then determine which thing(s) specifically. You cannot solve all the company’s problems in 1,500 words, so explain to the reader the scope of the challenges (sometimes there are many), and why you are narrowing it down to a specific focus:
- “Company X needs to lower it’s customer acquisition cost because ABC”
- “Company X is now the smallest incumbent in a business were economies scale matter”
- “Company X has been largely disrupted because ABC, and therefore, we need to focus on 123”
Basically, show your thinking, logic, bring the audience along for the story.
c) Work smart and lazy: After figuring out what you will focus on, find the evidence to prove your points. Don’t do an exhaustive book report – boring – instead be smart and find analyst reports, investor relations pdf, or YouTube interviews with industry experts, or Linkedin message with people who work at the company:
- “Goldman Sachs forecast that this trend will continue with a 25% CAGR for the next 5 years”
- “Currently, the EV market is _____ % of the total, but is forecast to be _______% in 2030”
- “Our recommendation is ambitious and requires $3 billion of investment, but their balance sheet shows $17B in cash available.”
d) Link it to strategy: Think about what strategy frameworks make sense. What did we learn and how is that helping us think about the future? Another tip is to go ahead and make the appendix first, THEN after those are made, you can knit together the paper. It’s like looking in your refrigerator (oh, cheese, tomatoes, beef) seeing what ingredients you have, then making some pasta.
10. Be a (Cynical) judge of your own work
e) Finish the draft early, then walk away for 24 hours. Then come back and be a cynical judge of your own work. From the feedback from the last paper:
- What’s the company and their strategic positioning? What’s “winning” look like to them?
- What’s the major trends in their industry (and adjacent industries)? What’s happen in the world?
- What do the financials say? Does it point to where they are in trouble? Can they afford what you are recommending?
- What are their core competencies? What are they uniquely good at (or used to be good at)? How does that map to your recommendations?
- All companies have multiple issues; why did you choose issue ABC to address? Why is that the main problem?
- Are your recommendations a good fit for the company, or just a best practice? Even if it is a best practice, how can they implement in a unique way?
- What are the trade-offs the company is making by choosing your recommendations?
- If the company takes your recommendation fully, where could they be in 5 years?
Finally, congratulations. Good job on the semester and writing a strategy paper you are proud of. Winning.
John