Strategizing Lecture

VUCA

Four traits of the modern business environment. It demands constant adaptation, rapid decision-making, and comfort with uncertainty:

Volatile (unstable, fast-changing conditions)

Uncertain (unpredictable)

Complex (multi-layered, interconnected)

Ambiguous (often unclear, hard to interpret)

Grand challenges

Large, intertwined global problems (e.g., climate change, pandemics, inequality). No challenge can be solved in isolation: connected problems require connected, systemic solutions involving all stakeholders

Polycrisis

Huge global problems that are all connected—affecting money, politics, nature, society, and technology. Because people created most of these crises, solving them requires groups and governments to work together, instead of just relying on new technology.

Strategizing

Strategic Steering (van Tulder & van Mil, 2023):

Strategy is not a fixed one-time document; it is a flexible process of constantly adjusting your direction and learning as you go to connect your goals with what you are actually able to do.

13 Reflective Questions Framework

A reflective cycle (not a rigid plan), revisited repeatedly as conditions change. Three clusters:

Positioning (3 questions: the organizational baseline)

Navigating & Strategizing (5 questions: charting the course from intent to realization)

Implementing & Evaluating (5 questions: execution and tracking progress)

Positioning questions

1. Who are we, and what responsibilities do we have?

2. Where are we positioned in the value chain?

3. What immediate challenges do we face right now?

Navigating questions (5)

1. Can risks be turned into opportunities?

2. How do we navigate business model innovation?

3. What is our business case for sustainability?

4. How do we phase our transition to the next level?

5. What barriers might we encounter, and what strengths or "powers" can we leverage?

Implementing & Evaluating questions (5 Execution based questions)

1. What defines sustainable leadership, and which leadership styles reach critical tipping points?

2. How can we use KPIs to facilitate change and repurpose our organization?

3. How do we align internal stakeholders across functions?

4. How do we engage external stakeholders and build strategic partnerships?

5. How do we approach evaluation and reporting as springboards for further change?

Four levels of failure

Four ways organizations can fail society

Level 1 (failure to live up to one's legal duty to create value)

Level 2 (failure to avoid, minimize and mitigate negative externalities, i.e., destroying value)

Level 3 (failure to create and scale positive externalities)

Level 4 (failure to partner for the common good)

Level 1 failure and 3 forms of it

Not fulfilling your core responsibility (fiduciary duty, the reason for existence). Three forms:

1. Market failure (business abuses market power, e.g., monopolies, price-fixing cartels)

2. Government failure (corrupt or ineffective governing)

3. Civic failure (civil society group cannot mobilize people as intended)

Level 2 failure

Failing the duty to do no harm (negative duties, "thou shalt not harm"): negative externalities not accounted for in the price (e.g., pollution, underpaying workers, unsafe products)

Level 3 failure

Failing to create positive externalities: a missed opportunity to use resources and expertise for good

(e.g., a tech company hoarding data that could help solve a societal problem, a government under-investing in education)

Level 4 failure

Failing to address systemic challenges and safeguard the commons.

No single actor is solely responsible, so nobody steps up, causing tragedies of the commons (e.g., climate change, biodiversity loss, pandemic response breakdown).

Addressed through industry coalitions and public-private initiatives

Three spheres

The traditional organizational categories, seen as the corners of a triangle:

1. Private (businesses sell products for profit)

2. Public (governments provide public services funded by taxes)

3. Civic (civil society organizations mobilize voluntary resources for social good)

Hybrid organizational forms

Organizations that blur the private, public, and civic spheres, created to fix gaps left by pure market or government approaches (e.g., microfinance institutions).

Well-positioned to tackle Level 2, 3, and 4 failures, but face an identity dilemma: who are we if we straddle categories?

Societal interfaces (4 intersection points of the sphere used to map hybrids)

Governmental vs. non-governmental (state actors vs others; "NGO" usually means a civil society organization)

For-profit vs. non-profit (distributing profits to shareholders vs reinvesting in a mission; cooperatives blur this line)

Public vs. private ownership (here, a "public" company = publicly traded, still a private sector entity)

Public vs. private goods (public: non-excludable, benefits all, e.g., clean air, national defense; private: paid for individually)

Eight organizational types

State-owned enterprises

Government organizations

Semi-public organizations (mutuals, insurance, hospitals, universities)

Civil-society organizations (NGOs, churches)

Social enterprises (cooperatives)

Family-owned companies

Publicly-listed companies (joint-stock companies)

Semi-private companies (public-private partnerships)

Four levels of business cases

Four levels of engagement with societal challenges. Ambition shifts from financial performance ("doing well") to societal value creation ("doing good"). Most companies move step by step:

Inactive (CSR 1.0) → Reactive (CSR 2.0) → Active (CSR 3.0) → Proactive (CSR 4.0)

Corporate Financial Performance & Corporate Societal Performance

CFP and CSP are the two axes on which the four business-case levels are plotted

Inactive business case (Level 1, CSR 1.0)

The bare-minimum approach where a company only cares about short-term profit and following basic laws, believing a business exists only to make money (Friedman).

They only do green things if it saves cash quickly (like switching to LED lightbulbs), change nothing about how they actually make money, and remain highly vulnerable to fines or bad publicity.

Reactive business case (Level 2, CSR 2.0)

1. The Goal: Damage control and risk management—protecting reputation and the "license to operate" under the logic of "do well by not doing bad."

2. The Driver: Purely extrinsic motivation, pushed only by public backlash, tightening regulations, or baseline peer standards.

3. The Behavior: Formal CSR policies, glossy sustainability reports, and philanthropic donations—all kept peripheral to how the company actually makes money.

4. The Boundary: Strictly reactive fixes that hit a hard ceiling the moment real progress demands substantial capital or a fundamental overhaul of the business model.

Active business case (Level 3, CSR 3.0)

(Shared Value Tier)

1. The Goal: "Doing well by doing good" — profit and social impact reinforce each other.

2. The Motive: Win-win competitive advantage (beat rivals, NOT reshape the whole system).

3. The Mindset: Long-term & proactive; secures vital resources before they run out.

4. Frameworks: Porter & Kramer's Creating Shared Value (CSV) | Triple Bottom Line.

Proactive business case (Level 4, CSR 4.0)

HIGHEST AMBITION (Transformative / Systemic Tier)

1. The Goal: Fix root causes & protect the broader system (System Stewardship).

2. The Bottom Line: Profit is just the fuel; the mission is the destination (Net Positive).

3. The Strategy: Invent new markets for shared public benefit

4. The Behavior:

• Open Innovation

• Builds cross-industry coalitions.

• Lobbies for TOUGHER laws & higher industry standards.

Tipping points

Critical moments in a sustainability transition where progress can stall or surge ahead. Crossing them takes the right leadership style at the right time (guiding transition processes, not heroic personal traits)

Internal vs. external alignment

Internal alignment (everyone in the organization works in sync and new capabilities are built; the implementation phase; delivered by agile and strategic leadership)

External alignment (aligning with stakeholders, markets, and society; shift from reactive "comply with what others demand" to proactive "shape the agenda and partner with others"; delivered by thought and connected leadership)

Four leadership styles

Agile (internal: self-organizing teams, leader as coach)

Strategic (internal: purpose, goals, priorities, sustainability at the core of strategy)

Thought (external: authority in a field, puts societal issues on the agenda)

Connected (external: cross-sector partnerships and a common strategy)

Agile leadership

Internal alignment.

Leader acts as coach of self-organizing teams that learn fast (autonomy, short planning cycles, retrospectives, psychological safety).

Surfaces dilemmas and trade-offs instead of hiding them. Keeps experiments oriented by a clear purpose ("north star"). Requires trust between leader and team

Strategic leadership

Internal Alignment:

Making sustainability the actual core of the business by getting every department moving in the same direction around one clear promise.

The company sets priorities simple enough for anyone to recite, picks the key strategic tipping points to tackle, and backs them with real budgets and resources.

Thought leadership

External Alignment:

Driving public dialogue on critical societal issues with authority and an entrepreneurial lens, while empowering employees across every department to serve as active ambassadors and thought leaders.

Connected leadership

External Alignment:

Uniting traditionally divided stakeholders around a common strategic agenda, actively managing a diverse partnership portfolio to maximize collective impact and shared learning.

Professional (Sustainable) strategizing (textbook)

Sustainable Strategy: Making social and environmental issues a normal part of how a business plans and acts, so it can make money while also helping people and the planet.

Strategizing process (textbook) 4 steps.

1. Shaping direction (purpose, vision, mission, and objectives)
   
   

2. Analyzing context (strategically relevant internal and external factors)
   
   

3. Formulating strategies (making alternative strategies explicit)
   
   

4. Executing and evaluating (turning strategy into action: governance, change management, leadership, entrepreneurship)

Responsible vs. irresponsible competitiveness (textbook)

Responsible competitiveness (competitive advantage = above-average value creation for a wider range of stakeholders than competitors; may be temporary but deliberate)

Irresponsible competitiveness (competitive advantage at the cost of stakeholders, e.g., abusing monopoly power to overcharge, exploitative labour conditions)

Vision, mission, objectives, and goals (textbook)

Direction-setting runs from long-term to short-term: vision → mission → objectives → goals

Vision (what management ultimately wants to achieve; "strategic intent" with stretch goals)

Mission (what the organization is and does right now: markets, customers, products, processes, values)

Objectives (specific quantitative targets)

Goals (qualitative intentions in the same time frame)

Three strategic environments (textbook)

Internal environment (the company's value chain)

Industry environment (Porter's five forces: competition, supplier bargaining power, customer bargaining power, threat of new entrants, threat of substitute products)

Macro environment (PESTLE: Political, Economic, Social, Technological, Legal, Environmental)

Environmental view vs. resource-based view (textbook)

Two views on where competitive advantage comes from:

Environmental view (the external environment: choose the right industry and macro environment and you will be competitive)

Resource-based view (the internal environment: physical, human, and organizational resources and how they are managed create competitive advantage)

SWOT analysis (textbook)

Tool that sums up the internal and external analysis in one view:

**Strengths and weaknesses** (internal: helpful vs harmful, from the internal environment analysis)

**Opportunities and threats** (external: helpful vs harmful, from the external environment analysis)

Strategy hierarchy (textbook)

Corporate level (in how many markets do we compete, and how many value chain stages do we perform ourselves?)

Business level (how to manage a strategic business unit competing in a certain product market)

Functional level (how do single business functions support the overarching strategic objectives?)

BCG matrix (textbook)

Tool for analyzing a corporation's business-unit portfolio and diversification moves by market growth (market attractiveness) and relative market share (competitive strength):

Star (strong share, attractive market)

Question mark (weak share, attractive market)

Cash cow (strong share, limited growth)

Dog (weak share, unattractive market)

Generic business-unit strategies (textbook)

Cost leadership (broad scope)

Differentiation (broad scope)

Cost focus (narrow scope)

Differentiation focus (narrow scope)

Stuck in the middle (aiming for low price and high differentiation at once, which cannot lead to competitive advantage)

Hardwiring vs. softwiring (textbook)

Two ways of executing strategy; companies often over-emphasize hardwiring and neglect softwiring:

Softwiring (social-human and knowledge side: change management, strategic leadership, strategic entrepreneurship, corporate culture)

Hardwiring (business infrastructure, governance, and organizational structure: executive pay, ownership concentration, board of directors)

Deliberate, unrealized, and emergent strategies (textbook)

Deliberate strategy (intended and realized)

Unrealized strategy (intended but not realized, e.g., unrealistic expectations, misjudged environment, changes during implementation)

Emergent strategy (realized but never intended)

For-profit business case, Level 1 (Operational Efficiency)

Cuts costs through waste reduction and eco-efficiency; captures niche revenue by targeting eco-conscious consumer segments (willingness to pay for sustainability).

For-profit business case, Level 2 (Risk & Reputation Management)

Protects brand equity and the social "license to operate"; gains access to patient capital and passes strict investor ESG screening.

For-profit business case, Level 3 (Strategic Growth & Positioning)

Secures critical long-term resources; grows revenue by entering niches in existing markets and serving underserved societal needs (market extension).

For-profit business case, Level 4 (Systemic Leadership & Ecosystems)

Builds positive network effects through lock-in; sets de facto industry standards; gains first-mover advantage from creating new markets; uses cross-sector cooperation as a collaborative advantage.

Non-profit business case, Level 1 (Alternative Funding)

Survives by raising money in new ways (crowdfunding, in-kind contributions, sponsoring) and by cross-subsidization, where stronger units pay for weaker ones (strongest shoulders principle).

Non-profit business case, Level 2 (Using Leverage & Power)

Drives change by owning company shares to exert influence, granting sustainability labels (certification role), and benchmarking and ranking the sustainability performance of for-profits.

Non-profit business case, Level 3 (Running Like a Business)

Earns steady income by selling cause-related products and providing third-party labelling services; uses blended finance arrangements and service-driven organizing with "market logic".

Non-profit business case, Level 4 (Teaming Up at Scale)

Mobilizes cross-sector partnerships (collective organizing); leverages pooled resources and shares risks; gains collaborative advantage from cross-sector cooperation.