Mar 192018
 

Around the world, strategy workshops—also known as retreats or breakaways—are a favourite way to plan and review business strategies. Run them well, and they can play an extremely positive role in your firm’s success. Do it badly, and they’re a waste of time and money.

Having facilitated hundreds of them over the past 30 years, I’ve learned some valuable lessons in how to make workshops work. Here are some guidelines:

1.    Be clear about why you need a workshop at all. Why do you need to to discuss your strategy? What specific challenge (opportunity or problem) must you deal with? What should the outcomes of your deliberations be? Some executives have thought these questions through and can provide a useful brief to whoever will facilitate the discussion. But a surprising number are astonishingly vague, and even C-suite colleagues differ in their expectations. Many CEOs routinely jot “Strategy breakaway” into their diaries at the start of each year, and then scratch for a way to justify spending time and money on taking their top team away from the office for a couple of days. Their agenda typically centres on a review their existing strategy, how they’re progressing towards it, and what they need to do next, and no brief is complete without emphasis on “blue-sky thinking” or “disruption.” And, hey, there has to be room for “team building” and “motivation.”

But this generic template is no guarantee of success. In fact, without careful thought and preparation, and expert design, it may lead to boring and aimless conversations which in no way improve a firm’s competitiveness. And even if a good time is had by all, many people are likely to leave feeling, “What the hell was that all about?”

So what, exactly, should it be about? That’s Decision #1.

2.   Get the right people into the room. Since strategy informs everything a company does and the way it does everything, and since it’s widely seen as a top-management function, I t’s not surprising that only top teams get invited to most workshops. But this can be a costly mistake.

When CEOs ask me, “Who should we include?” I almost always say, “Everyone.” And I’m not kidding. Firstly, because you never know who’ll offer the most valuable insights or the best ideas. Second, because I think it’s important to have everyone hear the same message at the same time, as communicating it later is always a hassle and poor communication is a major cause of strategy failures. And third, because being invited sends a powerful message that “You matter. You’re important. We need to hear your opinions and ideas.” (While not being invited sends an equally powerful message: “You don’t matter. You’re not important. Your opinions and ideas aren’t worth anything.”)

Obviously, you won’t always be able to invite everyone. There will be times when you do need to confine sensitive discussions to just a few people. Or there might be logistical issues. Or it might be impractical to take everyone away from their jobs. Or doing it might be unaffordable.

But remember: the  first—and biggest—challenge in implementing your strategy is to take your people with you. Without their support, the wheels will spin and performance will be disappointing. Fat strategy documents and detailed strategy maps will be of little help. Yet while it’s an article of faith for senior executives to say, “People are our most important asset,” it’s a fact that more often than not, when it comes to strategy, they’re an afterthought.

3.  Recognise that people have different views of strategy, and confusion can kill a strategic conversation. Ask almost any group of even the most seasoned managers to define strategy and how to “do it,” and you’ll get an array of views. They walk into the room not only with different mindsets and different views of why they’re there, but also with different opinions on what strategy is all about and how to craft it. One person thinks competitors are the problem, while another says it’s a lack of R&D; one believes they should rewrite the mission statement, while another argues for developing some scenarios; one likes the idea of Porter’s “five forces,” and another votes for a debate about “blue oceans.” They zig-zag between visions and missions, from strengths to weaknesses, from threats to opportunities. Not surprisingly, this leads to poorly-informed and haphazard conversations that end with ambiguous intentions rather than firm decisions,

4.   Keep it simple. Keep it brief. This should be the guiding principle in every company. Strategy is partly a matter of analysis, choices, and decisions—and largely a social process. It’s easy to complicate, so you can easily make it impractical and unworkable. And although you might be tempted to chuck everything into your strategy, don’t fall into that trap. Simple language makes the right actions much likelier than wads of complex verbiage. A few clear ideas beat a laundry list of to-do’s every time.

START WELL TO END WELL

If your organization is to be a winner, you have to tap into the imagination and spirit of your people and they must all pull in the same direction. So they need a shared understanding of your strategy, and they must know what’s expected of them personally, and by when.

Getting their support starts from the moment you begin crafting your strategy. And it’s most likely when:

  • Your company has one strategy toolkit with just a few tools in it.
  • Your people speak a common strategy language.
  • They own the strategy.

For these reasons, I believe in starting a workshop with two building blocks:

  1. A short “Making sense of strategy” presentation—to suggest the tools and provide the language. It clarifies what strategy is about, what can be expected of it, and how it’s best created and implemented.
  2. “Strategy snapshot”—which captures the essence of the firm’s situation, options, and strategic priorities. It gets conversation going, and since the workshop delegates provide much of the information on which it’s based, they’re involved from the very start.
THE “STRATEGY SNAPSHOT”

To prepare for a workshop, I need to be thoroughly briefed—at least by the CEO, and perhaps by other senior people, too—and see whatever strategy documents you might have. I may also see various parts of an organization, talk to industry experts, customers, and suppliers, and spend time on desk research. And I reply heavily on questionnaires which are sent to everyone who’ll attend the strategy workshop—and maybe to  wider audience who won’t be there. This not only brings many voices into the process, but also gives people a sense of involvement and meaning. It also gives me a deep understanding of why a firm is where it is, what issues really affect its performance, and where the strategic conversation needs to go.

Then, looking at your business through the lens of my knowledge and experience, I develop a “strategy snapshot” from what I’ve learned and what it all seems to imply. This usually takes much longer than the workshop itself, but it always pays.

There’s no beating about the bush. My conclusions, comments, questions, and advice during a workshop are often provocative, and maybe uncomfortable. They untangle complex issues, make people face reality, and assist them in reframing the way they see things. They also enable us to cut straight to the chase and deal with what matters, instead of wasting workshop time trying to surface issues and figure out how to begin.

Your most urgent need may be to get back to basics and fix them. Or perhaps to counter a competitive threat or cut costs. Or maybe you should review your supplier network, rethink your “difference,” intensify your innovation efforts, redesign your business model—or even radically reinvent your business.

The “strategy snapshot” points to where the focus should be. In just a few slides, I sum up your firm’s current situation and its challenges—and suggest possibilities for action. 

This guides our debate, gets you and your team talking about the right stuff as quickly as possible, and leads to a simple, sound, and practical “strategy story.”

(Of course, you could argue that all consultants do this—hence the old joke that a consultant is someone who steals your watch and then tells you the time! But if you want someone who can cut to the chase, challenge your assumptions, push back against easy answers, and ensure a rich and robust strategic conversation, we should talk.)

BALANCING FIXES, CAPACITY-BUILDING, AND BLUE-SKY THINKING

Every business has to attend to countless short-term issues, while at the same time preparing for the future. You have to manage the present and the future concurrently—not sequentially. So improvement and innovation are both imperatives. How you balance your time between each depends on your circumstances.

The priority for some companies should be to “get back to basics”—they need to urgently fix what’s broken or not working optimally, drive down costs, ramp up productivity, or hire more sales people. Others should make tomorrow’s customers, investments, technologies, and value the focus of their strategy discussions. Mostly, though, it’s a bit of both.

Striking the right balance makes all the difference between success and failure.

I’ll help you find it.

TAKE-AWAY SLIDES FOR FAST EXECUTION

Companies love strategy documents. By now, though, there’s plenty of evidence that they’re almost always a waste of time and paper. Writing them takes longer than a workshop, and things change so fast that they’re out of date before they’re done. They get in the way of reality and destroy agility. They mostly wind up on a shelf or in a bin.

I’ve written plenty of them, but I now I hardly ever do. Instead, I capture all key decisions on a handful of PowerPoint slides, and give you a set immediately. That way, you can start executing your strategy right away. And you can keep adjusting your story quickly and easily to suit new circumstances.

FLEXIBILITY, NOT A FORMULA

I look at every consulting assignment through fresh eyes. Unlike many consultants, I never try to “force-fit” concepts or activities that are just plain wrong for you.

The process described here is not cast in stone. I’m not stuck on a single method or tied to one concept, and I won’t drag you through a prescribed set of steps. Strategy is too dynamic for that. Your needs are different to those of other firms; what you need to focus on today is not the same as yesterday. So I make sure that we do only what’s most appropriate to get you the best possible strategy. From start to finish, there’s a sensible mix of structure and flexibility.

  •  19/03/2018
Jan 312013
 

One question I’m constantly asked, by both consulting clients and business school classes, is, “When should you review and possibly change your strategy?”

A second question—one that’s almost never asked—is just as important: When should you rethink the way you make strategy?

The answer to both questions, as with most others in management, is “It depends.”

There is never a “right” time to take a fresh look at your strategy. After all, strategy is a dynamic activity. You may create it at a specific moment, but you execute it over weeks, months or years—and meanwhile, things change constantly both inside and outside your organization.

Let’s say you develop a five-year plan. Let’s say, too, that you’ve laid out in great detail what you expect to happen in your world from year to year, what you must do, and what results you will get. You bind that story into a thick document, and start moving.

In no time at all, though, the assumptions you made about the future turn out to be wrong. You try to execute your plan as well as possible, but the world you designed it for is not the world you find yourself in. There are many surprises. Things don’t go as smoothly as you’d like. Problems distract you. New challenges engulf you.

Politicians fighting for voters seem intent on making life tough for business. The economy  grows and slows. Regulators keep you on your toes with a string of new laws and adjustments to old ones. Machines fail. People present you with a constant flow of problems. Suppliers let you down. Competitors surprise you. Customers change their spending habits. And so on.

The result is, you spend more time fighting fires than thinking about the future. You miss some of your targets. And you realize that that you’re doing a lot of things that no longer make sense.

There’s no point in persisting with a strategy that’s out of kilter with the world. So you need to rethink what you’re doing. But it’s not enough to do it at long intervals, or as a one-off response to factors that have popped up on your radar screen.

NEW REALITIES DEMAND A NEW STRATEGIC CONVERSATION

If 2011 was a year of astonishing tumult and upheaval, 2012 is bringing even more of it. “The new normal” is defined by austerity, volatility, and surprise, and much of the world will struggle for years through “The Great Contraction.” At the same time, we face rapid and radical shifts in politics, society, the environment, regulation, and technology—and in customer and competitor behavior.

Today, virtually every market—for any product or service—is an emerging market demanding fresh insights and ideas.

To survive and thrive in this new era, companies need to take a new look at the purpose and role of business, what “value creation” means—and which stakeholders really matter. They need to out-learn and out-run the competition. They need to understand the “rules of their game” and excel at them, while simultaneously making innovation a way of life. And they need to balance long-term capability building with short term action.

Strategic thinking is a living process. Strategy is a here-and-now view of where and how you’ll compete, which will almost inevitably have to change faster than you might imagine. So you need to review it constantly, to be sure you’re dealing in the best possible way with emerging conditions.

But it’s not enough just to re-look at the assumptions you made and the decisions and choices that followed. The content of your strategy is obviously important. But equally important—and largely overlooked—is the way you got to it. In other words, the way you think about strategy.

Right now, job #1 for most executives is not only to reset their strategies, but also to rethink what strategy should do for them and how they use it. That’s job #1 for me too!

 This is no time for business as usual. Neither can you risk strategy as usual.

 
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  •  31/01/2013
Jan 262013
 

My motto is, “If you don’t make a difference, you don’t matter.”

Business competitiveness is all about making a difference. So key questions in strategy are: “What is our difference?” “Why does it matter?” and “How will we deliver?”

Any firm wanting to be successful has to be able to do some thing exceptionally well. Innovation, for example. Or operating across borders. Or recruiting and managing people with rare skills. Or developing alliances, design, manufacturing, marketing, service—or any of the many other activities that add up to the production of value.

That thing must set the firm apart from competitors and offer unique value to customers especially, but also to various other stakeholders. It must be durable and defendable. And most importantly, it must have “multiplier potential” so that excelling in it today will enable delivery of further value in the future.

Experts on business have been telling us this for ages, using terms like “core competence” or “core capabilities.” Most executives understand it well and will swear they’re driven by it—though in most companies there’s a surprising lack of focus on actually making a difference. Rather, it’s one of those taken-for-granted notions that hovers in the background but is not the central and explicit issue in every conversation or decision. I’ve sat in countless management discussions where no one mentions it at all.

What’s even more of a surprise is that strategy itself isn’t seen as a capability worthy of special focus or mastery. Almost everyone agrees it’s important and knows you have to have one, so you have to “do it.” But get it out of the way, and you can get on with making and selling stuff and making a profit.

Why do I say this? Here are some reasons, gleaned from my own 25-plus years of consulting as well as lots of research by others:

1. Just about every manager you talk to in any company—let alone across firms—has a different take on what strategy is about. They’re all over the place when it comes to why it matters, what it should do, or how to make and execute it. They’ve all read strategy books and attended courses, but they’re unclear about why one approach to strategy works while another is less satisfactory. So ask six senior people about this and you’ll likely get six different opinions. Ask the same questions outside the C-suite, and you can expect blank looks.

2. Few companies have a consistent approach to strategy. They bounce from this concept to that, switching tools and techniques on a whim. They don’t have a “strategy language” that their people understand and that anchors their discussions. As a result, their strategic conversations are poorly framed and conducting them over time is ineffective. A process that should cut through complexity, clarify priorities, and focus resources and efforts has the unintended consequence of constantly adding confusion.

3. They chop and change consultants as if whom they work with doesn’t matter. (Why don’t they do the same with their auditors or lawyers?) They think that outsiders can add value to a strategy process, but are careless about choosing them, often leaving it to some low-level, uninformed person to call around or do a Google search for someone new. They’re not fussy about whether the latest “guru” is really a strategy expert—or a sales trainer or retired factory manager hungry for a new assignment. So the value of the advice they get is spotty, and they’re jerked this way and that by it.

4. They fail to look back and learn, and to use each strategy discussion as a building block for the next one. Amazingly, there’s evidence that only a few firms systematically review their strategies or keep building on them. They make one, get on with life… make a new one… get on with life… and so on. Equally amazing, they rarely review their approach to strategy, asking whether it’s the best they can do or needs to be changed, or debating how to improve it.

5. Strategy is seen as a parallel activity to “real work,” not as real work. And certainly not as the most important of all real work. It’s not woven into the everyday agenda. It isn’t seen as the over-arching issue in business, or as something that concerns literally every person in an organization. It’s a task that has to be dealt with. It gets the spotlight from time to time, and then only a privileged few people get involved with it.

Competing in the future will be quite unlike competing in the past. Things will be much, much tougher. Firms will have to be cleverer and quicker in dealing with the challenges they’ll face. Making strategy “on the fly” will be increasingly necessary. Strategy smarts will matter more and more.

So if there’s one deep competence companies need to develop, strategy is it. The ability to craft and conduct strategic conversation —to design and execute effective strategy—will be the skill that “makes the difference that matters.”

Nothing else—not financial wizardry, innovation, collaboration, “human capital” management, technology, or whatever—counts as much. For without strategy, nothing else will get companies the results they want. And the difference between good strategy and bad strategy will count as never before.

MAKING STRATEGY MATTER
  1. Make building the strongest possible strategy capability an explicit goal and a priority—”Topic #1″ in your company. And involve everyone.
  2. Taking into account your specific needs, choose one approach to strategy and stick to it. Communicate it widely and constantly within your organisation. 
  3. Use a few tools and learn to use them well. Keep checking that they’re working for you (but beware of dumping them too readily). 
  4. Develop a “strategy language” so people talk about things the same way. 
  5. If you need help, pick your advisors carefully. Make it clear to them that while you want their outsider’s views and expert knowledge, you aim to develop a consistent process and to develop the strategic IQ of your team. Make sure that what they’ll bring to the party will be additive and not blow holes in your approach or take you in a totally different direction.
  6. Constantly review with your team what new knowledge and insights about strategy they may have picked up, and rigorously debate whether or not to integrate them into your approach. If you really think they have merit, plug them in carefully.
  7. Always review your current strategy before moving on. It’s tempting to race forward, especially when you face new challenges, but that can hurt programmes and initiatives already in place.
  8. Practice! Practice! Practice! Create opportunities to talk strategy. Begin every strategy discussion with the intention that it will be a building block for the next one. Keep asking, “Why is this working for us?” “How can we do it better?”
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  •  26/01/2013
Jan 212013
 

Strategic planning has a long history—and a dismal track record. Just about every company does it, obviously because they think it’s important, yet it’s value is highly questionable.

Ask almost any senior manager, “Is planning important to your company?” and you’ll get a strange look and a resounding “Yes.” But ask, “What exactly does it do for you?” and the answer is likely to be vague and unconvincing. Even when you do get a confident story, it’s easy to poke holes in it. There’s almost always a gap between intentions, expectations, and results.

In many firms strategy is reduced to an annual ritual tied to the budget cycle rather than timed to deal with critical challenges. It’s a stop-start activity that distracts people from “real work,” incites political games, and results in boring PowerPoint presentations and piles of paper which no one looks at again. While it’s happening, new challenges keep arising and decisions are made that override what was decided the year before. When it’s done, there’s a huge sigh of relief.

What should be a very serious matter is a recurring joke. “The Stratplan” is a calendar event more notable for what goes into it than what comes out of it. The best that can be said of it is that it keeps a lot of people busy while life goes on.

In consulting assignments and business school classes, I typically get questions like these:

  1. Does planning work?
  2. What’s the best process?
  3. Who should be involved?
  4. How can you communicate the plan throughout an organization?
  5. How long should a plan last, and when should you change it?
  6. How can you improve execution?
  7. How can a balance be struck between planning and innovation?
  8. What’s the best way to measure strategy?

This used to surprise me. After all, “everyone knows” that strategy is the overarching management discipline, the one that comes before all other and informs every management decision and action.

It’s a topic that has been researched and commented on for decades by academics, business leaders and journalists. There are countless books, articles and courses on it, and more than enough models, frameworks and opinions to provide the guidance any manager could want.

But having watched countless high-level executives struggle to make sense of strategy, I’ve come to the view that in their quest for better tools and techniques they have utterly confused themselves and everyone around them. Equally serious, their ceaseless experimentation keeps them from ever mastering and embedding any single approach that will serve them over time.

The questions above are not profound ones: they deal with what you might at best call “the basics.” So surely the answers should be well known to anyone with even limited exposure to strategy theory and a modicum of experience in making and executing strategy. But clearly they’re not. This very important—and very influential—subject is shrouded in mystery and mumbo-jumbo.

To develop strategy, managers tend to use an arbitrary mix of familiar tools and fashionable new ideas. SWOT analysis seems mandatory and Porter’s five forces framework is popular. During the past three decades, the vision, mission, values approach has gained a strong hold. Terms like core competence, agility, strategy maps, and balanced scorecards are tossed about.

In the introduction to Competence-Based Competition, a 1994 book they edited for the Strategic Management Society, Gary Hamel and Aimé Heene said this:

“After almost 40 years of development and theory building, the field of strategic management is today, more than ever, characterized by contrasting and sometimes competing paradigms … the strategy field seems to be as far away as ever from a ‘grand unified theory’ of competitiveness. Indeed, there is still much divergence of opinion within the strategy field on questions as basic as ‘what is a theory of strategic management about?’ and, more importantly, ‘what should a theory of strategic management be about?’”

A few years later, Hamel, one of the most prominent strategy gurus of all, wrote in the Financial Times that “The dirty little secret is that we don’t have a theory of strategy creation. We don’t know how it’s done.”

I disagree with both these comments. Hamel and Heene are right to say that there are many opinions about strategy theory, but there are not many strategy theories. In fact, there are just a few—and they underpin all the other stuff that “thought leaders” spin as breakthrough ideas. The real “dirty little secret” about strategy creation is we know more than enough about it but just don’t do it very well!

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  •  21/01/2013
Dec 012012
 

Disruption must surely be the hottest strategy concept of the past decade. But it is less of a breakthrough than it’s made out to be. And it may unnecessarily impede your strategic thinking.

The idea grew out of a study by Joseph Bower and Clayton Christensen, both professors at Harvard Business School, which saw light in a 1995 Harvard Business Review article titled “Disruptive Technologies, Catching The Wave.” It was subsequently moulded into a theory by Christensen, making him a superstar and spawning many books and articles by him and others. Thanks to determined promotion, it’s now a term you hear in almost every management discussion—though it’s seldom used as precisely as Christensen proposes.

The gospel according to Christensen goes like this:

In their quest for the most profitable customers, companies innovate and improve aggressively—and give customers more than they need or will pay for. And the more intently they listen to their customers, the more they up their game and sustain that gap.

While they focus on the next-generation performance needs of the most attractive customers, guerilla competitors sneak in under their price umbrella and target less attractive customers who’re being overlooked, ignored or under-served. The upstarts ask, “Who is not getting attention?” “What is value to those customers?”

The customers they aim at aren’t in the market for state-of-the-art products. So these firms can ditch the bells and whistles and keep costs and prices low.

Initially, the leaders don’t see a threat. The challengers are of no appeal to their best customers and aren’t chasing them anyway. Those customers they do lure are likely to be ones who always want a deal, are satisfied with “good enough” offerings, and won’t be missed.

But this is just a lull before the storm. Quite soon, more mainstream customers are tempted by the no-frills competitors. They need to forego some of the “value” they’ve grown used to, but what they get does the job—plus it’s easier to use, more convenient, and more affordable. So it offers them value, albeit not the kind they’ve been used to.

Many established players have been hurt this way—think clothing, airlines, steel, medical devices, consumer electronics, autos, and so on. But then they make things worse for themselves.

In an effort to counter competitors who won’t play by their rules, they typically race even faster up the value path. They invest even more in innovation and pile on features and benefits. But in their efforts to stay ahead of their enemies, they also stay ahead of their customers; and the cost of their overkill forces them to keep hiking their prices.

Some customers stick with them because they don’t mind paying more for products that they perceive to be at the leading edge. But the pool gets smaller. And the harder these firms try to hang on to their traditional business, the more they lock themselves into their “superior” strategy—and the worse things get for them.

FEW OPTIONS

If the leader wishes to retain its low-end customers, it has three options:

  1. Pump up its promotional activities, to hopefully persuade those customers to stay loyal.
  2. Keep offering the same products, but at a lower price.
  3. Eliminate some features and benefits, and cut prices.

The problem with Option 1 is that if customers learn that a competitor’s low-end offering is OK and costs less, some will leave. No amount of hype will convince them to keep paying top dollar for “value” they don’t need.

Option 2 may keep customers coming back, but margins will take a hit and buyers who’d paid the higher price will feel they ‘d been screwed.

Option 3 will result in the loss of top-end customers. The company will cannibalize itself. By offering less and tacitly admitting to customers that they’ve been paying too much, it’ll drive them into the arms of cheaper competitors.

Faced with these unpalatable choices, and trying desperately to evade the pesky newcomers, firms tend to even more doggedly pursue their current customers—whose numbers keep shrinking. Meanwhile, their low-priced competitors improve their offerings, hone their processes, and become more and more dangerous. And as their sales and profits grow, they can afford to intensify their advance.

Market-leading firms attained their dominance by focusing on an attractive target market and working furiously to satisfy it. They have a lot invested in their current strategy—money, resources, capabilities, relationships, processes—and are weighed down by these sunk costs. But even more by their mindset. So they can’t suddenly or easily change. Newcomers, on the other hand, have little baggage and can switch tack with relative ease.

OLD INSIGHTS REPACKAGED

Following Christensen’s thinking over the years, it’s hard to avoid a sense of deja vu. Even a quick glance back into the history of management thought makes it hard not to conclude that much of his “theory” is to be found in Marketing 101 and Strategy 101. And that it’s not all it’s cracked up to be.

Take, for example, the notion of “the job to be done”—a Christensen favourite that’s sure to crop up in any discussion about disruption. This is, in fact, one of the oldest ideas in the marketing playbook.

So old, in fact, that it’s impossible to pin down its origin. But I suspect it gained explicit understanding in the 1930s, thanks to a famous American sales trainer named Elmer Wheeler who coined the phrase, “Don’t sell the steak—sell the sizzle.” His point was that it’s not a chunk of meat that customers want, it’s the pleasure that goes with it: the sizzle and aroma from the barbecue, companionship and fun with family and friends, and so on. This lesson has been drummed into copywriters and sales people for years.

In “Marketing Myopia,” a HBR article that won the 1960 McKinsey Award, Ted Levitt made the then-provocative case that too many companies limited their growth by defining their industries too narrowly, and by being more concerned with what their products could do than what their customers want done. Discussing the oil industry, for example, he noted: “People do not buy gasoline. They cannot see it, taste it, feel it, appreciate it, or really test it. What they buy is the right to continue driving their cars.”

Peter Drucker told us in his 1973 book Management: Tasks, Responsibilities, Practices:“The customer never buys a product. By definition the customer buys the satisfaction of a want.”

Levitt echoed this in his 1983 book The Marketing Imagination, writing that “people don’t buy things but buy solutions.” To illustrate his point, he recycled a quote from one Leo McGinneva, who’d said that when people buy a quarter-inch drill, “they don’t want quarter-inch bits; they want quarter-inch holes.” (Something another marketing guru, Philip Kotler, had said in 1980.) Levitt also observed that “The customer may actually want and expect less.” (My italics.)

Within months of his book appearing, Levitt also published an article in HBR titled “The Globalization of Markets.” The basic argument was that by stripping away the features and benefits that made products particularly appropriate for particular markets, firms could sell them to many more customers across the world. Citing the example of Japanese firms, he said: “They have discovered the one great thing all markets have in common—an overwhelming desire for dependable, world-standard modernity in all things, at aggressively low prices. In response, they deliver irresistible value everywhere, attracting people with products that market-research technocrats described with superficial certainty as being unsuitable and uncompetitive….”

And what about Christensen’s observation that the more closely firms listen to customers, and the harder they work to deliver what those customers say they’d like, the more likely they are to offer too much? Or that to compete with disruptors, the leader should spin off a totally separate business unit?

Nothing new here, either. This, and much else that he says, has been written about for decades. That disruption, as described by Christensen, has become such a fetish is a sad indictment of academic thought and management practice.

DEFINE “DISRUPTION” WITH CARE

The theory of disruptive strategy that so many people swoon over offers a very narrow view of how market disruption may occur, which firms are disruptors, or what disruptive strategy might be.

Can you possibly argue that Apple, say, is not a disrupter, because it sells beautiful, innovative products at high-end prices? (No “good enough” thinking here!)

And what would you say about Elon Musk’s award-winning Tesla S car? Or Woolworths, Nando’s peri-peri chicken, Discovery Health’s Vitality programme, Emirates airline, or Reckitt and Coleman’s household products?

By Christensen’s criteria, none of these deserves to be called “disruptor.” These products are all excellent, and priced accordingly. Their target market is not the “bottom of the pyramid.” Cheaper, “good enough” options are available from other firms.

But all have challenged convention and redefined their categories. And surely, that’s what disruption means.

The fact that some of these big names may face competitors who offer “good enough” products doesn’t shift the disruptor label from them to those upstarts. To split hairs about an arbitrary interpretation of what a word means is ridiculous.

Christensen has chosen one interpretation of what disruption means, and made it his own. He has focused on one strategic formula which highlights a very serious threat to market leaders, and also offers challengers a way to take them on. But no established firm should imagine it’ll be bulletproof if it follows his advice exclusively. Neither should any ambitious attacker close off strategic possibilities. Most managers would do better with a broader definition.

To disrupt something is to overturn the order of things. So how could you do that? Surely, not only by offering cheaper but “good enough” products to customers who’ve previously been ignored or overlooked.

The reality is that, in most markets, there are many ways to compete, many ways to upend convention. So strategic thinking should be about creating possibilities, not shutting them down. It should be about understanding the many ways you could be toppled, not just one.

If there’s one important thing all the chatter about disruption has achieved, it’s to focus managers’ attention on the three most critical strategy questions: who is your customer, what is value to them, and how will you deliver it? (Though you have to ask what else they’ve been thinking about!)

And yes, Christensen has added many examples of why this matters and some advice on making the most of your answers.

But three, five, or 25 years from now, will we look back on the Christensen era as a disruptive one in the annals of strategic thought, or one in which we woke up and went back to basics?

As Levitt said, “Man lives not by bread alone, but mostly by catchwords.” So it’s important to pick those catchwords with care, and to be clear about what they mean and how they might be applied.

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  •  01/12/2012
Mar 052012
 

Most companies have a strategy, but the quality of those strategies varies greatly. Not all are equally sound. A lot are utterly useless. And all too often, even the best of strategies won’t get turned into action because of organizational weaknesses.

You might wonder if strategy really is necessary in today’s environment of extreme uncertainty, roller-coaster volatility, resource constraints, and rising competitive hostility. The answer: unequivocally yes! In fact, right now, strategy matters more than ever. Precisely because the world is so hard to understand and there are so many surprises, you need a strategy in order to give you the best possible chance of defining your own future.

This is no time to be careless or vague, to bet on yesterday’s strategy taking you into the future, or to bank on your competitors being idiots. A carefully thought-through, robust strategy is essential for riding the “white waters” we’re in, and that in turn requires a systematic, disciplined strategy process. Now, more than ever, you need to subject your strategy—and the way you made it—to tough, dispassionate review.

No doubt you and your colleagues have put a lot of effort into your strategy. You’ve probably thought long and hard about the best process to use, what it should address, what you should finally say, and how you should communicate the outcome. But before you rush ahead with implementation, pause for a moment. Stand back and take another long, hard look a what you’ve decided. Use this checklist to stress-test your strategy. These 20 questions may highlight weaknesses, trigger new insights, or lead to new decisions.

One set of questions helps you evaluate your overall strategy:

  1. Is your strategy based on specific and sound assumptions?
  2. Is it based on adequate and accurate information—most importantly, about customers, competitors, your operating context, and your own capabilities?
  3. Does it address all the key issues facing your company, or have you overlooked some or skirted around the tricky ones?
  4. Are you clear about the results you want, and will it raise your chances of delivering them?
  5. Will it give you a meaningful advantage over competitors, and can you capture the value of that edge?
  6. Have you made the right trade-offs, or are you making too many compromises?
  7. Do you have what it takes to make it work—resources, capabilities, attitude, stakeholder support, etc?
  8. Will it be sufficiently hard for competitors to understand, copy, or nullify?
  9. Will important competitors worry about it, and wish they’d thought of it first?
  10. Does it lock you into a particular course, or will you be able to change direction when you need to?
  11. Is this strategy unquestionably the best you can do given your current circumstances?
  12. Does it have legs – i.e., will it give you the results you want for long enough to make it pay off?

A second set of questions looks at your chances of making your strategy work:

  1. Is your strategy simple, clear, and specific (i.e., will it be easy to explain, will it make sense, and will you be able to stay “on message”)?
  2. Does it have just a few (3-5) key goals that are unquestionably the priorities, and will achieving them get you where you want to go?
  3. Are those goals followed by (3-5) well-defined actions, and are specific individuals responsible for those actions within specified time-frames?
  4. Do you have the right people in all functions, and are they excited about your strategy and aligned behind it?
  5. Do the “pivotal people” on your team (the few who are the most critical “gears in the system”) have the skills and clout they need to make things happen?
  6. Do they have the information, resources, and support they need, and will they continue to get it?
  7. Will your organizational arrangements (structure, processes, systems, culture, incentives, etc.) support your strategy?
  8. Do you understand the risks that lie ahead, and do you have plans to deal with them?

All of these appear to be quite simple questions. But they may be tougher than you imagine. Getting to the answers may be painful, and you and your colleagues may not like them.

But remember, strategy is not just about logic, analysis, and hard decisions. It’s also a highly-charged social, political, and emotional subject. If you don’t start out with that understanding, and if you fail to confront reality while you craft your strategy, don’t expect great results. The world is just too tough for that, and it’s getting tougher.

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  •  05/03/2012
Feb 092012
 

As a voracious reader of business books and journals, I’ve become increasingly jaded and disillusioned. I’ve spent countless hours over the past quarter century searching for insights, concepts, and tools that might really change things. Yet for all the hype that “management” gives rise to and is prone to, most of what I’ve seen is just more of the same, repackaged for a new time and possibly a new audience. Some of it is vaguely interesting. A good deal of it is just plain nonsense.

For all the efforts of academics, consultants, executives, and writers, there’s been surprisingly little progress in the field of management thinking. A handful of concepts cooked up 30, 40, 50 – or even close to 100 years ago – are still the ones that matter; and they are the core of what now gets touted as “new,” “breakthrough,” or “revolutionary.”

The DuPont chart, a tool for thinking about how companies create wealth, appeared almost a century ago. Fifty-odd years ago, Peter Drucker noted that every company needs to answer three questions: 1) who is the customer? 2) what is value to that customer? and 3) how can we deliver it? And around the same time, the human resources school of organizational behavior gathered momentum with its message that people are the most important resource, and treating them well is smarter than treating them badly. So what has changed? Answer: nothing. What better advice is on offer? Answer: none. These long-in-the-tooth ideas remain the bedrock of today’s “freshest” management thinking. Again and again, they’re tarted up for a new audience by management’s “thought leaders.”

Of course, there will be howls of protest at this view. After all, a lot of people have a lot riding on the world being eager to hear what they have to say – and being willing to pay for it. But one thing I’ve learned about management is that we have a very good idea of what works. Get these few things right, and you have a chance of success; get them wrong, and you’re roadkill. Another lesson is that there are no silver bullets in business. And in this time of great change, we really can’t afford to keep reinventing the wheel or flailing around for answers that don’t exist.

There are three possible tests of the value of any new insight or concept: 1) how useful it is to busy, practicing managers; 2) whether it advances our understanding of a particular topic such as strategy, leadership, change management, customer service, or operations; or 3) whether it becomes a catalyst for further investigation and thought. By these tests, very little of what’s dished up is worthwhile.

This is alarming, given that management is the discipline at the very centre of human affairs. The one that makes pretty much everything happen. That makes businesses competitive and schools, hospitals, and armies effective. That makes cities, ships, trains, power stations, and much else work. And that drives innovation and progress.

You’d think that, by now, we’d have figured out how to manage things. That we’d have settled on a set of core principles and a proven set of practices. But we haven’t. Instead, we keep on searching. And searching…

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  •  09/02/2012