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Visualizing Strategy at the Corporate Level
Visualizing strategy can also greatly inform the dialogue among individual
business units and the corporate center in transforming a company’s business
portfolio from red to blue. When business units present their strategy canvases to
one another, they deepen their understanding of the other businesses in the
corporate portfolio. Moreover, the process also fosters the transfer of strategic
best practices across units.
Using the Strategy Canvas
To see how this works, consider how Samsung Electronics of Korea used
strategy canvases. Let’s zoom in on one of its corporate conferences, for
example, that was attended by more than seventy top managers, including the
CEO. Here unit heads presented their canvases and implementation plans to
senior executives and to one another. Discussions were heated, and a number of
unit heads argued that the freedom of their units to form future strategies was
constrained by the degree of competition they faced. Poor performers felt that
they had little choice but to match their competitors’ offerings. That hypothesis
proved to be false when one of the fastest-growing units—the mobile phone
business—presented its strategy canvas. Not only did the unit have a distinctive
value curve, but it also faced the most intense competition.
Samsung Electronics institutionalized the use of the strategy canvas in its key
business creation decisions by establishing the Value Innovation Program (VIP)
Center all the way back in 1998. Samsung was at a crossroads at the time. With
the aftermath of the 1997 Asian financial crisis still being felt, the company,
under the direction of its leader, Jong Yong Yun, saw the dire need to break out
of commodity-type competition and create products and businesses that were
both differentiated and lower cost. Only that, CEO Yun felt, would propel the
company to become a leading consumer electronics company of the future. With
this aim, the VIP Center was established under the influence of our value
innovation theory.
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The center is a five-story building nestled amid the
company’s enormous industrial complex in Suwon, South Korea. Here, core
cross-functional team members of its various business units come together to
discuss their strategic projects with code names like Rainbow and Habana.
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These discussions typically focus on strategy canvases.
More than two thousand people a year have been known to cycle through its
VIP Center in Suwon, where designers, engineers, planners, and programmers
gather for days—or months—to hammer out detailed specifications for new
products that will launch the company’s products toward the blue ocean. The
center has a core team of members who work to support the projects passing
through the center, all focused on driving value innovation into Samsung’s next-
generation products. With the value innovation knowledge it has developed, the
center, equipped with twenty project rooms, assists the units in making their
product and service offering decisions. On average, some ninety strategic
projects pass through the center each year. Samsung also opened more than ten
VIP branches to meet business units’ rising demands.
VIP branches to meet business units’ rising demands.
In this spirit, Samsung Electronics has established an annual Value Innovation
corporate conference presided over by all of its top executives. At this
conference, Samsung’s hit Value Innovation projects are shared through
presentations and exhibitions, and awards are given to the best cases. This is one
way that Samsung Electronics establishes a common language system, instilling
a corporate culture and strategic norms that drive its corporate business portfolio
from red to blue oceans.
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Samsung Electronics has come a long way since the VIP Center was
established. Its sales have grown from $16.6 billion in 1998 to $216.7 billion in
2013 and its brand value has catapulted with it. Samsung Electronics is now
ranked as one of the top-ten most valuable global brands.
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While Samsung’s
focus on driving value innovation has contributed to its sales, brand value, and
market leadership, it will need an even stronger value innovation push in the
future as new lower-cost rivals and untraditional players enter the fast-moving,
high-tech consumer electronics industry.
Do your business unit heads lack an understanding of the other businesses in
your corporate portfolio? Are your strategic best practices poorly communicated
across your business units? Are your low-performing units quick to blame their
competitive situations for their results? If the answer to any of these questions is
yes, try drawing, and then sharing, the strategy canvases of your business units.
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