Creating Strategic Leverage

Industry structure and an organization’s competitive position determine the organization’s strategic leverage. Changes to an industry structure can cause corresponding changes in an organization’s strategic leverage and competitive position. Specifically an organization’s “leverage”–including its objectives, strategies and tactics will need to be revisited and recast. Each industry–including health care–has certain rules, a set of tacit agreements that define:
  • the terms of competition
  • dimensions of competitions
  • intensity of competition
  • stability of the terms of competition

An organization that can identify where it has greatest leverage is able to determine where to allocate scarce resources. Leaders need to identify and monitor the dimensions of industry change to incorporate those factors in an organization’s maneuvering of critical business decisions.

An organization’s strategic leverage changes over time as an industry evolves. The focus of the leadership needs should be on anticipating industry shifts that will require change in an organization’s strategic direction.

Strategic mapping is a particularly valuable analytical tool that provides insight into strategic leverage. It allows an organization to identify its “freedom to maneuver” and potential returns in a competitive market.

Industry mapping is a tool that helps an organization visualize an industry and analyze and anticipate competitive actions. Milind Lele in Creating Strategic Leverage offers the following components of strategic mapping:
  • It categorizes markets into various areas or groups, which may vary considerably in terms of the leverage available.

  • It identifies the reasons why some market areas are better protected from internal (and external) competitors and relates these reasons to the underlying economic forces.

  • It categories industry participants in terms of the various groups/market areas and helps identify where organizations may be vulnerable.

  • It helps determine which areas/groups offer the most leverage and whether to enter/exit certain groups or market areas.

  • It provides insight into the areas in which leverage is concentrated and what factors constrain, maneuver or limit return.

Strategic mapping allows a comparison of variables–in this case the average stage length and markets.

Pyrce Healthcare Group uses strategic mapping to assist clients in understanding their market position and in identifying an organization’s strategic leverage. Pyrce Healthcare Group also uses strategic mapping to analyze product life cycles.

Please e-mail us at phg-inc@ix.netcom.com to discuss the use of strategic mapping in your planning efforts with a Pyrce Healthcare Group representative.

The Consultant Newsletter

Home Page