Do take care, though – few are universally applicable, so you will need to assess how appropriate each is to your specific situation.

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As usually implemented  …
- there is no coverage of competitive conditions or competitor behaviour – nor can I find any suggestion in the BSC or Strategy Maps books that they should do so.
- there is no coverage of overall supply/demand conditions – and again, no suggestion they should do so.
- there is no attention to prospective performance – i.e. how we are likely to perform on key indicators in coming periods [as distinct from our performance targets].
More seriously, although the causal logic generally seems to make sense to executives [Learning/Growth >> Internal Processes >> Customer Consequences >> Financial Outcomes] there is no rigorous, formal, verifiable structure to that logic – i.e. no solid ‘theory’ – that might ensure the strategy map is robust. Consequently, BSCs seem to reflect what teams think, or would like, some of the causal relationships to be – which may be entirely different from what another team might come up with. [I address this issue and suggest the basics of a more rigorous approach in chapter 4 of my book .. see www.strategydynamics.com/c4 ]
As a result, I can’t as yet see how a company’s BSC could have led them to anticipate the current crisis, to plan for it, or to work out what to do to survive and escape from it. It would be extremely valuable for many of us to hear of cases where BSC has been helpful in coping with current difficulties, and how that has happened.
Kim

Some of these actions just might be unavoidable if the business is in real danger of collapse, but very few are in such a bad state. It seems most are doing these things for purely symbolic reasons – ‘We must be seen to be taking the problem seriously’ – or else to hold up short-term profitability because of perceived pressure from investors or analysts.

 I already asked why a company would chuck out consultants if they were doing useful work. Others I have recently come across:

• ban executive travel … so if someone is going to win a million dollar deal, you are going to stop them getting on the plane?
• stop all hiring … it’s only a year ago most companies couldn’t get the staff they needed, many still lack key skills, and now the peope they need are available and cheap!
• downsize staff numbers – even if staff are overloaded?
• aggressively renegotiate supply terms … just hope those suppliers will still be around when you need them in the recovery.
• cut all expenditure budgets by X% – no single number across all functions can possibly be the right choice

… and then there are some really daft ones that I had better not mention, to avoid embarassing valued clients.

• ban staff from

An alternative view is that executives were mostly doing things they thought – but incorrectly – to be in the best interests of their organizations and their customers [as well as themselves of course].  This hypothesis is supported by the endless positive assessments of corporate prospects by analysts and other well-informed commentators, right up to the moment things went wrong. Surely all those hundreds and thousands of executives could not have hidden dishonest or deceitful behaviour from the outside world for so long?

If they were not being dishonest or unethical, then, were they in fact being insufficiently competent in the strategic management of their organizations. Government grilling of banking executives, for example, has shown that CEOs were doing things that were widely regarded as skilful, even super-clever, that neither they nor most others realised were dumb until after the event. And the banks were not alone in managing themselves into crisis, or at least into serious trouble – we now have car makers, airlines, ship-building, commercial real-estate, retailers and hundreds of other sectors in difficulties they could and should have foreseen and guarded against.

The screen-cast you will find at http://www.strategydynamics.com/strategy-lessons came about because I had reason to reflect on this question for presentations at business schools in Argentina and Brazil over the last 2 weeks.

The first is easily dealt with – stronger cash flow ‘growth’ than rivals can of course imply less decline when everyone is going backwards .. would you rather cash-flows fell by 50% or only 20%? We just need to add the check that this is sustainable – as I have argued with the Starbucks case, slashing costs to sustain immediate cash-flows [and support ROIC] is hardly welcome if it damages future cash flow.

I find the second response intriguing – that strategic management is all about survival, and anything extra management may achieve is just a welcome bonus. First, this does not seem to have been the primary concern of CEOs for most firms during reasonable economic conditions [at least after the high infant mortality of start-up!]. Maybe it should have been.

But there’s a bigger question as to whether survival should be the aim in any case. It is easy to see situations in which it would be in everyone’s interests for a firm not to survive, but to be acquired – both in positive and negative circumstances.

• In my time practising strategy, we constantly sought out promising smaller businesses to acquire and develop. This was good for their owners, who got good cash returns for their investment – good for customers, who got faster and wider access to the good products and services of those businesses – good for employees, who got more job and career opportunities – good for suppliers, who got a stronger, faster-growing  customer to supply – good for their management, who often had access to bigger jobs or else also left with a nice cash handout. Apart from competitors, I can’t think of any group who suffered. Indeed, many smaller businesses start up with the deliberate intent of being acquired in this way. For a big-scale example of a serial-acquiror who has exploited this phenomenon, it’s worth checking out Cisco – here’s an interview with their head of business development and just one case study on the story .. you will find a ton more case studies at European Case Clearing House.
• It’s not even clear that death necessarily does harm when it’s the final outcome of business failure. If death = acquisition by another company, investors can get value that would otherwise have disappeared, customers can get continued provision of products and services that may otherwise have discontinued, suppliers get a continuing sales opportunity, and employees get the chance of a continued job rather than redundancy.

Unfortunately, even when others would benefit hugely from a business being absorbed by another, one small group likely to suffer unfortunately dominates whether it happens or not – management themselves. So I find myself wondering how many firms are currently strugging to survive when it would be best if management spent their time seeking a buyer instead.

The only form of survival I can see that might be a reasonable aim for strategic management is the avoidance of bankruptcy – but that’s the extreme case, and responsible management should be able to find better solutions in almost all cases, well before that becomes unavoidable.

The article by Shumeet Banerji CEO of Booz & Co and Neil McArthur MD of Booz Europe helpfully groups firms into 4 categories – strong, stable, struggling and failing. You would expect stable companies to be strengthening their position by seeking complementary acquisitions, and the weaker groups to be conserving cash, for example, but neither group is by and large pursuing these or other appropriate actions.

The survey also confirms another finding I expected – that most firms expect to emerge stronger from the downturn [especially in developing economies]. ‘Most’ may be disappointed, but many firms should do so and be working towards making it happen.

Boom times create all kinds of difficult industry conditions – competitors charging into ‘strategic’ initiatives that make no sense, new entrants taking on markets they have no hope of succeeding in, everyone expanding too fast and creating over-capacity. It’s when things get tough that all these challenges pile up and get too much for weaker firms – and that’s when strong firms can sort out the mess. So, for example, we should be seeing more acquisitions and faster rationalisation than seems to be the case. No surprise either that developing economy firms are more optimistic – in addition to their lower basic cost base, their recent arrival means many have been able to grow a ‘clean’ business model, while established firms in old economies were adding on bits and pieces and complicating their businesses. I know which position I would rather be starting from today!

I asked for two ratings – Useful [no, a little, very] – and Dangerous [no, a little, very] – and allowed people to respond with both if they felt a suggestion was both potentially useful, but also came with dangers. Following are the most common views – with no initial prompting from me! Note that other views were justified in specific cases.

De-layer management

Useless and dangerous in most cases. Most felt it should only to be done in extreme crisis – like danger of bankruptcy.

Consolidate support functions

Possibly useful and not too dangerous, provided it did not distract management from other important tasks.

Redefine your business model

Useless in most cases and dangerous diversion from managing the business.

Save the core at the expense of the periphery

Very useful, and not too dangerous. With prompting, most felt their firms had over-expanded away from their core in the first place.

Buy up cheap assets – or whole businesses

Very useful and not dangerous if current business was not struggling too much.

Pick up good people who become available

Very useful and not dangerous. Most have found it tough to get the people they needed before the crisis, so see this as a great opportunity.

Keep going with all strategic initiatives

Could be useful but also dangerous … most thought they had way too many ‘strategic’ initiatives that should never have been started. Conflicted with the better advice above to focus on the core.

So … if there was a good purpose in having them help last year, chances are it’s still a good purpose now. Chucking them out looks like another example of ‘gesture management’ that some companies seem to think they need to do, but don’t.