REACTIVE STANCE ?? OR PROACTIVE STANCE ??
WHAT WILL YOU CHOOSE TODAY ??

Reactive Stance

• They focus on keeping up, protecting their existing markets and improving their performance

Proactive Stance

•They focus on executing shaping strategy and using technology changes to create new business ecosystems Example : Google’s Ad Sense

WHAT IS A SHAPING STRATEGY?
• A shaping strategy is no less than an effort to broadly redefine the terms of competition for a market sector through a positive, galvanizing message that promises benefits to all who adopt the new terms • Example: Bill Gates in early 1980s. (mainframes to desktop machines). • Strategies can be of two forms:
– – Disruptive innovation Mergers & Acquisition driven

DISRUPTIVE INNOVATION
• In simple terms disruptive innovation helps – create a new market – goes on to disrupt an existing market – displaces an earlier technology • Innovations that improve a product or service in ways that the market does not expect, by designing for a different set of consumers in the new market and later by lowering prices in the existing market.
– Example: Dell and Southwest Airlines

DIGITAL INFRASTRUCTURE
• Unlike the other technical (disruptive) innovations like steam engine, electricity which stabilized after businesses harnessed their potential, digital infrastructure is constantly improving • New powerful enabling infrastructure. • Provides potential for small actions and investments to make an impact disproportionate to their size. • Favors new entrants over incumbents

RETHINKING THE SUBSTANCE OF STRATEGY
• Convention wisdom holds adaptation as the best strategy in case of absence of equilibrium • Success achieved if they can sense and respond quickly to what’s changing around them • Examples:
– – – – – Visa Microsoft and Intel Google Facebook Salesforce.com

• Successful shapers: “ Reduces risk and magnify hopes and rewards”. • Motivates players to make significant investments and take aggressive action in order to accelerate movement towards a preferred outcome.

To succeed, a shaping strategy needs a critical mass of participants. Shapers can attract them by:
COMMUNICATING A “SHAPING VIEW” •Convincingly articulating opportunities available to participants DEVELOPING A SHAPING PLATFORM •Defining standards and practices that make participation easy and affordable DEMONSTRATING SHAPING ACTS •Indicating that the shapers have the conviction and resources for success and won’t compete against participants

These are the three elements of a shaping strategy

PRE-REQUISITES FOR SUCCESS IN A SHAPING STRATEGY
Risk Taking
Unique insights at both Macro and Micro Level Need managers who can evangelize shaping views (internally and externally) Coordinate relationship with a number of third party participants.

ELEMENT 1: SHAPING VIEW
• Formulate a view of the future that highlights how a broad industry or market is changing and identifies the opportunities for a wide range of participants. • Change the way the potential participants perceive the market opportunities. • Altering mindsets can materially influence the perceived economic incentives to participants. • Start with a clear long term view of the market • It makes sense of fundamental forces at work, helps participant envision the rewards and act accordingly. • Reduces perceived risk by making the positive outcome inevitable. • Never in detail; leaves room for refinement • Helps participants make difficult choices in long term.

SHAPING VIEW AND VISION
Vision: Vision tends to be narrow – only the direction of company articulating the vision. Shaping View: It starts with clear perspective on direction of relevant market and articulate the value creation implications for all companies involved. Vision: Vision also tends to be too broad– they define future so vague to accommodate virtually choice or action. Shaping View: Must be at a high enough level to account for general business uncertainty and leave room for experimentation and innovation.

FIVE TESTS OF A SHAPING VIEW
Does the view express a perspective on the long-term direction of a broad industry or market and highlight how it will change?

Does it clearly identify attractive business opportunities for a wide range of participants?
Does it tie these opportunities explicitly to broader economic, cultural, and technological forces at work on the business landscape? Is the view at a sufficiently high level to allow for unexpected developments, yet specific enough to direct and focus the thinking of executives faced with difficult choices? Has it been aggressively and continually communicated by senior management to external audiences and to employees?

ELEMENT 2: SHAPING PLATFORM
• A set of standards and practices that organize and support participants’ activities—making it easy and inexpensive for participants to develop and deliver their own products or services. • Shaping platform provides leverage. 1. Development Leverage: derived from new technologies. Reduces investment and effort. Example: Salesforce.com 2. Interaction Leverage: Reduces cost and effort for a diverse array of participants to coordinate their activities. Example: Google’s AdSense
• Key is standard protocol and practices defined. • Scalability makes specialization by participants more attractive.

FIVE TESTS OF A SHAPING PLATFORM
1.
2. 3. 4. 5.
•Does the platform promise financial benefits to potential participants, especially by reducing their cost of entry, accelerating the prospect of generating revenue, or both? •Does it support a diverse set of participants and offer opportunities for creating value in many distinct niches?

•Can the platform scale up by accommodating large numbers of participants without adding unacceptable costs for the shaper?

•Is it likely to generate increasing returns as participation grows?

•Will its functionality continually evolve, providing an incentive for participants to engage regularly with the platform owner and share their own learning and plans?

ELEMENT 3- SHAPING ACTS AND ASSETS
• Shapers may lack the conviction and capability needed for success • Worries from participants about their own business niches being vulnerable to competition • Bold act by shapers. Example- Novell • Assets of shaping company become a significant factor in persuading potential participants to invest in shaping strategy • Large established companies have an advantage • Small companies can gain needed assets through strategic relationship with large, better known companies.
– Example: Microsoft, Facebook, Google

SIX TESTS OF A SHAPER’S ACTS AND ASSETS
• Larger incumbents: Given all your other business initiatives, how can you convince potential participants that you are in this venture for the long haul, even in the face of setbacks? • Smaller entrants: How will you gain access to assets that will prove to potential participants that you have sufficient resources to pursue a successful shaping strategy? • All shapers
– What have you done to assure potential participants that you won’t eventually compete with them? – Do your senior management team, board members, and key investors have the tolerance for risk and the patience required to commit the assets and take the actions essential to being a successful shaper? – Is your company capable of attracting and mobilizing enough participants to realize the full potential of shaping platforms? – Does your leadership team—and especially the CEO—have a forceful enough personality to build a shaping narrative that is plausible, vivid, and alluring to participants?

SUMMARY

DEMONSTRATION OF ABILITY TO WOULD-BE PARTICIPANTS
By achieving critical mass of participants quickly By mobilizing the multitudes

Shaping again and again

• Before You Decide Not to Be a Shaper... ...consider that nearly any company can benefit from the attempt, even if unsuccessful. • That’s in sharp contrast to other strategic approaches. M&A based shaping strategies often require huge capital outlays and can rise or fall on the accuracy of assumptions about economies of scale or scope. • Disruptive innovation strategies often require significant investment at the outset and confidence that one company can deliver the full breadth of innovation. Although options exist to mitigate the risk of such strategies, incorrect assumptions about the timing or scope of adoption can leave losses in their wake. • The bottom line: Even if you think you’re not a real shaper, trying to undertake a shaping strategy still might make sense.

STEPS TO IDENTIFY AN OPPORTUNITY TO SHAPE STRATEGIES
OCUS

CCELERATE

TRENGTHEN IE IT ALL TOGETHER

ACCELERATE
• Identify 2-3 operating initiatives • Carried out over 6-12 months • Would most accelerate the movement towards your preferred future • Specify the resources

STRENGTHEN
• Identify organizational obstacles which if addressed would speed the process

TIE IT ALL TOGETHER
• Integrate all the preceding activities • Refine them • Values an alignment between near-term performance and long term direction • Long view is required • Surefooted short steps wont take us far

NOT A SHAPER? BE A PARTICIPANT
Not every company is cut out to be a shaper. Playing the shaper’s role requires the right aspirations, mind-set, risk profile, and management capabilities—not to mention a powerful, farsighted CEO and board of directors. But many roles are available to companies that participate in other firms’ shaping strategies. These participants must be able to assess the relative strengths of the shapers they might support, plus define their own roles within the shaping opportunity. Specifically, they need to determine which of three main roles— influencer, hedger, or disciple—best suits them.

Commits early and prominently to one shaping strategy BENEFITS: Increases asset efficiency, builds capabilities and gains strong market positions RISKS: Supported platform may not become the industry standards

Not a Shaper? Be a Participant
DISCIPLE
Commits exclusively to one shaping platform

INFLUENCER

BENEFITS: Has clear strategic focus and direction, does not invest in competing shaping strategies
Develops its products or services to support multiple shaping platforms BENEFITS: Operations spread across several competing platforms RISKS: Higher costs can incur RISKS: Supported platform may not be adopted

HEDGER

ANY QUESTIONS ?
Presented By : Rohan Aggarwal B004 Aditi Banka B007 Abhishek Bhalla B010 Amneet Jawanda B024 Melvin Jose B027 Ramandeep Mand B034 Paras Maru B036