Chief Strategy Officers ?!
Now here’s a thing – Bet you didn’t know that there are ‘Chief Strategy Officers’ out there [we used to call them Strategy Directors in UK corporations]! McK Q says they are turning up in organizations of all kinds as companies struggle to balance their short- and long-term goals in an increasingly complex and volatile business environment. It seems there are many unanswered questions about what exactly they do, and how. One question to consider is what skills, qualifications or professional standing these folks might have. We’d usually expect our CFO to have some finance training and a recognised professional endorsement – we’d even hope our heads of Marketing and HR to have pursued some functional training and be part of their professional bodies – so what training or professional development exactly does a Chief Strategy Officer have? A 10-class course in strategy from their MBA? Of course these guys and gals are likely to be very smart and maybe have picked up some good strategy skills along the way, but it’s a bit alarming that there is no recognised skill-set or professional body for what is a critical functional role in a corporation. [The less said the better about firms who don’t even see any point having someone focused on this role, just assuming that the CEO’s smart enough to make up strategy as s/he goes along!]
Of course, there is a professional body – the ‘Strategic Management Society’ .. but no strategy professionals ever turn up at its conferences, leaving the academics to chat amongst themselves – I wonder why that might be?
Candidate for the most dangerous strategy article ever?
I am reminded of what may be one of the most dangerous articles on competitive strategy I ever read. ‘Hardball: Five Killer Strategies for Trouncing the Competition.’, Stalk and Lachenauer, Harvard Business Review, April 2004, pp. 62-71. This urges management to deploy five strategies ‘in bursts of ruthless intensity’:
- devastate rivals’ profit sanctuaries
- plagiarise with pride
- deceive the competition
- unleash massive and overwhelming force
- raise competitors’ costs.
Now the article is correct to highlight the competitive strength and commitment of powerful firms like Toyota, Wal-Mart, and Dell. But to reduce their highly sophisticated strategic management to a fatuous list of bullet points is an insult to these mighty industry leaders. Worse still is the danger that lesser organisations will take these headlines and try to implement them with the minimal information and resources more usually available. We can just imagine the annual Strategy conference:
The CEO rouses top executives with a stirring rendition of their determination to carry out this ‘hardball strategy’. With luck, they might even get the authors to come and wind up the level of inspiration. The troops leave the event fully energised and equally determined to start – and win – a huge competitive battle. Unfortunately, virtually no organisation actually has the information necessary, nor the analytical skill, to work out how to turn these trivial phrases into reality. Nor do they have anything like the resources required or the management capacity to make it happen.
The audience will walk off with only the vaguest idea of what to do. They will initiate a lot of pointless activity amongst their people that would be better spent making sure they run their own business properly. If they actually get so far as to initiate this competitive warfare, they will burn huge amounts of cash, destroying profitability in their markets, and doing irreparable harm to their reputation with customers.
Know your enemy !
I am amazed how little companies seem to know about competitors, and how they lack any specific plans for dealing with specific rivals – most just drag on, trying to capture small points of market share here and there from wherever and whoever they can pick it up. Such broad-spectrum ‘competing’ is expensive, takes for ever, and just doesn’t work. When it comes to responding to competitive threats McK Q finds that instead of undertaking extensive, sophisticated analyses, most companies assess just a few responses, and they often choose the most obvious one. Better practices could give them an opportunity to seize competitive advantage.
The age-old acquisition question.
I see Wrigley, of chewing-gum and mints fame, accepted a $23 billion takeover from Mars, which includes Snickers, M&M’s and Uncle Ben’s rice among its brands, making it the world’s biggest confectioner. Strange then how we keep being told that take-overs are mostly a bad idea for the acquiring company, with all the benefits [or more than all!] going to the shareholders of the company that is bought out. Don’t see how that could be true, or we would today have hundreds of small companies in pharma, media, consumer goods, electronics etc. that in total delivered more value than the large and powerful corporations we actually see today. This deal was backed by Warren Buffett – not noted for dumb investment decisions.
Investors in Hewlett-Packard clearly believe the advice, though .. when it agreed to buy Electronic Data Systems for $13.9bn, its stock price fell 10%, knocking $12bn off its value! Perhaps HP were unduly impressed by IBM’s success from developing a broad range of computer services, rather than flogging boxes. That’s not to say HP+EDS is bound to succeed – a lot rides on not only a successful marriage, but growing a healthy family afterwards.
ROI on marketing spend
Good to see Strategy+Business looking at ROI on marketing in a grown-up way. The proliferation of digital media and the fragmentation of audiences have rendered audience exposure, the traditional currency of advertising, much less compelling. [Was that ever a useful indicator? – It got measured because that’s what the agencies could deliver – whether their clients ever turned that exposure into sales was too dependent on things outside the agencies control.] A new focus [‘new’ ? about time, more like !!] on outcome-based metrics has the potential to yield enormous returns for leaders in marketing, advertising, and media.