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May 052012
A thoughtful review of Netflix move to split DVD from streamed movie delivery and then reverse the change. It’s good to see an event examined for plusses and minusses, rather than just praised or derided – and the story has useful lessons for others making strategic moves.
One particular issue it brings up is the tension between what works for customer-facing issues vs. what works back in operations. Here, consumers want a single relationship, whether they rent physical DVDs or stream video-movies, but the business operations to provide those two services are fundamentally different.
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Apr 022012
Every statement ‘Strategy is an art, not a science‘ knocks back any chance of being taken seriously by management colleagues.
Some such statement comes up on just about every strategy discussion group I follow, but it’s a false dichotomy, and untrue in any case. The ‘Picasso’ analogy is a nonsense – not only is every work by true artists highly creative, but every brush-stroke is too.
Creativity is a minuscule element strategy – spotting some business idea that no-one else has done – but 99% of it is serious, logical thinking and working-out. Even issues where creativity might be helpful are much more often tackled, successfully, by reasoning than by creative genius – you can think your way to spotting new market opportunity, and work out analytically how to tackle a competitor.
There are armies of strategy professionals out there (even if not named as such) doing rigorous investigation, analysis, and decision-making, and helping their organisations do well as a result. Even where a genius insight happens, it will then be built on by hundreds of times more effort in its implementation than the split-second Eureka moment.
Can we please stop devaluing the vast amounts of hugely important, professional work that strategy professionals do?
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So the FT reckons companies just need CEOs with “experience”, not strategic competence. Business leaders, politicians, strategy consultants and business schools have been wringing their hands since the 2008 crash (which was not just about banks), asking how on earth we got into such a mess. The article says no-one saw the recession coming, but fails to note that the corporate sector itself actually created the problem – as it has most other recessions.
The Strategic Planning Society got a meeting together yesterday at Said Business School to see if there is some way to make the practice of strategy more professional, but the FT already decided this is a bad idea, citing examples of top execs appointed because of their experience alone. This hardly accounts for the endless procession of CEOs, appointed for exactly that experience, who end up getting fired for messing up the strategy of their companies. And these are just the tip of a huge iceberg of lesser failures that are never reported.
We also know from endless studies that most senior executives have little confidence in their own strategy, many cannot articulate what it is, and most of those below them share their scepticism. Any effort to inject some basic skills into corporate management would seem to be welcome – and we might just end up with fewer Goodwins leading corporations to disaster.
Mar 072012
A shockingly simplistic ‘Executive Definition of Strategy’ in the Booz journal Strategy+Business. The summary is partly OK “… the result of choices executives make on where to play and how to win, to maximise long-term value“, but it follows up with trivial, age-old points about choosing “position” and required capabilities – illustrated with that ancient case Southwest Airlines.
This cannot be an adequate definition of strategy. First, the answer today is no different than it would have been 30 years ago when S-W started – so what has S-W “strategic management” been doing over all that time? Secondly, 60-odd airlines have tried that strategy in Europe, over 40 have failed, and only a handful are successful, so these choices cannot possibly explain what constitutes a successful strategy. The same is true of just about every other well-known success-story- a one-time clever choice, never significantly changed, copied by many, but most failing.
The discipline is called “strategic management”, so surely any answer must encompass what management does on a continuing basis – not just one-off choices. So Strategy (whether successful or not) is something like “The stream of quantitative decisions made across all functions of the organisation, continually over time, against changing external conditions, that causes performance to change over time“. Whether the strategy is successful for business cases shows up (as Booz explain) in creation of business value, as given by the net present value of free cash flows. The alternative basic definition, though, has the merit of being equally applicable to non-commercial cases (and many business cases too), where performance aims are not primarily financial.
Mar 062012
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