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The experience-curve has been well-understood for half a century, and is now so axiomatic that tech-product innovators now simply incorporate its impact every time they launch new products – see below. Numerous clean technologies are way back at the start of their experience curve and have a very long way to fall in cost, but their promoters and Govts are nowhere near exploiting the experience curve in most cases to drive that process.

Companies leverage the experience curve in various ways – e.g. under-pricing products early on, to stimulate the production output that will drive the very cost-reduction that will make the product profitable. Given that Govts are claiming they want to drive clean-tech, it’s curious then that they are not doing much that they could to accelerate this process.

It’s not just some qualitative idea that things get better and cheaper with ‘learning’. Put simply, unit-cost of new technology products fall in cost by a characteristic percentage – typically 15-20% – every time total cumulative production doubles. Photo-voltaic solar cells have been following this curve for 20 years and we can see them penetrating sector after sector as they become affordable for different applications. Govts don’t seem to be doing anything to help trigger and accelerate these experience curves, investing instead in early-stage R&D for numerous, dubious technologies, rather than driving forward others that are already proven. And many such innovations, being developed by VC-funded small enterprises, have little appreciation of this mechanism and nothing like the necessary resources to make it happen.

Three Keys to Effective Execution at least makes the point that great strategy is no use if it is not implemented well and fast. Unfortunately, the advice is a bit too self-evident and general to be helpful – you should [a] maintain your focus [b] develop tracking systems and [c] set up formal reviews.

Turning Great Strategy into Great Performance reports research on the large gap between hoped-for and realised results from strategic plans, and offers some rules to close the gap – good-enough pointers, if again rather self-evident and generic:

1. Keep it simple, make it concrete
2. Debate assumptions, not forecasts
3. Use a rigorous framework, speak a common language
4. Discuss resource deployments early
5. Clearly identify priorities
6. Continuously monitor performance
7. Develop and reward execution capabilities

I particular, it’s clearly a great idea to use rigorous frameworks and speak a common language – but the strategy field offers no such rigor, so not clear where the authors think this will come from.  

Transforming Corner-Office Strategy into Frontline Action urges creating a “memorable and actionable phrase that distills a company’s corporate strategy into its unique essence and communicates it across an organization”. This will, it is claimed focus everyone in an organization–executives and line managers alike–on the same strategic objectives. Unfortunately, the article offers no idea on how any of those folk are supposed to work out what to do, when and how much, and link with what everyone else is doing, to deliver performance outcomes.

Promise-based Management claims that the essence of execution lies in the commitments people make to colleagues and customers. Important, of course, but ‘the essence’ of strategy? There’s no clue how folk are supposed to work out what exactly to commit to.  

Here’s a puzzle, though – this and tons of other good advice has been around for ever, and read by just about every decent senior executive. So how come we continue to see weak and disastrous strategies like those that drove the current recession?

In any year, the vast majority of value is created by companies exploiting business models they have had for years or decades, rather than ones they just invented. On a longer view, though, all value ever created comes from business models that were new at some point in time. The article seems to be taking the first meaning – implying that most value is created by recently-new business models – and urges business schools to focus MBAs on innovation. This may be useful in some cases, but should not take precedence over strategy delivery. If this comment leads to MBAs learning less about how to deliver strategy as a result of focusing on innovation, it will be a great example of how an entirely false premise can lead to fundamentally wrong strategic choices [and this from a business school that is supposed to be teaching the rest of us how to do strategy well!]

So … when reading an article that seems persuasive, do put on your ‘skeptical’ hat and just check that it’s built on accurate foundations.

Good to see the Boston Consulting Group encourage us to focus on the core business (as we should have been doing in the first place), protect product development, look at competitors’ weaknesses etc. – and all with analysis too, rather than gut feel !

Unfortunate, though, that some of the proposals conflict, and some are positively dangerous. “.. begin with aggressive moves to cut costs and increase efficiency … some means of lowering break-even points are obvious: stripping out layers of the organization … consolidating central functions … “.

If you’re in danger of going under, maybe, but I keep coming across companies where everyone is ludicrously flat out and simply failing to get important things done. The strong impression is that many managements are grossly under-staffed, not top-heavy. And what goes out the door when you throw out those “time-wasters”? – the organization’s memory and knowledge of how to do simple, critical things. And those constant reorganizations do the same – in function after function, no-one knows how to do things because none of them have been there more than five minutes.

What you need in present conditions is settled people who really know what they are doing. [Reminds me of the three dimensions of organizational capability - the ability to do critical tasks well, fast, and cheap - see chapter 9 of Strategic Management Dynamics - analyst-driven obsession with doing things cheap does serious damage to doing things well, and fast.]

Then the article repeats that other current fad “Rethink your business model” – almost always wrong and in present conditions a bad distraction from making what you have work really effectively.

There’s some good stuff too though, so take a look – but with brain engaged!

Apple’s development of iTunes of course features strongly in demonstrations of the concept, as in Christensen et al in HBR. Music was going digital, so what a great idea to give consumers a neat device to play music that you had to buy through a central online store. Question is – what on earth were the music production companies doing – sleeping?!

I like Coldplay, who are signed up with EMI, so what do I actually want? – just the music by the band, produced by the company. So surely I just key ‘Coldplay’ into Google which takes me to an EMI web-page where I can sample a track and buy it? Being quite bright, I might even just key ‘www.emi.com/coldplay‘ into my browser and get the same. No chance! [try it for yourself, the URL is actually http://www.emi.com/page/emi/Discography_UK/0,,12641~931488,00.html].

So I find what I want – now can I buy it? no. Why not? Why does there have to be anyone else involved in this transaction? I quite understand that 10 years ago the record companies wanted to protect their CD sales, but surely the writing was on the wall for that business model years ago. It looks like the smart players in this situation were the bands themselves, who realised they could offer something that neither Apple nor the record companies could take from them – live shows, worth millions and just great for the fans. Recorded music for the bands now looks like a promo give-away to drive demand for tickets that will make them very, very rich.

Can the record companies still take back control of their own product? Maybe – and maybe they can exploit Apple to do so. There’s plenty of potential added-value content – extended length tracks, video and so on – so Apple could keep selling the basic content and the record companies develop the facility to sell direct to us all the really good stuff. My friend in the industry tells me that they have been able to do much of this for over 5 years, but instead of taking charge many have instead stumbled from crisis to crisis as Apple at one end and the bands at the other have stolen all the value.

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This is a big step forward from the much-abused, misused and dangerous focus on ‘core competences‘ – the idea that some unique and super-powerful capability will deliver sustainable competitive advantage. [I even came across one quoted company who re-titled the entire strategic planning system in the firm as their 'core competence process']. Here’s an extract from my chapter 10 showing one example of why it doesn’t work …

 “Practising managers commonly look for core competences, but it should by now be clear that firm performance depends on accumulating and maintaining a complete system of mutually-supportive resources. If any of these is inadequate in scale or quality, the performance of the entire system will suffer – the firm must be capable in all resource-building and maintenance activities. Attempts to identify a single capability that will provide sustained advantage are doomed to failure, as the following quote from the Economist (July 4th, 1998) illustrates for Honda.
‘… by 1990, Honda was in thrall to its engineers – a priesthood … untroubled by the dismal business of marketing and accounting … It hardly seemed to matter that customers were not buying Honda’s flights of engineering fancy … Things were already going wrong [due to lack of] attention to what the customer wanted and producing it at reasonable cost. … it was taking twice as long to get a new Honda into production as Toyota.’Â
This brief comment is remarkable for indicating the supposedly non-core capabilities that were in poor shape – design capability to create cars that people wanted, product-development capability to get them into production quickly, production engineering capability to achieve low unit-cost, marketing capability to build the customer-base, and accounting and control capability to translate revenues into cash. The solution to Honda’s troubles involved reducing the focus on technology for its own sake, turning attention instead to market research and product-design, and moving policy control from the engineering function to the marketing and production departments. ” – interesting to note that Honda was in this mess in 1990, exactly the year that their core competence in engine technology featured in an HBR article! Of course Honda has come a long way since then, and the HBR article never actually said that you didn’t need to be basically capable in all other functions.

So … the capability-coherence notion from Cesare Mainardi and colleagues is a welcome call to make sure all necessary capabilities are strong.