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Palo Alto 33


"The chosen path to Victory"

Palo Alto 33 uses a canvas to build up a strategy for the future of the company. We are talking about a business (unit) strategy, not a corporate strategy which involves trade-offs between companies. We have to find the answer to 4 questions : Where ?, What ?, How? And Why ? These 4 questions should give us a clue how we can ADD VALUE and how we can WIN.

Strategy Grid Palo Alto 33 - "Organization as a Strategy"

? Where? What? How? Why?
Definition Clear list of long term goals Defines the activities of the company Explain how we will add value and will keep this value better than our competition.
3 questions:
  1. 2 Ways to create value
    • quality or differentiation = delivering a service or product with a higher perceived quality
    • cost : delivering the same product or service but at the lowest production cost
  2. 2 sorts of competitive advantages
    • positional advantage something you HAVE that other don’t : distribution channels, patents, status, presence in markets
    • knowledge advantages : something you do that others cannot i.e. a mix of routines, procedures, expertise, people and the power of the learning process. It is the organization as a strategy
  3. Five Forces analysis
    • Are we in an industry that enables us to make a profit
Explain the mechanisms, the core arguments why you will be able to win.
  • a logical analysis of how the "where", "how and what" will be realized.
Characteristics Specific long term more than just making profit. f.e. 10 % organic grower fe. market leader in a niche with x % Contains 4 domains
  1. Clients: for which clients we want to work for
  2. Geography:are we local, international,...
  3. Products : what is our product portfolio and how will we position us
  4. Activities : what do we want to do ourselves and what do we stop doing
potential entransts providers competition clients substitutes

As you notice we will focus a lot of attention on how you can differ from your competition be it in a price strategy, an added-value strategy and in which market you operate. We will especially focus on “knowledge” advantages as these are structural advantages that are much more difficult to copy. You can buy the same locations as Ikea, you can invest as much money in marketing and people as them but there is no one who can copy the way they do business : the virtual integration, the philosophy of its management, the way they approach the design of furniture, their logistical knowhow etc. We should search for knowledge advantages in each business. This recurrent competitive advantage explains in most industries why the market leader is able to remain in the lead. It is the ORGANISATION as a strategy instead of a policy where you establish a strategy and change your organization accordingly. It is important to notice that we are talking about an evolutionary environment and NOT a disruptive environment for which another business strategy is suitable. Disruptions like the advent of the internet for newspaper companies, the rise of low cost airlines, the explosion of new tools like smartphones and tablets on the hardware and telco industry, etc. should be approached differently than the classic Porter approach. At Palo Alto 33 we use the approach of Clayton Christensen to deal with disruptions or to become a disruption yourself. Last but not least this strategy exercise can be complimented with the Hedgehog analysis, based on the principles defined by Jim Collins where we search for the answer on 3 other questions : where CAN we be the best at ? What are we passionate about ? and What is the economic denominates to guide the whole company ? This exercise can follow out of the strategy-analysis as mentioned above but takes more time.