Skip to content

The Truth About Strategy

2011 November 20
tags:
by Greg
Truth about Strategy

Over the years I’ve done a lot of things.  I’ve lived in a bunch of countries, run a number of businesses and even spent some years as an independent strategic consultant. Clients would come to me to solve their problems and, inevitably, they always traced them back to strategy.

They wanted to hire me, therefore, to give them the right one and that, they felt, would set things right. I had built a strong track record of success and they were sure that I would find the elusive, magical answer.
 
However, once the project started, I would find that strategy was the least of their problems.  Lousy products, nasty people and inherently poor management were at the crux of the issue.  Successful companies, on the other hand, excel at those things.  Nevertheless, it is strategy that tends to get the credit or blame.  It’s time to tell the truth about strategy.

What Is Strategy?

Voltaire once said, “If you would like to converse with me, first define your terms.”  Fair enough.  As I wrote in an earlier post, I define strategy as:

A coherent and substantiated logic for making one set of choices rather than another.

The primary function of strategy is to frame issues for action, so it must be coherent, in that it doesn’t contradict itself and substantiated, meaning that it’s consistent with the facts.  Both of those things are much harder than they sound.

You need a real understanding of the business to avoid contradiction and it takes a substantial amount of rigor to get the facts right (which is why many strategists just make them up and then go searching for research that will appear to back them up.)  There’s more to a good strategy than a nice looking PowerPoint deck and a convincing voice over.

There Is No “Right” Strategy

While good strategy is rare indeed, it should be clear that it is necessary, but not sufficient for sustainable competitive advantage.

Look at Southwest Airlines, with their strategy to be “THE low-cost airline.”  This is a simply stated, widely known strategy that many competitors have attempted to copy, but none have rivaled Southwest’s enormous success.  In fact, most airlines are big money losers.

In a similar vein, I recently wrote about Apple and Microsoft’s widely divergent strategies. One is integrated and insular, the other modular and collaborative.  Yet both are enormously, fabulously successful, with two of the highest market caps on the planet.  So who has the right strategy?

These aren’t isolated examples.  Look at any category and you’ll find firms with polar opposite strategies who do great and a number of competitors with very similar strategies who spew red ink.  Obviously, there’s much more to profitability than strategy.

Strategy Is Not Static, It Lives and Breathes

In ancient times (and, it seems, modern times as well) high priests would cloister themselves away reading sacred texts so they could bless the lesser beings with their received wisdom.  These holy men were, of course, beyond reproach because they, and they only, had access to the sources of wisdom.

Strategy encounters similar pitfalls when it is formulated by lone geniuses, working quietly behind closed doors and, presumably, screaming “eureka!” when divine inspiration leads them to a key strategic insight.  Or worse, by outside consultants who hog up some conference rooms for a few months and then leave behind weighty documents and confusing white papers.

Good strategy is not static, but dynamic.  It must evolve and, as Tim Harford explains in his wonderful book Adapt, that means that it must be sensitive to feedback from the system in which it has to thrive.  It can’t be insular, it must interact, be questioned, embellished, augmented and sometimes thrown away.

Strategy Is Fractal and Imbued with Purpose

One thing you’ll notice at a successful company is that strategy looks the same at every level.  From the lowest level employee to the most senior executive, people are on the same page and their actions reflect it.

This goes far beyond simply chanting mantras or bowing to consensus, but is a direct result of what Gary Hamel, in his book The Future of Management, calls a “community of purpose.”  Defining that purpose, after all, is the essence of good strategy and the litmus test is the degree to which the organization has internalized it.

A company with a purpose won’t get thrown off course by a bad quarter, a disparaging article in the business press or by a difficult client.  It will stay the course because it has a mission that is important.  Moreover, it won’t be afraid to adapt its tactics because it will understand that those are merely a means to an end, not the end in itself.

Strategy is Emergent

Nobody gets their strategy right from the beginning.  Look at any blindingly fantastic success – Southwest, Google, Wal-Mart – and you’ll find fumbles and failures, (and often pretty dumb ones).  Interestingly, the great strategies that catapulted those companies to dominance often seem more accidental than the products of brilliance inspiration.

That is because truly great strategy is not, as some would have us believe, the product of wise men on mountains, descending intermittently, as Nietzsche’s Zarathrustra, to proclaim great truths.  It is emergent, the product of experience, trial and error, and luck (both good and bad).  In other words, not a priori essense, but a posteriori  lessons learned well.

In other words, strategy is not a starting point, it’s a process and a collaborative one at that.  It is not written in stone, nor is it ever truly complete.  It evolves over time, becomes stronger as it adapts to new challenges even as it remains true to its core principles.

Good strategy is never being, it is always becoming.

– Greg

15 Responses leave one →
  1. Carl Cassidy permalink
    November 21, 2011

    Greg this is the most honest and most accurate commentary I have yet to read on the subject of Strategy. I have spent 35 plus years in both corporate as well as my own firm and have seen all of the flavours of the week and even had Robert Waterman one of the”In Search of Excellence” authors in to talk to us when I was Director of Marketing at Campbell Soup.

    My conclusion, it all comes down to execution, the right product/service, Leadership and committed perseverance.

    Like you, I spent a great deal of time handling a global assistment. For 6 years I was an Internatonal VP of Marketing for a $6.4 billion dollar company working 79 countries on five continents. For all the posturing, smart strategies and management BS, that I, like my boss engaged in in order to take credit for our successes, It really all came down to the little people hustling our products each day just to scrape by. Our local Country Managers, usually MBA trained in the USA, made sure they practiced the fine art of manning a desk, too important and clever to ever get their hands dirty.

    [Reply]

    Greg Reply:

    Thank you Carl. That’s very kind.

    You also point to one the great challenges of the 21st Century (if not the great challenge). We Americans constitute about 5% of the world’s population and about 25% of the income. Meanwhile, we score relatively low on standardized tests and the rest of the world is increasingly skilled and educated (as you mentioned, in no small part due to American universities and corporations).

    Something has got to give.

    Greg

    [Reply]

    Carl Cassidy Reply:

    Greg:

    Unfortunately, it has beyond consumption and arrogance, especially if you pull back and take in the larger picture. Once again we are on the edge as the “Super Committee” comes back with “the” plan for cutting the budget. Parties are so entrenched that there is no way out of this quagmire. The Republicans have made it a policy to fight Obama at every step when compromise could and should be achieved only if these few are willing to put the good of the country ahead of politics. It’s gone toxic. And as “Rome burns”; on the international front,” the Chinese quietly move along with a cohesive economic policy that will pass the USA over the next 15 years if not sooner.

    Instead of pointing fingers, and taking intransigent political positions, it’s time for Americans to wake up, put the good of the many ahead of the over bloated few, overhaul the education system (fat chance) and begin the process of pulling together.

    I watched a banker yesterday on TV as he waded into the “Occupy Wall Street” sitters to argue with the 99%. In a later interview he slammed the movement, completely missing the point and regurgitating the same old “I am OK, screw you” rhetoric and just short of stating “Qu’ils mangent de la brichehe”, Marie Antoinette’s charge to the rioting Paris mob telling them to eat cake.

    If not now, when is it time to leverage the remaining strength of economic size and market clout to rebuild a the country if not for growth, then at least for survival. “Ask not what the country can do for me, but what I can do for my country”. America is still a great country well worth taking back from the greed, and the arrogance of the boated few and it begins with T word, yes I said it, make the rich pay there fair share of Taxes. God Bless America.

    [Reply]

  2. November 21, 2011

    Greg,

    You have expressed what everyone who has truly studied strategy has come to accept in under 1,000 words. I’m not going to rehash the article but do want to highlight two important points. One, ‘strategy is not static’ and secondly ‘nobody gets their strategy right from the beginning’. Strategy is based on a pool of assumptions – educated guesses – about both internal and external assets, capabilities, and reactions. It’s a house of cards that will always be proven wrong to some degree when exposed to the market. This is why those who seem to always nail it really have a present, adjust, and repeat process baked into their DNA.

    I’m personally fascinated with this stuff because it allows me to combine analytical insights and creativity to help organizations overcome both external and internal barriers to growth. 
    Donald McMichael´s last blog post ..New Product Launch; Why Some Businesses Almost Always Nail It

    [Reply]

    Greg Reply:

    Thanks Donald. It really is the journey and not the destination.

    Happy travels!

    – Greg

    [Reply]

  3. November 22, 2011

    Hi Greg

    Great thinking – to distil this down what you’re saying is that a Strategy shouldn’t just be about the WHAT and WHERE – but also, and maybe more importantly, the HOW.

    One of the best ways I’ve heard this synthesised is a strategy is a ‘Where to Play, How to Play’

    In his excellent book HOW – Dov Seidman really illustrates the need for a good grasp and commitment to the HOW of business. Perfectly aligned to your thinking that it’s not necessarily the end goal of the strategy that matters but how to make the journey.

    Thanks again for stimulating insight.

    CC

    [Reply]

    Greg Reply:

    Thanks for the tip. I’ll check out Seidman’s book.

    – Greg

    [Reply]

  4. November 24, 2011

    Greg,

    I advertised your site today to a few of my colleagues taht try to help me to launch my business. I found that your article is a great comfort because I am still searching for the magic moment to launch.

    As you probably know, I am formulating a new Mortgage and Pensions System. The latest version is simplicity itself and is grabbing people’s imagination really well. I just need to write a convincing lender’s script now,based on the facts that I have and maybe a bit ore digging to make sure they are really persuasive…

    This is what I wrote to my friends, all of whom sincerely want to see this work:

    Why am I constantly changing course?

    Because I am looking for the way forward that will not burn my boat
    and leave me with no resources because I spent them all without being
    certain that I got it right.

    When I get it right I will know because people will start knocking on my door.

    I am getting close to that feeling now.

    A number of people are asking if they can borrow. Now I need to find
    people that want to invest.

    So today I placed a few questions on LinkedIn to ask fund managers and
    others what they would do if they could find an investment with the
    characteristics that an investment in (I did not say what) the ILS
    system as a lender would have to offer.

    It takes time to get a response.

    I will adjust the wording time and again till I get some enthusiasm.

    Then we can put both sets of people together.

    Here is an extract from a great website which regularly fascinates me
    and others:

    Strategy is Emergent….
    Edward C D Ingram´s last blog post ..WHAT IS MACRO-ECONOMIC DESIGN? Edn 9

    [Reply]

    Greg Reply:

    Good luck Edward.

    – Greg

    [Reply]

  5. November 30, 2011

    Greg – Nicely written, particularly the powerful words “choices”, “sensitive”, and “emergent”.

    Now if more boards or management teams would ask themselves the simple question, “do we have the right strategy?”, then your eloquent points would be more easily brought to life. That simple question implies playing out alternative scenarios (“choices” to use your term), some of which might be uncomfortable or unnatural. When that question is asked quarterly, it demands that the strategy and team sense and respond to change in both the internal and external environment (“sensitive” to use your term). And finally, when asked consistently over time, success and failures can shape strategy and decision making more so than anything else (“emergent”).

    All to often, both management and the board fall in love with “the strategy” because of the emotional attachment that comes with hard-fought execution. Just step back, and ask “do we have the right strategy”?

    Bill

    [Reply]

    Greg Reply:

    Good advice Bill. I particularly like Andy Grove’s story of how when Intel was confronted with the major strategic change of switching from memory chips to microprocessors he asked Gordon Moore, “If we came in to replace ourselves, what would we do?” (or something to that effect).

    Greg

    [Reply]

  6. Augustine Duwoe-Lawoe permalink
    December 9, 2011

    Thank you

    [Reply]

  7. January 10, 2012

    Greg, I really enjoyed your post, especially the aspects of living strategy and it’s emergent nature. I’ve been experimenting with a few concepts when I facilitate strategy summits: 1) strategic planning is about creating a movement, not just a plan, 2) strategic planning is about creating a container for shared understanding for coordinated action, and 3) strategic planning, when done well maximizes free choice (taps into people’s passions/interests) and balances the need for planning with the need for improvisation. I’m including my latest blog, check it out and let me know what you think: http://www.organizationalinnovationideas.com/strategic-planning-its-about-creating-a-movement-not-a-plan/.

    Would love to connect and discuss further. Thanks for stimulating the conversation. Tony

    [Reply]

    Greg Reply:

    Tony,

    Sure. Feel free to connect on LinkedIn and/or Twitter.

    btw. Have you read Mintzberg?

    – Greg

    [Reply]

    Tony Silbert Reply:

    Yes, love Mintzberg’s work, really ahead of his time. I most resonate with his distinction between strategic planning and strategic thinking. Look forward to connecting. t

    [Reply]

Leave a Reply

Note: You can use basic XHTML in your comments. Your email address will never be published.

Subscribe to this comment feed via RSS

CommentLuv badge