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Good Strategy
By
Dr. Michael McDermott
mcdermottm1@nku.edu
“A hallmark of true expertise and insight is
making a complex subject understandable”

Client to Consultant: “So I am paying you to ask me
questions”
Consultant to Client: “Absolutely! Without these questions
you are not identifying your main challenges”
Strategy – such an over-used
and abused word
Strategy and Two Popular
Misconceptions

1. Strategy is formulaic or
mechanistic
2. Strategy is goal-setting
mcdermottm1@nku.edu

4
The Three Key Hallmarks of Fake
Strategy
Failure to Face
the Challenge
Mistaking Goals
for Strategy
Bad Strategic
Objectives

• You must define the challenge
• If you cannot define the challenge, you
cannot evaluate the strategy or improve it

• Do not confuse desire with a plan to
overcome obstacles

• Fail to address critical issues
• Objectives are impracticable

mcdermottm1@nku.edu

5
Bad Strategy in 3D
The Focus is on 3D
• Desire;
• Drive; and
• Determination

mcdermottm1@nku.edu

6
The 3d Essence of Bad Strategy

Desire

Drive

mcdermottm1@nku.edu

Determination

7
Incoherence:
The Essence of Bad Strategy
• At best pursuing multiple unconnected
objectives
• At its worst, it involves pursuing conflicting
objectives

mcdermottm1@nku.edu

8
The Cost of Bad Strategy
It is a source of
weakness
because it is
incoherent

mcdermottm1@nku.edu

9
So what is Genuine or
Good Strategy?
mcdermottm1@nku.edu

10
Essence of Genuine Strategy:
The D² rule

• Avoid Dumb
• Focus upon Direction

mcdermottm1@nku.edu

11
The Essence of Good Strategy

Direction
mcdermottm1@nku.edu

12
What is Direction?
• It’s focus
• And this can
only be
obtained by
making choices
mcdermottm1@nku.edu

13
(Genuine) Strategy

=
Problem-Solving

Make Choices –
hard choices

Define the problem
mcdermottm1@nku.edu

14
Strategy is identifying
the key challenges
and the means to
overcome them
mcdermottm1@nku.edu

15
Therefore developing a
strategy is an exercise in

problem-solving

mcdermottm1@nku.edu

16
Stop Right There!

You
suggestin’
we gotta
problem?
mcdermottm1@nku.edu

17
Pre-requisite for Genuine Strategy:
Define the challenge
• If you apply careful consideration and define
then challenge then you are well on the road to
good strategy
• If you fail to identify and analyze the
obstacles, you cannot have a strategy.
– Instead, you have either a stretch goal, a budget, or
a list of things you wish would happen”
mcdermottm1@nku.edu

18
The Absence of Good Strategy
Explained
Good Strategy

Bad Strategy

• Begins with the • Begins with an
admission that
implicit denial
there is always a
that there is any
specific problem
specific problem

mcdermottm1@nku.edu

19
Essence of Good Strategy

Diagnosis

Guiding
Policy
(the signpost
indicating future
direction)

mcdermottm1@nku.edu

Coherent
Action

20
Strategy is the Path

• The How
• The Why
(Genuine) • The Where
Strategy • The When
• The Who
mcdermottm1@nku.edu

21
What is Genuine Strategy?
• A cohesive response to an important challenge
• A genuine or good strategy must therefore
include the details – the actions to be
implemented
• Strategy is not grandiose goals – it’s about how
an organization will move forward
mcdermottm1@nku.edu

22
Developing Genuine or
Good Strategy

• It emerges from identifying
one or two critical issues in the
situation and then focuses and
concentrates action and
resources on them.
mcdermottm1@nku.edu

23
Bad Strategy vs Good Strategy
Bad Strategy:
Widespread

Good Strategy: Rare

• Urges achievement of a
goal…but nothing else
• It’s essentially wishful
thinking
• ‘Problems’ are glossed over;
• Tries to meet conflicting
goals and ducks making
hard choices

• Is honest in identifying
challenges
• develops a cohesive
approach to overcome them

mcdermottm1@nku.edu

24
Common Strategic Thinking

Strength

Opportunity
mcdermottm1@nku.edu

25
Coherence:
The Essence of Good Strategy
• Good strategy does NOT simply build upon
existing strength
• It is a source of strength because it is coherent

mcdermottm1@nku.edu

26
Strategy and Competitive
Advantage
• Competitive Advantage often arises simply by
having a genuine or good strategy
• Because most organizations have a fake or bad
strategy
– Sure they have goals but are essentially guided by
‘spend more, work harder’ mantra
mcdermottm1@nku.edu

27
The Advantage of Having Good
Strategy
• Focus – as it is
so unexpected
by rivals

• And as such
identifies the
“don’ts” as well
as the “do’s”
mcdermottm1@nku.edu

28
Genuine Strategy Provides
Dual Purpose

• It stipulates
the “do’s”

• It stipulates
the “don’ts”

mcdermottm1@nku.edu

29
Remember

it's just as important to decide
what not to do in business as
it is to determine what to do

mcdermottm1@nku.edu

30
What makes for a good strategy?
• Harnessing power and applying it where it will
have greatest effect
• We can find good examples of this

mcdermottm1@nku.edu

31
Sources of Power:
Leverage
Strategic leverage arises from a mixture of:
1. Anticipation
2. Insight into what is most pivotal or critical in
a situation;
3. Making a concentrated application of effort

mcdermottm1@nku.edu

32
OK. I now get it. Strategy and
goals are two different
things.

mcdermottm1@nku.edu

33
REBUTTAL OF BEING BETTER
ARGUMENT
mcdermottm1@nku.edu

34
But business success is
simply about being
better. Isn’t it?
mcdermottm1@nku.edu

35
The “Being Better” Argument
• In order to succeed, it’s true you do need to
possess at least one advantage:
• Better
• Cheaper
• Faster
• Richer
• Stronger
mcdermottm1@nku.edu

36
The “Being Better” Argument
• But simply ‘being better’ provides only shortlived success
• The ‘better’ is based only on operations

mcdermottm1@nku.edu

37
Three Questions
1. What biblical story do you most associate with
an underdog defying expectations to beat a more
impressive opponent?
2. Who is the greatest boxer of all time, and indeed
considered the greatest sportsman of the 20th
century?
3. Who are considered the greatest ever football
(i.e. soccer) team?
mcdermottm1@nku.edu

38
mcdermottm1@nku.edu

39
What explains their success?

Their success was based
upon Genuine Strategy

mcdermottm1@nku.edu

40
Example 1: David vs Goliath
David
• Youthful
• Inexperienced in hand-tohand conflict
• Physically weak
• No protection

Goliath
• Mature
• Experienced in hand-tohand conflict
• Physically strong
• Heavily protected

mcdermottm1@nku.edu

41
Example 1: David vs Goliath
• If David is to win, he
only had one
option…and his insight
enabled him to identify
that fact
• Goliath – classic case of
‘brawn and no brain’

mcdermottm1@nku.edu

42
Lessons from David vs Goliath

Smarter can
beat better
• Good strategy comes
from fresh insight into
strengths and
weaknesses, and
opportunities and threats
mcdermottm1@nku.edu

43
Facing ‘Goliath’
• So developing a strategy to topple the
‘invincible’ is not easy
• Do you try and copy the best – but the core
competence of the best is always hard to
imitate
• Or do you have to invent a superior solution?
mcdermottm1@nku.edu

44
Example 2: Ali vs Foreman
World Heavyweight Championship Fight, Zaire,
October 1974

The Challenger
32 years of age

mcdermottm1@nku.edu

The Defending World Champion
25 years of age
45
Ali vs Foreman:
Comparison Based Upon the ‘Better’ argument
Ali

Foreman

• Former World Champion
• Past success was based on
being ‘better’
• Past his peak in terms of
being ‘better’
• 32 years of age
• Making a comeback after
years without competitive
fights

• Defending World Champion
• Present success was based
on being better
• At his peak
• 25 years of age
• Getting better with each
fight

mcdermottm1@nku.edu

46
Who is Going to Win?

mcdermottm1@nku.edu

47
What’s Missing?

We have not identified a crucial
difference!
Only one boxer had a genuine
strategy
mcdermottm1@nku.edu

48
Ali vs Foreman:
Comparison of Strategy

mcdermottm1@nku.edu

49
Ali vs Foreman
•
•
•
•
•

Two boxers
One, the defending world champion
The other, the former, older champion
One Common goal
Two Different Strategies
– Ali – Good Strategy
– Foreman – Bad Strategy

mcdermottm1@nku.edu

50
Ali vs Foreman
Ali Practiced Good Strategy

George relied on Bad Strategy

• diagnosed his critical problem
• He could no longer “float like
a butterfly, sting like a bee”
over 15 rounds against a
younger opponent

• The 3D Effect

• So he developed an action plan
to overcome his critical
weakness
• Rope-a-dope
mcdermottm1@nku.edu

51
Rope a
Dope
Ali Wins by a
Knockout in
Round 8.
Foreman had run
out of steam.

mcdermottm1@nku.edu

52
Two Vital Lessons from
Ali vs Foreman
1.

Even the very best
are eventually
overtaken;
2.

If they are to
continue winning,
they need genuine
strategy
mcdermottm1@nku.edu

53
Lessons from “Rope-a-dope”
• Exhaust your rival’s
resources through
suckering them into
constant expenditure of
ineffective yet
debilitating effort

• When you look at the
market for some
products, do we see that
the market leader is
employing the “rope-adope”?

mcdermottm1@nku.edu

54
Example 3:
Barcelona’s Dominance of World Soccer

• The present Barcelona side, Spanish and
European champions, are considered the greatest
team of all time;
• It features Lionel Messi (born 24 June 1987), the
World Footballer of the Year (2009, 2010)
• Spain, current European and World Champions, is
heavily dependent upon Barca players
mcdermottm1@nku.edu

55
Example 3:
Barcelona and Spain’s Dominance of World
Soccer

This example shows that this success is
based upon a genuine strategy that
was developed 40 years ago

mcdermottm1@nku.edu

56
Example 3:
Barcelona and The Dutch Legacy
• In the early 1970s, Barcelona was managed by
Dutch coach, Rinus Michels
• He bought the player Johan Cruyff – ‘the Messi’
of his generation
• Cruyff managed Barcelona in the late 1980s-mid
1990s
• One of his key players was Josep Guardiola,
manager of Barcelona since 2008
• Today the present Barca team are hailed as the
greatest ever side
mcdermottm1@nku.edu

57
Example 3:
Barcelona and The Dutch Legacy
• In 1970 Brazil beat Italy 4-1 in the soccer
World Cup final in Mexico
• The Brazilian team was considered invincible
• The next World Cup was in Germany in 1974
• But how could anyone beat Brazil?

mcdermottm1@nku.edu

58
Example 3:
The Dutch Influence on Soccer
• Rinus Michels, the coach of the Dutch national
team, concluded that no one could match
Brazil
• So a radical new approach was required
• He invented ‘total football’
• At the heart of this new system was the player
Johan Cruyff

mcdermottm1@nku.edu

59
Total Football Defined
• In Total Football, a player who moves out of
his position is replaced by another from his
team, thus retaining the team's intended
organisational structure. In this fluid system,
no outfield player is fixed in a nominal role;
anyone can be successively an attacker, a
midfielder and a defender. The only player
fixed in a nominal position is the goalkeeper.
mcdermottm1@nku.edu

60
The Immediate Outcome
• In 1974 Holland beat Brazil but were beaten in
the final 2-1 by the host country Germany
• In 1978 Holland was again beaten in the final
by the host nation Argentina

mcdermottm1@nku.edu

61
Barcelona F.C:
The Lasting Legacy
• Michels introduced ‘total football’ to
Barcelona
• The commitment to ‘total football’ continued
under Cruyff
• Cruyff recognized the exceptional ability
required to implement ‘total football’
• He thus established in 1978 “La Masia”, the
youth academy to train young players in the
system from an early age
mcdermottm1@nku.edu

62
Barcelona F.C:
The Lasting Legacy
• One of the first graduate from ‘‘La Masia” was
Guardiola, exceptional player and manager;
• Today’s current midfield of Xavi, Iniesta and
Fabregas are all graduates of “La Masia”;
• Messi is also a product of the youth academy

mcdermottm1@nku.edu

63
Barcelona F.C: The Lasting
Legacy
Barcelona F.C.
• When Barca won the
European Champions
League in 2009, 8 of the 11
players were graduates from
the youth system

Spanish National Side
• When Spain won the 2010
World Cup the 22 man
squad included 8 Barca
players and 6 were in the
starting 11 for the final

mcdermottm1@nku.edu

64
The Lasting Legacy:
From Total Football to Tiki-taka
Tiki-taka has been variously described as
• "a style of play based on making your way to the back of the net
through short passing and movement"
• a "short passing style in which the ball is worked carefully through
various channels, and
• a "short passing, patience and possession".
•

The style involves roaming movement and positional interchange
amongst midfielders, moving the ball in intricate patterns, and sharp,
one or two-touch passing.

mcdermottm1@nku.edu

65
The Lasting Legacy:
From Total Football to Tiki-taka
• One of the weaknesses of Spanish sides and the
national team was that their players were often
much smaller and less physical than players from
other nations (e.g. Northern Europe, Africa);
• Tiki-taka focuses on movement, possession and
skill
• Some of the best players for Barcelona and Spain
are physically small
mcdermottm1@nku.edu

66
Barcelona and Competitive
Advantage
Differentiation
• Barcelona competes through
innovation – it has
developed a unique style or
brand of football

Low Costs
• The youth academy enables
Barcelona to produce the
world’s best players at low
costs;
• This reduces the club’s need
to spend in excess of $50m
per player

mcdermottm1@nku.edu

67
Barcelona and Competitive
Advantage
Competition:
• competitors have so far failed
to overcome the Barcelona
system;
• This is despite the fact that
arch-rivals, Real Madrid have:
• acquired the world’s most
expensive player ($132m);

Customers:
• Barcelona is the world’s
most popular club as its
style is uniquely
entertaining;
• It has 20m ‘likes’ on
facebook, narrowly beating
Real Madrid

• the world’s highest paid soccer
manager (about $20m)
mcdermottm1@nku.edu

68
Barca Has Clear Core
Competencies
• “Core competencies
are the most
significant value
creating skills within
your corporation and
key areas of expertise
which are distinctive
to your company and
critical to the
company's long term
growth”.

• It can be leveraged
widely
• It’s hard for rivals to
imitate
• It’s of great value to
customers

mcdermottm1@nku.edu

69
1. Multiple Lessons from Barca and
its Genuine Strategy
• It arose from a foreign idea (i.e developed in
Holland)
• It involved honest internal analysis and
identification of weakness;
• Indeed the essence of the new strategy is to render
weaknesses that cannot be overcome obsolete;
• It has received constant commitment over 40
years – even in ‘difficult’ times;
• It is now delivering the best ever results as the
original business model (i.e. total football)
evolved to ‘ticki-tacka’;
mcdermottm1@nku.edu

70
Multiple Lessons from Barca and its
Genuine Strategy
1. It is centered upon differentiation (i.e.
innovation);
2. The commitment to innovation compelled a
focus upon New Product Development (i.e.
the youth academy)

mcdermottm1@nku.edu

71
Multiple Lessons from Barca and its
Genuine Strategy
3. New superstar brands (i.e. players) are
developed at low cost and sourced locally and
internationally;
4. Costly acquisitions are seldom required
– and even when they are they are graduates of La
Masia who were allowed to join other clubs
mcdermottm1@nku.edu

72
Multiple Lessons from Barca and its
Genuine Strategy
5. Even when Barca is briefly overtaken by a
‘better’ team, it is without equal strategically,
so the strategy is a constant that ultimately
prevails
6. Barca may not always win, but its strategy
always delivers exceptional value to its
growing number of customers globally
mcdermottm1@nku.edu

73
Barca vs Real Madrid:
Genuine vs Fake Strategy
Barca
•
•
•
•
•

Genuine strategy
Commitment to core values
Consistency
Succession planning
Relies primarily upon
organic growth (i.e.
development of players and
managers)

Real Madrid
• Fake Strategy – all about
goals;
• Lacking core values
• Inconsistency
• Absence of succession
planning
• Relies primarily upon
external growth (i.e.
acquisitions of players and
managers)

mcdermottm1@nku.edu

74
Apple:
the corporate Equivalent to Barca
• Apple has a genuine strategy;
• At one time it struggled but remained totally
consistent to its strategy;
• It seized opportunity (i.e. the iPod) and has
refined its original strategy with each
successive product and/or service

mcdermottm1@nku.edu

75
Apple:
the corporate Equivalent to Barca
• Apple can/should expect to be overtaken
briefly in some areas;
• But by applying its genuine strategy it can
expect to once again come out tops

mcdermottm1@nku.edu

76
Conclusions

‘Better’ is Good
‘Smarter’ is Better
‘Better’ and ‘Smarter’ is Best
mcdermottm1@nku.edu

77
Conclusions
1. David was ‘smarter’ than
Goliath
2. Ali extended his success by
transitioning from ‘better’ to
‘smarter’
3. Barca relied on being ‘smarter’
to get ‘better’ and is now best
mcdermottm1@nku.edu

78
Conclusions
1.
2.
3.
4.

Apple was ‘smarter’ than PC
producer;
PC producers were briefly ‘better’;
But Apple was the ‘smarter’ and used
this to conquer new markets, leaving
PC producers to fight over scraps
Apple does not always have to be
‘better’ so long as it’s always
‘smarter’
mcdermottm1@nku.edu

79
Genuine Strategy is
about being different!

mcdermottm1@nku.edu

80

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A rumelt perpsective on good strategy

  • 1. Good Strategy By Dr. Michael McDermott mcdermottm1@nku.edu
  • 2. “A hallmark of true expertise and insight is making a complex subject understandable” Client to Consultant: “So I am paying you to ask me questions” Consultant to Client: “Absolutely! Without these questions you are not identifying your main challenges”
  • 3. Strategy – such an over-used and abused word
  • 4. Strategy and Two Popular Misconceptions 1. Strategy is formulaic or mechanistic 2. Strategy is goal-setting mcdermottm1@nku.edu 4
  • 5. The Three Key Hallmarks of Fake Strategy Failure to Face the Challenge Mistaking Goals for Strategy Bad Strategic Objectives • You must define the challenge • If you cannot define the challenge, you cannot evaluate the strategy or improve it • Do not confuse desire with a plan to overcome obstacles • Fail to address critical issues • Objectives are impracticable mcdermottm1@nku.edu 5
  • 6. Bad Strategy in 3D The Focus is on 3D • Desire; • Drive; and • Determination mcdermottm1@nku.edu 6
  • 7. The 3d Essence of Bad Strategy Desire Drive mcdermottm1@nku.edu Determination 7
  • 8. Incoherence: The Essence of Bad Strategy • At best pursuing multiple unconnected objectives • At its worst, it involves pursuing conflicting objectives mcdermottm1@nku.edu 8
  • 9. The Cost of Bad Strategy It is a source of weakness because it is incoherent mcdermottm1@nku.edu 9
  • 10. So what is Genuine or Good Strategy? mcdermottm1@nku.edu 10
  • 11. Essence of Genuine Strategy: The D² rule • Avoid Dumb • Focus upon Direction mcdermottm1@nku.edu 11
  • 12. The Essence of Good Strategy Direction mcdermottm1@nku.edu 12
  • 13. What is Direction? • It’s focus • And this can only be obtained by making choices mcdermottm1@nku.edu 13
  • 14. (Genuine) Strategy = Problem-Solving Make Choices – hard choices Define the problem mcdermottm1@nku.edu 14
  • 15. Strategy is identifying the key challenges and the means to overcome them mcdermottm1@nku.edu 15
  • 16. Therefore developing a strategy is an exercise in problem-solving mcdermottm1@nku.edu 16
  • 17. Stop Right There! You suggestin’ we gotta problem? mcdermottm1@nku.edu 17
  • 18. Pre-requisite for Genuine Strategy: Define the challenge • If you apply careful consideration and define then challenge then you are well on the road to good strategy • If you fail to identify and analyze the obstacles, you cannot have a strategy. – Instead, you have either a stretch goal, a budget, or a list of things you wish would happen” mcdermottm1@nku.edu 18
  • 19. The Absence of Good Strategy Explained Good Strategy Bad Strategy • Begins with the • Begins with an admission that implicit denial there is always a that there is any specific problem specific problem mcdermottm1@nku.edu 19
  • 20. Essence of Good Strategy Diagnosis Guiding Policy (the signpost indicating future direction) mcdermottm1@nku.edu Coherent Action 20
  • 21. Strategy is the Path • The How • The Why (Genuine) • The Where Strategy • The When • The Who mcdermottm1@nku.edu 21
  • 22. What is Genuine Strategy? • A cohesive response to an important challenge • A genuine or good strategy must therefore include the details – the actions to be implemented • Strategy is not grandiose goals – it’s about how an organization will move forward mcdermottm1@nku.edu 22
  • 23. Developing Genuine or Good Strategy • It emerges from identifying one or two critical issues in the situation and then focuses and concentrates action and resources on them. mcdermottm1@nku.edu 23
  • 24. Bad Strategy vs Good Strategy Bad Strategy: Widespread Good Strategy: Rare • Urges achievement of a goal…but nothing else • It’s essentially wishful thinking • ‘Problems’ are glossed over; • Tries to meet conflicting goals and ducks making hard choices • Is honest in identifying challenges • develops a cohesive approach to overcome them mcdermottm1@nku.edu 24
  • 26. Coherence: The Essence of Good Strategy • Good strategy does NOT simply build upon existing strength • It is a source of strength because it is coherent mcdermottm1@nku.edu 26
  • 27. Strategy and Competitive Advantage • Competitive Advantage often arises simply by having a genuine or good strategy • Because most organizations have a fake or bad strategy – Sure they have goals but are essentially guided by ‘spend more, work harder’ mantra mcdermottm1@nku.edu 27
  • 28. The Advantage of Having Good Strategy • Focus – as it is so unexpected by rivals • And as such identifies the “don’ts” as well as the “do’s” mcdermottm1@nku.edu 28
  • 29. Genuine Strategy Provides Dual Purpose • It stipulates the “do’s” • It stipulates the “don’ts” mcdermottm1@nku.edu 29
  • 30. Remember it's just as important to decide what not to do in business as it is to determine what to do mcdermottm1@nku.edu 30
  • 31. What makes for a good strategy? • Harnessing power and applying it where it will have greatest effect • We can find good examples of this mcdermottm1@nku.edu 31
  • 32. Sources of Power: Leverage Strategic leverage arises from a mixture of: 1. Anticipation 2. Insight into what is most pivotal or critical in a situation; 3. Making a concentrated application of effort mcdermottm1@nku.edu 32
  • 33. OK. I now get it. Strategy and goals are two different things. mcdermottm1@nku.edu 33
  • 34. REBUTTAL OF BEING BETTER ARGUMENT mcdermottm1@nku.edu 34
  • 35. But business success is simply about being better. Isn’t it? mcdermottm1@nku.edu 35
  • 36. The “Being Better” Argument • In order to succeed, it’s true you do need to possess at least one advantage: • Better • Cheaper • Faster • Richer • Stronger mcdermottm1@nku.edu 36
  • 37. The “Being Better” Argument • But simply ‘being better’ provides only shortlived success • The ‘better’ is based only on operations mcdermottm1@nku.edu 37
  • 38. Three Questions 1. What biblical story do you most associate with an underdog defying expectations to beat a more impressive opponent? 2. Who is the greatest boxer of all time, and indeed considered the greatest sportsman of the 20th century? 3. Who are considered the greatest ever football (i.e. soccer) team? mcdermottm1@nku.edu 38
  • 40. What explains their success? Their success was based upon Genuine Strategy mcdermottm1@nku.edu 40
  • 41. Example 1: David vs Goliath David • Youthful • Inexperienced in hand-tohand conflict • Physically weak • No protection Goliath • Mature • Experienced in hand-tohand conflict • Physically strong • Heavily protected mcdermottm1@nku.edu 41
  • 42. Example 1: David vs Goliath • If David is to win, he only had one option…and his insight enabled him to identify that fact • Goliath – classic case of ‘brawn and no brain’ mcdermottm1@nku.edu 42
  • 43. Lessons from David vs Goliath Smarter can beat better • Good strategy comes from fresh insight into strengths and weaknesses, and opportunities and threats mcdermottm1@nku.edu 43
  • 44. Facing ‘Goliath’ • So developing a strategy to topple the ‘invincible’ is not easy • Do you try and copy the best – but the core competence of the best is always hard to imitate • Or do you have to invent a superior solution? mcdermottm1@nku.edu 44
  • 45. Example 2: Ali vs Foreman World Heavyweight Championship Fight, Zaire, October 1974 The Challenger 32 years of age mcdermottm1@nku.edu The Defending World Champion 25 years of age 45
  • 46. Ali vs Foreman: Comparison Based Upon the ‘Better’ argument Ali Foreman • Former World Champion • Past success was based on being ‘better’ • Past his peak in terms of being ‘better’ • 32 years of age • Making a comeback after years without competitive fights • Defending World Champion • Present success was based on being better • At his peak • 25 years of age • Getting better with each fight mcdermottm1@nku.edu 46
  • 47. Who is Going to Win? mcdermottm1@nku.edu 47
  • 48. What’s Missing? We have not identified a crucial difference! Only one boxer had a genuine strategy mcdermottm1@nku.edu 48
  • 49. Ali vs Foreman: Comparison of Strategy mcdermottm1@nku.edu 49
  • 50. Ali vs Foreman • • • • • Two boxers One, the defending world champion The other, the former, older champion One Common goal Two Different Strategies – Ali – Good Strategy – Foreman – Bad Strategy mcdermottm1@nku.edu 50
  • 51. Ali vs Foreman Ali Practiced Good Strategy George relied on Bad Strategy • diagnosed his critical problem • He could no longer “float like a butterfly, sting like a bee” over 15 rounds against a younger opponent • The 3D Effect • So he developed an action plan to overcome his critical weakness • Rope-a-dope mcdermottm1@nku.edu 51
  • 52. Rope a Dope Ali Wins by a Knockout in Round 8. Foreman had run out of steam. mcdermottm1@nku.edu 52
  • 53. Two Vital Lessons from Ali vs Foreman 1. Even the very best are eventually overtaken; 2. If they are to continue winning, they need genuine strategy mcdermottm1@nku.edu 53
  • 54. Lessons from “Rope-a-dope” • Exhaust your rival’s resources through suckering them into constant expenditure of ineffective yet debilitating effort • When you look at the market for some products, do we see that the market leader is employing the “rope-adope”? mcdermottm1@nku.edu 54
  • 55. Example 3: Barcelona’s Dominance of World Soccer • The present Barcelona side, Spanish and European champions, are considered the greatest team of all time; • It features Lionel Messi (born 24 June 1987), the World Footballer of the Year (2009, 2010) • Spain, current European and World Champions, is heavily dependent upon Barca players mcdermottm1@nku.edu 55
  • 56. Example 3: Barcelona and Spain’s Dominance of World Soccer This example shows that this success is based upon a genuine strategy that was developed 40 years ago mcdermottm1@nku.edu 56
  • 57. Example 3: Barcelona and The Dutch Legacy • In the early 1970s, Barcelona was managed by Dutch coach, Rinus Michels • He bought the player Johan Cruyff – ‘the Messi’ of his generation • Cruyff managed Barcelona in the late 1980s-mid 1990s • One of his key players was Josep Guardiola, manager of Barcelona since 2008 • Today the present Barca team are hailed as the greatest ever side mcdermottm1@nku.edu 57
  • 58. Example 3: Barcelona and The Dutch Legacy • In 1970 Brazil beat Italy 4-1 in the soccer World Cup final in Mexico • The Brazilian team was considered invincible • The next World Cup was in Germany in 1974 • But how could anyone beat Brazil? mcdermottm1@nku.edu 58
  • 59. Example 3: The Dutch Influence on Soccer • Rinus Michels, the coach of the Dutch national team, concluded that no one could match Brazil • So a radical new approach was required • He invented ‘total football’ • At the heart of this new system was the player Johan Cruyff mcdermottm1@nku.edu 59
  • 60. Total Football Defined • In Total Football, a player who moves out of his position is replaced by another from his team, thus retaining the team's intended organisational structure. In this fluid system, no outfield player is fixed in a nominal role; anyone can be successively an attacker, a midfielder and a defender. The only player fixed in a nominal position is the goalkeeper. mcdermottm1@nku.edu 60
  • 61. The Immediate Outcome • In 1974 Holland beat Brazil but were beaten in the final 2-1 by the host country Germany • In 1978 Holland was again beaten in the final by the host nation Argentina mcdermottm1@nku.edu 61
  • 62. Barcelona F.C: The Lasting Legacy • Michels introduced ‘total football’ to Barcelona • The commitment to ‘total football’ continued under Cruyff • Cruyff recognized the exceptional ability required to implement ‘total football’ • He thus established in 1978 “La Masia”, the youth academy to train young players in the system from an early age mcdermottm1@nku.edu 62
  • 63. Barcelona F.C: The Lasting Legacy • One of the first graduate from ‘‘La Masia” was Guardiola, exceptional player and manager; • Today’s current midfield of Xavi, Iniesta and Fabregas are all graduates of “La Masia”; • Messi is also a product of the youth academy mcdermottm1@nku.edu 63
  • 64. Barcelona F.C: The Lasting Legacy Barcelona F.C. • When Barca won the European Champions League in 2009, 8 of the 11 players were graduates from the youth system Spanish National Side • When Spain won the 2010 World Cup the 22 man squad included 8 Barca players and 6 were in the starting 11 for the final mcdermottm1@nku.edu 64
  • 65. The Lasting Legacy: From Total Football to Tiki-taka Tiki-taka has been variously described as • "a style of play based on making your way to the back of the net through short passing and movement" • a "short passing style in which the ball is worked carefully through various channels, and • a "short passing, patience and possession". • The style involves roaming movement and positional interchange amongst midfielders, moving the ball in intricate patterns, and sharp, one or two-touch passing. mcdermottm1@nku.edu 65
  • 66. The Lasting Legacy: From Total Football to Tiki-taka • One of the weaknesses of Spanish sides and the national team was that their players were often much smaller and less physical than players from other nations (e.g. Northern Europe, Africa); • Tiki-taka focuses on movement, possession and skill • Some of the best players for Barcelona and Spain are physically small mcdermottm1@nku.edu 66
  • 67. Barcelona and Competitive Advantage Differentiation • Barcelona competes through innovation – it has developed a unique style or brand of football Low Costs • The youth academy enables Barcelona to produce the world’s best players at low costs; • This reduces the club’s need to spend in excess of $50m per player mcdermottm1@nku.edu 67
  • 68. Barcelona and Competitive Advantage Competition: • competitors have so far failed to overcome the Barcelona system; • This is despite the fact that arch-rivals, Real Madrid have: • acquired the world’s most expensive player ($132m); Customers: • Barcelona is the world’s most popular club as its style is uniquely entertaining; • It has 20m ‘likes’ on facebook, narrowly beating Real Madrid • the world’s highest paid soccer manager (about $20m) mcdermottm1@nku.edu 68
  • 69. Barca Has Clear Core Competencies • “Core competencies are the most significant value creating skills within your corporation and key areas of expertise which are distinctive to your company and critical to the company's long term growth”. • It can be leveraged widely • It’s hard for rivals to imitate • It’s of great value to customers mcdermottm1@nku.edu 69
  • 70. 1. Multiple Lessons from Barca and its Genuine Strategy • It arose from a foreign idea (i.e developed in Holland) • It involved honest internal analysis and identification of weakness; • Indeed the essence of the new strategy is to render weaknesses that cannot be overcome obsolete; • It has received constant commitment over 40 years – even in ‘difficult’ times; • It is now delivering the best ever results as the original business model (i.e. total football) evolved to ‘ticki-tacka’; mcdermottm1@nku.edu 70
  • 71. Multiple Lessons from Barca and its Genuine Strategy 1. It is centered upon differentiation (i.e. innovation); 2. The commitment to innovation compelled a focus upon New Product Development (i.e. the youth academy) mcdermottm1@nku.edu 71
  • 72. Multiple Lessons from Barca and its Genuine Strategy 3. New superstar brands (i.e. players) are developed at low cost and sourced locally and internationally; 4. Costly acquisitions are seldom required – and even when they are they are graduates of La Masia who were allowed to join other clubs mcdermottm1@nku.edu 72
  • 73. Multiple Lessons from Barca and its Genuine Strategy 5. Even when Barca is briefly overtaken by a ‘better’ team, it is without equal strategically, so the strategy is a constant that ultimately prevails 6. Barca may not always win, but its strategy always delivers exceptional value to its growing number of customers globally mcdermottm1@nku.edu 73
  • 74. Barca vs Real Madrid: Genuine vs Fake Strategy Barca • • • • • Genuine strategy Commitment to core values Consistency Succession planning Relies primarily upon organic growth (i.e. development of players and managers) Real Madrid • Fake Strategy – all about goals; • Lacking core values • Inconsistency • Absence of succession planning • Relies primarily upon external growth (i.e. acquisitions of players and managers) mcdermottm1@nku.edu 74
  • 75. Apple: the corporate Equivalent to Barca • Apple has a genuine strategy; • At one time it struggled but remained totally consistent to its strategy; • It seized opportunity (i.e. the iPod) and has refined its original strategy with each successive product and/or service mcdermottm1@nku.edu 75
  • 76. Apple: the corporate Equivalent to Barca • Apple can/should expect to be overtaken briefly in some areas; • But by applying its genuine strategy it can expect to once again come out tops mcdermottm1@nku.edu 76
  • 77. Conclusions ‘Better’ is Good ‘Smarter’ is Better ‘Better’ and ‘Smarter’ is Best mcdermottm1@nku.edu 77
  • 78. Conclusions 1. David was ‘smarter’ than Goliath 2. Ali extended his success by transitioning from ‘better’ to ‘smarter’ 3. Barca relied on being ‘smarter’ to get ‘better’ and is now best mcdermottm1@nku.edu 78
  • 79. Conclusions 1. 2. 3. 4. Apple was ‘smarter’ than PC producer; PC producers were briefly ‘better’; But Apple was the ‘smarter’ and used this to conquer new markets, leaving PC producers to fight over scraps Apple does not always have to be ‘better’ so long as it’s always ‘smarter’ mcdermottm1@nku.edu 79
  • 80. Genuine Strategy is about being different! mcdermottm1@nku.edu 80