Week 3 Discussion: Use ADR Theory to discuss Hannibal’s Strategy
Use ADR theory (‘choice of battles’, ‘relative strength’, ‘stakes’, and resource movement) to discuss Hannibal’s strategy as described in the video, Hannibal vs. Rome.
The Attack-Defend-Retreat (ADR) Framework of Strategy and Strategic Thinking: Continued
The ADR framework is the central organizing construct of this course, it combines ‘strategy‘ (resource movement to select battles) with ‘strategic thinking’ (how to decide). Use the framework to organize your thoughts around the multiple products and multiple markets. This approach to strategy integrates the internal and external analysis, to make a strategic decision to either ‘Attack‘ (increase resource commitment, ‘Defend‘ (maintain current market position), or ‘Retreat‘ (decrease resource commitment to the battle, and reposition resources to higher value battle (market). This is the nature of strategic thinking – choose your battles and move resource accordingly.
We’ve noted in the video that activities we recognized by all as ‘strategic’ have resource movement in common. All forms of strategy involve resource allocation in common, be it chess pieces, players, armies, or company resources, people time and effort, there is always some form of resource movement involved in strategy. This is called ‘resource allocation’ and ‘resource commitment’ in classic strategic management (see eText) and these terms are used interchangeably.
Applying the concept, in a business managerial sense we see this first in the choice of market decision, which battle to fight(?), where to allocate company resources to the greatest effect? This is the primary strategic decision. In the Capstone Simulation the decision looks like in the figure below as Team Andrews must allocate its resources across the landscape of five different market segments:
The question strategic issue teams in Capstone face is how to decide where to move resources, basically where to increase, decrease or hold resource commitment levels, in short in which product-market battle should one attack, defend, retreat, or avoid (if you’re currently outside the battle)?
Some teams never figure this out, and ‘attack’ everywhere in every Round, and never build a solid competitive advantage within a specific market, from which to grown and expand from. Some teams continue to ‘attack’ and throw millions of dollars round-after-round into a product with low Relative Strength in hopes of improving. Sometimes it works, usually it does not for reasons explained in this course as we progress through.
Still other teams never figure it out, but make a different strategic mistake. They ‘attack’ a market segment in one round and then ‘retreat’ in the next, followed by another ‘attack’ in the subsequent round, and another subsequent ‘retreat’. This strategy lacks consistency and the results are usually inferior. Observing this mistakes reinforces that it’s important to understand resource commitment – make certain you understand if your Capstone team is in fact, attacking, defending or retreating from a market segment when you think you are. This will take some thought about the data in the Capstone reports.
The point is, it is to your advantage to understand this framework and use it to think strategically, and your decisions will improve. To practice this skill, watch the follow video about the ancient Carthaginian general Hannibal, and apply the ADR framework:
https://www.youtube.com/watch?v=uFhuWHMkUQo (Links to an external site.)
Discussion Question: Use ADR theory to explain Hannibal’s strategy.
The remainder of this class will refer back to this framework, as we will be learning class strategic management tools/concepts to help you assess (internal) Relative Strength of your company to compete, and other tools/concepts to assess (external) Market Stakes, and combine these to make a strategic (ADR) decision. The ADR framework is a game theory approach, grounded in human motivation, and is the conceptual center of understanding strategy. This approach to strategic thinking is applicable and works in any situation that meets the 3 criteria for “strategic” as discussed in lecture, including the Capstone Simulation. Therefore we will refer back to this framework regularly throughout this course, just as we do in the on-ground classroom of this course.
Strategic Resource Movements (aka four generic “stratagems”):
Attack = increase resource commitment to a chosen battle. Goal: increasing Relative Strength, market share (and/or financial metrics), or both.
Defend = maintaining current market share position within a chosen battle. Goal: match the growth rate of the market to ‘defend’ market share, without gaining or loosing ground.
Retreat = decreasing resource commitment to a chosen battle. Goal: Pull resources back and redirect to more favorable battle whenever possible.
Avoid = zero resource commitment; special case of choosing to stay away from specific battle (point of rival competition.) Goal: Avoiding wasting resources on either an unwinnable battle, or low stakes battle.
* Note: This class spends little time on the “avoid” stratagem. Basically, the common sense idea is avoid fighting low priority/low motivation battles where your Relative Strength is low, and the Market Stakes are low. Not every battle needs to be fought. Preserve resources for more important, higher stakes battles. Consider the so-called “Island hop” strategy (Links to an external site.) in WWII. In this case, zero resource commitment is the logical thing to do.
Of course, the greatest strategic thinker of the boxing world, Muhammad Ali, had his own unique and highly skilled interpretation of strategic avoidance: