Example of Disruptive Strategy Generation by Andrew Isherwood

This section contains a worked example that follows the Reconstructionist’s strategy tools. The aim of this is to both demonstrate and test the usage of these tools. For this a...

This section contains a worked example that follows the Reconstructionist’s strategy tools. The aim of this is to both demonstrate and test the usage of these tools. For this a relatively simple subject was chosen to reduce any specific research as it is the tools that are being tested and not the data they are being used on.

Internal Capability Analysis

Following the steps in Strategy Formulation Model the initial step is to carry out an internal capability analysis, however as this is based on a new business idea there is no existing business to analyse. Therefore this step was skipped; however in reality you very rarely start with nothing, even if it is just the founders of a business and some idea of funding constraints.

Define Market

Step two is the definition of a market, the food industry was chosen as it is well known.

External Analysis

Step three is to analyse this market. The following steps were chosen from both Christensen’s work and BOS to identify what would be disruptive in this market, see Table Steps for External Analysis.

Table Steps for External Analysis

# Steps
1 Brain Storm the makeup of the sector (create rough definitions of each Value Network)
2 Brain Storm the Key performance parameters for each Value Network
3 Create a Strategy Canvas with all these Value Networks plotted
4 Analyse it, does anything ‘pop out’ and shout this is an opportunity?

Labels were created for the food sub-sectors or Value Networks: Fast Food, Restaurant, Burger Van… see Figure – Food Sub-sector.

Food Sectors

Food Sub-sectors

A list of key performance parameters for each Value Network was then created. This was rationalised (similar performance parameters were merged) and plotted on a strategy Canvas see Figure – Strategic Canvas for Food which shows three Value Networks, Fast food, Burger Van and Restaurant from the above list.

Strategic Canvas for Food

Strategic Canvas for Food

Create New Position

Step four is to create a new position, this is the more challenging aspect, identifying opportunities from the Strategy Canvas, however after looking at this data it became obvious that Burger Vans had very similar performance parameters to Fast Food outlets such as McDonalds, they both have high convenience and speed, with smaller differences in quality, choice and costs.

However McDonalds offered consistency as opposed to a Burger Van, all McDonalds have identical food, a customer knows what s/he is going to get, whereas with Burger Vans some are good, some are bad but all of them are different, different menu, different suppliers and different prices. Therefore consistency was the differential between a customer going to a McDonalds for a takeaway or the Burger Van parked outside.

The next question was how can a Burger Van move into the next level up in Christensen’s Value Chain? The immediate thought was to create a Burger Van Brand / Franchise which would make all branded Burger Vans Consistent and increase Quality thus disrupt the Fast food chains especially as the Burger Van has a lower cost than the Fast Food outlets. See Figure – Strategic Canvas with Changes:

Strategic Canvas with Changes

Strategic Canvas with Changes

This is however, not a Blue Ocean Strategy, a new uncontested market is not being created as no new performance parameters which don’t exist in the current market are created. This new Strategy Canvas is simply a traditional low cost competitive strategy. It is the more creative part of BOS that asks the question “what other element can be added to our current resources (Burger Vans) to create an uncontested market space?” A diversification would be to add home or work deliveries as a new performance parameter, this would then be classed as a BOS. See Figure – Strategic Canvas with BOS additions:

Strategic Canvas with BOS

Strategic Canvas with BOS

Would this be classed as a Potentially Disruptive Technology? Yes it would; Burger Vans have been around for some time and would be classed as inferior to the established fast food chains, they have also sold to a non-mainstream customer base. They are cheaper and more convenient than fast food chains. If the consistency of food can be stabilised then there is every potential for the technology to improve and meet the needs of the mainstream customers.

Validate and Create Mission & Vision

Step five, validation of this strategy has not been carried out here as it would require detailed information and is outside the scope of this simple worked example. The wording of Vision and Mission statements can be created from the strategic canvas Figure – Strategic Canvas with BOS additions –

Vision – “Revolutionising the Fast food and home delivered food markets”

Mission – “To create a Consistent Fast Food brand, based in mobile vans with home delivery”

Findings

While this is a very quick and superficial look at the food market and has very little scientific value in itself; it does show four issues of interest with the tools:

  1. Document Known and Unknown Knowledge – the strategist systematically document what s/he knows and what is unknown or unknowable.
  2. Simplify the Problem – these tools allows creativity to be applied to a much simpler problem, so rather than have the problem of “how to make money in the food sector” the question “how can Burger Vans be more consistent” is posed. This reduces the creative brilliance required and allows the average manager to be able to make the creative jumps necessary.
  3. Communication of Strategy – these tools simplify the communication of the strategy both to senior managers / Banks and to employees. In a similar way to Math answers, where the working out allows others to see how the student came to the answer, having this Strategy Canvas as a story helps others to understand the thought process of the strategist. This is essential to get buy-in; not just from the funders but from employees and customers.
  4. Combine Disruptive Innovation and BOS – By combining these two tools / theories into the Reconstructionist View you systematically search for potential disruptive innovation within new uncontested market spaces.

 

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