I spent today talking strategy with a guy who lives and breaths it – intent on using it to push through a lasting change to the way his company serves its community. And so a post by Roger Martin on the HBR blog today came at me at a useful time.
Roger says that strategy is making of an integrated set of choices – positioning the firm in its industry so as to create sustainable advantage relative to competition and deliver superior financial returns. He encourages people to answer 5 simple questions in a strategy – and he makes a separation between building budgets and delivery plans (which most people confuse as strategy) from the informed clarity of a strategy that sets direction for a period ahead.
Rogers questions are familiar – its the ‘Traditional Strategy’ view – about resources and winning – which Nilofer Merchant has declared as dead.
Nilofer questions whether this self-serving view of strategy is still valid in todays world and looks rationally at the role of collaboration and communities and their co-dependence. This coupling of organisations is know to drive innovation and offer all kinds of benefits as part of a business model – and a strategy is more about a company being ‘coupled’ than about the firm winning alone.
I like Nilofer’s contrarian views and in many cases agree with her – Ive seen the impact and opportunity in innovation partnerships in the UK – people working as complements to each other can be a real asset and open up opportunities well beyond the capabilities of a single firm competing solely upon its own resources.
Yet, if a firm is resource-rich its theory of business will be grounded in making the most of what its got and controlling all that you need internally – removing ambiguity, being planful and being in control. The guy I was meeting with today was within a multinational bank – you can be sure he has resources.
I recently found this video by Clay Shirky talking about the communites in the software industry – a great speaker – he talks about how value is created in loosely-coupled but strongly aligned open-source communities. If you like control and your own resources this doesn’t compute. He makes fun of guys at AT&T who didnt get the open philosophy – about how you can be ‘porous’ to external value.
“They didn’t care that they had seen it work in practice becasue they already knew it wouldn’t work in theory”
It depends how you see the world – and its a strategic choice as to how you leverage partners, customers, suppliers and your own staff. Getting intimate, listening and learning, and acting in close-step with external groups around your business is not for everyone – but the evidence is there that it pays off.
Roger’s article says Strategy is about answering 5 questions – and hurrah – you should be able to do that on less than 5 pages. Not because strategy is light weight – but because the choices it captures are built upon solid thinking, research and market insights.
When you have the facts to hand – the killer choices you should make become much clearer.
Rogers 5 questions are these:
What is our winning aspiration
Where will we play
How will we win
What capabilities need to be in place;
What management systems must be instituted
When I think of Rogers focus on winning I think of the anecdotes from Prussian military strategy that my MBA taught. Its pretty clear its about winning – with stories of fools that get it wrong.
Rogers questions are not the same questions that my Prof challenged us to ask – but then there is no one dominant way to do strategy. No one model that is correct – we accept all have strengths and weaknesses. All though, are good at framing an inquiry amongst teams and offer a common language make sense of our worlds and structure our choices.
And when I think of Nilofers perspective of how strategy needs to change, I think of new business models with the Key Partners and emerging social business channels that are shaping the world today. Both need engagement, shared beliefs and some degree of trust to make them work.
We still need to win but we will be doing it through others – sharing risk and co-building value. When I look at the ‘TS’ perspective – about the resource-based view of strategy – about finance, IP, assets that you have as the basis of a plan- these are all still valid – but relational capacity is about to become so much more important – culture, attitude and collaborative beliefs that underpin our reputation as good people to do business with.
For my part I believe that traditional strategy is still valid we just have to rethink how we define winning – keeping our eyes on creating and unlocking value and less focus on spilling our competitors blood on the streets.
For a bit of cheeky fun – check out Nilofer Merchants obituary to traditional strategy below.
And this is the link to Roger Martins Blog that started off my reflection.