Chapter 5 Building the Walmart Coherent CapabilityDriven Strategy
Chapter 5. Building the Walmart Coherent Capability-Driven Strategy The capabilities-driven strategy foundation using the building block architecture (Figure 6 below) is produced by unique implicit tacit results combined with adjacent explicit critical capabilities toward building dynamic know-how-capabilities for creating dynamic capabilities that will differentiate market offerings for the customer value proposition. Be High Productivity Be Market Place Agile Be Fast in the Marketplace To Manage Community Positioning
Chapter Five is a demonstration framing the entire process that is presented to the participants using a case study (The Walmart Corporation case study) to show each step is completed and how outcomes are arrived at for achieving the competitive advantages. This detailed conceptual model incorporates how underlying tacit micro foundational elements are harnessed for strategic augmenting capabilities resulting in the formation of dynamic capabilities. The Walmart case study illustrates how participants begin The Strategic Assessments to discover the tacit knowledge and its potential for enhancing internal resources and core capabilities for creating added advantages. (See Figure 7) Figure 7 better shows the transformational process of Explicit Mission-Critical Capabilities (internal resources and base capabilities) that are expanded by the Implicit Tacit Active Results (know- how), which in turn can actively create the pathways of market offerings for a differentiated customer value proposition. Tacit knowledge is know-how gained from experiences, ideas, values, emotions, talents, actions, culture, feelings, information, personalities, and character development (Leonard & Sensiper, 1998).
The Building Blocks of the Coherent Capability-Driven Strategy for Walmart Figure 7: The Ttransformational process for Expanding Explicit Mission-Critical Capabilities Using Implicit Tacit Results Horizontal Tacit Results Figure 7: Critical Capabilities are Strategic Market Offerings are differentiated for creating customer values propositions differentiated using the value of tacit skills results that are combined with adjacent critical capabilities to The Building Blocks of the coherent capability-driven strategy can be used to develop dynamic capabilities by combining tacit results (in Green) with critical capabilities that creates differentiated market offerings (in Blue) for building the customer value propositions leading to competitive Vertical Tacit Results create market offering Know-How. Stakeholder Tacit Results Critical Capabilities Tacit Results Customer Tacit Results Critical Capabilities Tacit Results Organizational Tacit Results Critical Capabilities Employee Tacit Results Know-How for Having Relationship Manager Capability Know –How for Being Fast in the Marketplace Capability Know-How for Being Marketplace Agile Capability Know-How for Highly Productive Capability 3 advantages. Core Process Capabilities Results Based Strategies D. Ulrich, 1998
The Explicit and Implicit elements will be different because of the unique business practices utilized by the firm in a particular industry which of course is different from industry to industry. The Explicit Mission. Critical Capabilities and the Implicit Tacit Activity Results are unique to Walmart for this conceptual model demonstration and will be however, uniquely different for every organization that intends to use this paradigm to build dynamic capabilities. In Figure 8: the Walmart Results Based Knowledge Pathway is organized by explicit critical core capabilities aligned under each of the four capability building blocks architecture (Employer, Organization, Customer, and Stakeholder). Derivatives of these explicit critical capabilities are expanded into a portfolio of Implicit tacit know how results that are aligned with each of Walmart’s management Capability Building Blocks to beginning the design of its Coherent Capability-Driven Strategy.
Walmart Business Coherent Capability-Driven Strategy with Implicit Tacit Results Explicit Mission Critical Capabilities = Implicit Tacit Know-How Results Employee; Highly Productive Capabilities 1. Commitment = 2. Competence = Organization; Marketplace Agile Capabilities 1. Capacity = 2. Change = 3. Consequence = 4. Collaboration = Customer; Be Fast in the Marketplace Capabilities 1. Connectivity = 2. Cycle time = 3. Culture = 4. Creativity = Stakeholder; Manage Relationship Capabilities 1. Career Focus = 2. Competitive Margins = 3. Consortium = 4. Capture New Markets = Portfolio Know-How Motivation and Climate Productivity and Clarity Portfolio Know-How Learning and Technology Speed and Agility Accountability Borderless Organization Portfolio Know-How Customer Satisfaction Value Adding Efficiency Shared Values Prod/Service Innovation Portfolio Know-How Employee Retention Predictable Performance Strategic Relationship Sensing for Opportunity Figure 8 Explicit Mission-Critical Capabilities (internal resources and base capabilities) are expanded into the Implicit Tacit Active Results (know- how behavior assets),
Our research reveals that Unique Capabilities fill the gap between intention and outcome, and they fill it in such a way that the outcome bears a definite resemblance to what was intended. Coherent Dynamic Capability-Driven Strategy. A coherent dynamic capability strategy is the most difficult to duplicate and gives the greatest competitive advantage. The capabilities-driven strategy is produced by a unique tacit results that are aligned with adjacent critical capabilities toward building dynamic know-how-capabilities for creating differentiated market offerings for the customer value proposition. In Figure 9 a Customer Value Reconfiguration has taken place by Explicit Dynamic Capabilities being combined with adjacent Implicit Tacit Know-How to create actionable Explicit Dynamic Capabilities Marketing Offerings for creating a capability differentiated competitive advantage.
Walmart Business the Coherent Capability-Driven Strategy with Implicit Tacit Results with Dynamic Capabilities for Competitive Advantage. Explicit Mission to Critical Capabilities. Employee Highly Productive. 1. Commitment = 2. Competence = Implicit Tacit Know-How to Portfolio of Know-How. Motivation and Climate for Productivity and Clarity for Explicit Dynamic Capability Marketing Offerings for Competitive Advantages. Customer Value Re- Configuration. Friendly Helpful Employees In all Functions. Ensure Efficient Quality Performance. Organization Market Agile. 1. Capacity = 2. Change = 3. Consequence = 4. Collaboration = Portfolio of Know-How. Learning and Technology for Speed and Agility for Responsible Efficacy for Borderless Organization for Customer Value Re- Configuration. Automatic Reorder Using Satellite Connection. Lower-Cost Using Cross Docking in Warehouse. Reliable Promotional/Product Availability in Stores. Quality Supplier for Direct Product Delivery to Stores. Customer Be Fast to Marketplace. 1. Connectivity = 2. Cycle time = 3. Culture = 4. Creativity = Portfolio of Know-How. Customer Satisfaction= for Value Adding Efficiency for Shared Values for Products/Service Innovation for Customer Value Re- Configuration. Positive Shopping Experience Follow-up. Low Inventory Costs Using Just-In-Time System. Easy Customer Return Cash/Credit Policy. Product Quality and Sales Performance Evaluations. Shareholder Manager Relations. 1. Career Focus = 2. Competitive Margins = 3. Consortium = Portfolio of Know-How. Employee Retention for Predictable Performance for Strategic Relationship for 4. Capture New Markets = Sensing for Opportunity for Customer Value Re- Configuration. Hiring to Values not Skills. High Product turnover and low prices. Incentives to Suppliers for lower prices on large. Volume Purchases. Stock Price Stability and High Earnings Ratio. Results. G. Stalk, P. Evans, L. Shulman “Competing on Capabilities: the New Rules of Corporate Strategy Harvard Business Review No. 92209. Figure 9 Dynamic know-how-capabilities for creating differentiated market offerings
Coherent Dynamic Capability-Driven Strategy The Dynamic Capability-Driven-Strategy outlined in Figure 9 shows the Explicit Critical Mission Capabilities being combined with Implicit Tacit Know-How Results to be reconfigured into Explicit dynamic capability marketplace offerings. A capability-driven system of unique coherent connected capabilities is the link that shapes a dynamic capability-driven business model that delivers strategic results. (See Figure 10) These marketing offerings are the basis for creating a new customer value proposition chain for each of the capability levels that when combined results in a Brandon Creating Driven Market Place Distinction for competitive advantage. This business model utilizing the coherent dynamic capability driven strategy Is very simple and focuses on what a firm can do best and matches that competence against the dynamism of the market place. But, the coherent dynamic driven strategy business model can be difficult to internalize the changes in renewing capabilities and innovating their existing business model if the leadership strategy to do so is not thought out, Chesbrough, (2010).
Wal. Mart Business Coherent Capability-Driven Strategy with Implicit Tacit Results Using Strategic Dynamic Capabilities To Create the Business Model. Explicit Mission Critical Capabilities Implicit Tacit Knowledge Activity Results Employee Highly Productive 1. Commitment = 2. Competence = Portfolio of Know-How Motivation and Climate for Productivity and Clarity for Organization Market Agile 1. Capacity = 2. Change = 3. Consequence = 4. Collaboration = Customer Value Explicit Dynamic Pathways to Competitive Advantages Proposition Chain Created Customer Value Re- Formulation Friendly Helpful Employees In all Functions Ensure Efficient Quality Performance Portfolio of Know-How Customer Value Re- Formulation Learning and Technology for Automatic Reorder Using Satellite Connection Speed and Agility for Lower-Cost Using Cross Docking in Warehouse Responsible Efficacy for Reliable Promotional/Product Availability in Stores Borderless Organization for Quality Supplier for Direct Product Delivery to Stores Customer Be Fast in the Marketplace Portfolio of Know-How Customer Value Re- Formulation 1. Connectivity = Customer Satisfaction for Positive Shopping Experience Follow-up 2. Cycle time = Value Adding Efficiency for Low Inventory Costs Using Just-In-Time System 3. Culture = Shared Values for Easy Customer Return Cash/Credit Policy 4. Creativity = Products/Ser. Innovation for Product Quality and Sales Performance Evaluations Shareholder Manage Relationships 1. Career Focus = 2. Competitive Margins = 3. Consortium = 4. Capture New Markets = Walmart Strategic Mission. Critical Capabilities Portfolio of Know-How Customer Value Re- Formulation Employee Retention for Hiring to Values not Skills Predictable Performance for High Product turnover and low prices Strategic Relationship for Incentives to Suppliers for lower prices on large Volume Purchases Sensing for Opportunities for Stock Price Stability and High Earnings Ratio Tacit Know-How Strategic Assets Coherent Dynamic Pathway Strategies Dynamic Capacities Difficult to Copy G. Stalk, P. Evans, L. Shulman “Competing on Capabilities: the New Rules of Corporate Strategy Harvard Business Review No Figure 10 a dynamic capability-driven business model “A Motivated and Valued Workforce” “Valued Operational Excellence” “Valued Customer Satisfaction” “Building the Franchise Value ” Branded Value Capability Driven Market Distinction
Coherent Dynamic Capability-Driven Strategy Companies have not learned to compete through there business model. It requires the right leadership strategy to implement and execute this business model capability driven strategy Casadesus- Masnell & Ricart, , (2011). Be sure to continue with Chapter 6 where we address how the organization and its leadership must continually be catalysts of constant change in the modification of the business strategy to accommodate a sustainable competitive advantages in the volatile and disruptive marketplace dynamics of today.
Record your new insights. Be sure to complete the chapter 5 Worksheet PDF question as it applies to your organisation. Be sure to watch Chapter 6 showing The Leadership Strategy to implement and execute the Business Strategy. The Capability Driven Strategy requires the right Leadership strategy makes a distinction between a Business strategy and the Leadership strategy. The business strategy cannot succeed without an integrated future focused leadership plan to execute it.
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