... talking about strategy » Kim Warren

BCG’s Competing for Advantage

Kim Warren — Tue, 09 Mar 2010 07:31:56 +0000

The Global Advantage Diamond from BCG looks useful to diagnose competitive advantage in rapidly developing economies (RDEs). It maps four issues – market access, resource access, local adaptation and network coordination – to produce a diamond map relative strengths of you and competitors. From your starting position, you can identify where you need to get to on each dimension, and thus set strategic priorities. Local firms, it is claimed, are stronger on resource access and local coordination, while multinational challengers are stronger on market access and network coordination.

Nice concept, and BCG probably have intensive analytical tools to assess your rating on the 4 dimensions, but I fear that in practice it will join the list of qualitative and subjective ‘methods’ that seem to make sense, but don’t give much real value. It is hardly a great insight, for example, for a would-be multinational entrant to a RDE to discover it needs to focus on local adaptation of its products.

Business’s key role in climate change

Kim Warren — Sat, 06 Mar 2010 08:57:43 +0000

Shocking to hear from a former strategy advisor to the UK Prime Minister that neither current nor future Governments are likely to do anything serious about climate change because most MPs ‘don’t believe’ in it. I’m reminded of an observation by Dennis Meadows – that the public have a long-term interest, but no resources to drive change, and politicians have the resources to act, but only a short-term focus on the next election. Only the business community has both the long-term concern and the resources to do something, and many are already doing so, in spite of positively obstructive government policies.

[ Incidentally, do not be surprised to see me comment on climate change as if it is proven beyond reasonable doubt, extremely serious, and needs to be acted upon hard - which makes it a major issue for corporate strategy. (See other posts on sustainability, notably from MIT's SLoan management Review.) Whilst politicians are happy to express strong views on issues they don't understand, I only express views on issues I do understand sufficiently to comment. Most MPs lack even the basic scientific skill to have an informed opinion on climate change - and the same is likely true of most politicians in other countries. I accept entirely that some who have taken the trouble to investigate and understand the mechanisms at work may come to a different view, but the vast majority of people sufficiently competent to have an opinion are in clear agreement. ]

Spreadsheets no good for strategy

Kim Warren — Mon, 01 Mar 2010 08:56:07 +0000

This blog post from HBS starts well, but ends in the wrong place, saying we shouldn’t try to quantify intangible issues. We do know how to deal quantitatively with such factors. We can handle both tangible qualities that differ between people, such as differing customer sales rates, and also intangible states-of-mind. A bank tracks ‘miserable moments’ their customers experience and knows well how recent history of those problems affects the likelihood of customers leaving. Call center companies know how workload pressures affect staff morale, productivity and turnover, and so on. Applying ‘artistry’ to the issue, as argued in this article, is not the answer. It is right, though, that you can’t do this with spreadsheet analysis – it can’t handle the interdependencies. The basics are explained in summaries from my book on attributes and state-of-mind intangibles. I can also recommend How to Measure Anything by Douglas Hubbard.

More at www.strategydynamics.com and strategy dynamics on LinkedIn.

Strategy error by Kraft?

Kim Warren — Wed, 03 Feb 2010 09:52:53 +0000

Kraft foods finally won control of Cadbury with a big £11.9 billion ($19.4b) offer. Warren Buffet, owner of 9% of Kraft, says it’s a bad deal – and he’s rarely wrong. Will Kraft do the usual and try to extract ’synergies’ by slashing costs, or deliver real value by leveraging the combined resources to drive medium- to long-term growth in cash flows? … and will analysts allow them to do it right?

What MBAs want

Kim Warren — Sat, 30 Jan 2010 15:05:42 +0000

Encouraging interview with Blair Sheppard, dean of Duke Business School, about increasingly mature expectations of future execuitves [their MBAs!] Seems they are looking for broader perspectives, linking business issues to societal and environmental issues, and not thinking the answer is to junk existing institutions but to make them work better. Blair says this needs better integration between schools of Business, Environment and Policy. We are not starting in a good place - though he claims business schools are already ‘interdisciplinary’ [i.e. they have all the required subjects], that’s not actually the case because they lack the tools to integrate them, even if they have the desire to do so.

The Execution Premium

Kim Warren — Wed, 27 Jan 2010 14:44:09 +0000

More solid stuff from Kaplan and Norton, which moves on somewhat from their balanced scorecard + strategy maps ideas. The Execution Premium points out “Strategy that does not link to operations is not strategic. It’s just pointless planning.” and goes on to outline how to plan operations to deliver the strategy – a notable omission from most business school strategy classes.

Why Most CEOs Are Bad at Strategy

Kim Warren — Tue, 26 Jan 2010 14:16:06 +0000

A blog post by Roger Martin* makes a good case that CEOs find it hard to simultaneously make a good choice of where to play and how to win. He concludes they need to go beyond these basics and ‘creatively integrate’ these two views. True enough if performance were all about formulating strategy, but it forgets that order-of-magnitude differences in performance more often arise from relentless expert management of strategy, than from unique choices of where+how to play.

He also claims that we do not have the tools to integrate these perspectives – which is not true, of course, because that’s what strategy dynamics does.

* Dean of the Rotman School of Management

Speed up clean-tech adoption

Kim Warren — Tue, 26 Jan 2010 09:48:55 +0000

A Chatham House report calls for policy makers to cut radically the time for clean technologies to be implemented. Even when technically and financially attractive, adoption takes decades. This can be changed – a big strategic opportunity for firms in relevant sectors, as well as massively important to society - see my note.

Green strategy potential

Kim Warren — Sun, 24 Jan 2010 13:53:56 +0000

In Green Is a Strategy, strategy+business makes a strong case that sustainability is becoming, not a nuisance issue to which business will have to react, so much as an opportunity for advantage that needs to be proactively grasped. A bit thin on details, but offers some good big principles. Given the severe environmental problems to which we are already condemned, the faster firms get going with this, the better! Further to my post on green recovery, it’s interesting to discover from a McKinsey Global Institute slide-set that:

1 – on a global basis, over 25% of carbon emissions can be cut at a profit, and as much as 60% at zero net cost!

2 – virtually all of this can be achieved with no new technology whatever.

It’s bad enough that governments are squabbling over who’s going to ‘pay’ to try slowing climate change, it seems they can’t even bother to tell the public what’s easy and cheap to do.

Which CEOs to admire?

Kim Warren — Fri, 22 Jan 2010 11:32:40 +0000

It seems the real hero-CEOs are not the well-known names, and perhaps not with well-known companies either. In Do We Celebrate the Wrong CEOs? Morten Hansen and Herminia Ibarra identify CEOs who have delivered sustained, long-term growth in investor returns over long periods, and it’s likely you never heard of most. More worrying – maybe the companies they run are not well documented either, nor what has been so great about the strategic management that delivered these great results.