Praise for The Strategy Book ‘Brilliant advocate of strategy and innovation.’ Laura Madison ‘It’s unusual for a management book to encourage readers to ask uncomfortable questions about their own products, leading to uncomfortable answers, and then to stimulate the inspiration and imagination to address those issues effectively. Max explains a range of perspectives and tools with admirable clarity. However, we don’t lose sight of the underlying challenges and risks in strategy development and implementation. This is a book that disturbs and demystiies in a creatively helpful way.’ Professor David A. Buchanan, Author of Organizational Behaviour, Cranield University ‘I love this book. Max Mckeown has the gift of making complex ideas accessible as well as enjoyable. One of the biggest challenges facing organisations today is making strategy come alive – especially with respect to innovation. Max demystiies the strategy process, bringing it to life with great examples. He challenges the reader to really think – as well as have the guts to take action. With its rich array of strategy tools, this book will help any reader bridge the “theory-practice gap” to produce results which really matter.’ Professor Linda Holbeche, Author of The High Performance Organisation, Centre for Leadership Innovation, University of Bedfordshire ‘This book ills a gap in the strategy literature between toolkits, frameworks, implementation and the individual. Max Mckeown provides not only an array of ine examples from a wide range of organisations, but also challenges the reader by presenting strategy as both an everyday performance and as a down to earth art. It is a book which will appeal to practitioners and students alike and it provides a richness and a challenge to the often stultiied frameworks which have come to characterise strategy.’ Professor David Wilson, author of Strategy: Analysis & Practice, Department of Sociology, University of Warwick ‘After thoroughly enjoying (and beneitting greatly from) The Truth About Innovation, I was anxiously awaiting Max’s next winner...and I think it’s here! The Strategy Book totally demystiies “strategy” for us non-MBA-types struggling to keep pace with the growing demands on our creativity and ability to lead from the front everyday. I will be investing in a few copies for my team – material that we will refer to as a working guide to the strategic and planning process...and beyond! Another brilliant one from Max!’ Rahim Dawood, Manager, Systems and Technology ‘Max de-clutters corporate speak and opens up strategy to everyone. His no-nonsense approach to corporate strategy will teach you to look at your business like never before. In person, his insight is scalpel sharp and this book is a masterclass in improving your strategic thinking. You will learn to ask the big questions that need to be asked to get to the core of strategic success.’ Steve Fortune, Global Leadership Development at Pizer Pharmaceuticals ‘For ages, the corporate strategy process has been kept obscure and unreachable for those without a seat in the board room. Max Mckeown depicts all about strategy planning and implementation in a book that clearly deserves the title it holds. Succinct and revealing. By following this book you will be doing strategy from your day-to-day activities considering all other aspects of the competitive era we all live in. You will come back to it several times to take advantage of such revealing information.’ Cesar Malacon, Marketing Manager and MBA Graduate ‘Having worked with Max on innovation I had high expectations for The Strategy Book. In short – worth the wait, this is a great and truly helpful book which I fully expect to reference back to for years to come. Max has the ability to articulate clearly the challenges most organisations face in shaping their futures – and with consummate swagger, mixed with real life, powerful examples – guides you through strategic thinking relevant to not only today, but you and the job you do.’ Geir Holmer, ex-Virgin Media, now Independent Consultant ‘My God, a strategy book that actually makes sense? Imagine that... Most strategy books are either exercises in wafling and vague generalities, or mind-numbingly boring laundry lists of could-a, would-a, should-a. Max Mckeown’s take on strategy is neither, and as an antidote he has given us The Strategy Book, where no-nonsense pragmatism meets imagination and adaptive lexibility. This books reads the way a good strategic plan should – guidance but not dogma, to the point but with an eye open to alternative possibilities. It just might be the cheapest form of strategic insurance ever created.’ Professor Alf Rehn, author of Dangerous Ideas, internationally active speaker and consultant ‘Leaders today do not need vision as much as they need a map. The rub is and has always been execution. Max has a gift to reverse engineer complexity in a way that leaders can truly navigate how to lead their business, their people and their lives with both clarity and conidence. I would say Max is a pre-eminent map maker of our times.’ Jennifer Sertl, President Agility3R and co-author Strategy Leadership & the Soul ‘This book is highly recommended reading and also a useful tool for military thinkers. It has a very good structure making it easy to embrace the powerful ideas inside.’ Harri Ohra-aho, Brigadier General of the Finnish Defence Forces ‘If you want to become a better strategic thinker, read Max’s new book. Succinct and to-the-point, he captures the essence of strategy. With a passion and style all of his own, he connects insights from leading strategy gurus to successful practices in leading companies.’ Simon Collinson, Professor of Strategy, Henley Business School ‘Max has his very own style of talking strategy – crossing all corporate and conventional boundaries. Mckeown continues to walk the talk as a restless contributor for unconventional ideas. Follow the grandmaster of Innovation into new dimensions of strategy for the twenty-irst century. A great book that’s also fun to read.’ Jan-Henrik Andersson, Operations Director Metro AG ‘The Strategy Book has very clear, honest tools that sharpen the clarity and focus of your thinking. It starts with you and ends with a plan that shapes your future. Filled with useful checklists to help you avoid the usual pitfalls and get you on your way. A great read to help win over and over again.’ Scott Smith, Nokia (Head of Operator Channels MEA) ‘Who knew a sometimes abstract, confusing concept could be made so clearly practical? More than any other, Max Mckeown’s book challenges with sophisticated simplicity – everything you thought you knew about innovatively achieving strategic business success; providing valuable tools and an impressive plethora of examples to hit the ground running. It’s so engaging, it opened my eyes!’ Kathleen Ndongmo, Chief Operating Oficer, Virtual Terminal Network, Nigeria ‘This is a compelling and fascinating read, with clear and structured discussion of many strategy tools and frameworks. Max has written a valuable book for anyone who needs to take a strategic decision.’ Catalina Stefanescu-Cuntze, Professor at European School of Management and Technology ‘Max stresses strategy is about shaping the future of organisations. As his book stresses, this is not the whole story. A sense of history (valuable turning points) does not always foretell the future. Shaping the future means setting in motion a low of events that as Max says, “depends on context” and “responding to external waves” and “examining turning points in the future.” And that of course means storytelling the future.’ David Boje – author/editor of Storytelling and the Future of Organizations: An Antenarrative Handbook (Routledge) ‘This book is both challenging and fun. Max cuts conidently through the hype and provides a critical and well-rounded view of the challenge of strategic thinking in contemporary business. This book entertains its readers while showing respect to their intelligence.’ Saku Mantere, Professor of Management and Organization, Hanken School of Economics, Helsinki ‘Strategy is a word bandied about by many but understood by few. Reading this book will help you become one of the few.’ Stephen Cummings, author of Creative Strategy: Reconnecting Business and Innovation and The Strategy Pathinder ‘Max encourages you to engage with strategy and helps you to see the world with different eyes – if you want to! He takes the mystery out of corporate strategic planning processes and invites you to adopt an effective, inclusive and collaborative approach, relecting on what really matters for you in your business and appreciating that good strategy needs to be lexible and be prepared for unplanned opportunities – it’s all about shaping the future which will remain by its very nature uncertain. The book also includes a clear overview of strategic models and tools. If you want to shape your professional future and are prepared to ask yourself some challenging questions, I can only recommend this book!’ Jost Wahlen, Head of Learning and Development, Allianz Insurance plc ‘Love at irst sight! The Strategy Book by Max Mckeown is not only brilliantly structured; its attitude and approach are most refreshing. This book is like an ocean full of ideas, very easy to apply to my daily strategic work. As an entrepreneur, I am faced many of the questions Max asks the reader. They are challenging but absolutely necessary. An excellent, practical tool set for anyone who wants to be known as strategic thinker.’ Riitta Raesmaa, Entrepreneur and Partner at Sopima Oy in Finland ‘Max has crafted a highly practical resource to guide strategy creation and execution in uncertain times. It is easy to read with clear examples from a wide range of industries.’ Conor Neill, Professor at IESE Business School The Strategy Book The Strategy Book Max Mckeown PEARSON EDUCATION LIMITED Edinburgh Gate Harlow CM20 2JE Tel: 144 (0)1279 623623 Fax: 144 (0)1279 431059 Website: www.pearson.com/uk First published in Great Britain in 2012 © Maverick & Strong Limited, 2012 Pearson Education is not responsible for the content of third-party internet sites. ISBN: 978–0–273–75709–2 British Library Cataloguing-in-Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging-in-Publication Data Mckeown, Max. The strategy book / Max Mckeown. p. cm. Includes index. ISBN 978-0-273-75709-2 (pbk.) 1. Strategic planning. I. Title. HD30.28.M3842 2012 658.4’012--dc23 2011040037 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without either the prior written permission of the publisher or a licence permitting restricted copying in the United Kingdom issued by the Copyright Licensing Agency Ltd, Saffron House, 6–10 Kirby Street, London EC1N 8TS. This book may not be lent, resold, hired out or otherwise disposed of by way of trade in any form of binding or cover other than that in which it is published, without the prior consent of the Publishers. 10 9 8 7 6 5 4 3 2 1 15 14 13 12 11 Typeset in 9pt Stone Serif by 3 Printed and bound in Great Britain by Ashford Colour Press Ltd., Gosport Contents About the author / xiv Author’s acknowledgements / xv Publisher’s acknowledgements / xvi Introduction / xviii What is strategy? / xxi part 1 Your strategic self / 1 Shaping the future / 4 Thinking before you plan / 10 Becoming a strategic thinker / 15 Selling your strategy / 20 part 2 Thinking like a strategist / 25 Reacting is as important as planning / 27 Taking risks (jumping your uncertainty gaps) / 32 Looking over your shoulder / 38 Knowing where grass (really) is greener / 43 part 3 Creating your strategy / 49 Seeing the big picture? / 51 Finding position, intention and direction / 56 Looking for advantages / 62 Making strategic decisions and choices / 70 Adapting to your competitive environment / 76 xii Contents part 4 Winning with strategy / 85 Winning strategy games / 87 Creating new markets / 93 Getting ahead of your strategic group / 100 Growing your business (again and again) / 108 Going global without going broke / 115 Knowing what you can do best / 121 part 5 Making your strategy work / 127 Managing your strategy process / 129 Meetings for strategic minds / 136 Managing change, making strategy work / 144 Understanding what can go wrong / 149 Saving your company from failure / 156 part 6 The Strategy Book tool kit / 165 The basic (powerful) strategy questions / 167 SWOT analysis / 170 Porter’s 5 forces of competition / 172 Porter’s generic strategies / 174 Burgelman’s strategy dynamics model / 176 Porter’s value chain / 178 Core competencies and resource-based view / 180 Nonaka and Takeuchi’s knowledge spiral / 182 McKinsey’s 7-S framework / 184 Scenario planning / 186 Ansoff’s growth grid / 188 BCG’s product portfolio matrix / 190 Kim and Mauborgne’s blue ocean / 192 Greiner’s growth (and crisis) model / 194 Treacy and Wiersema’s value disciplines / 196 Cummings and Wilson: orientation and animation / 198 Contents Lewin’s force ield analysis / 200 Kotter’s eight phases of change / 202 Kaplan and Norton’s balanced scorecard / 204 Hrebiniak’s model of strategy execution / 206 Hammer and Champy’s business process redesign / 208 Michaud and Thoenig’s strategic orientation / 210 Burgelman and Grove’s strategy bet model / 212 Argyris’s double and single loop learning / 214 Mintzberg’s deliberate and emergent / 216 Johnson’s white space model / 218 Prahalad’s bottom of the pyramid / 220 Stacey’s strategy from complexity / 222 Final words / 224 Further reading / 225 Index / 227 xiii About the author Max Mckeown is a new breed of management thinker. Brilliant, original and entertaining, he may become one of the most important business minds of the new era. He works as a strategy and innovation coach for many of the most admired and ambitious companies in the world. He is a sought-after speaker on subjects including strategy, innovation, growth, leadership, team building and competitive advantage. He has been elected to the Customer Service Hall of Fame, been nominated as a star of Human Resources by Personnel Today, is a fellow of the RSA (the Royal Society for the encouragement of Arts, Manufactures and Commerce), and has been featured on national and international radio, television and newspapers. Max has written several books, including: The Truth About Innovation, a deinitive set of home truths about how to increase creativity, create competitive advantage and use innovation practically to inspire and help your organisation; Unshrink, featuring myths that stop people doing their best work and a set of leadership principles to engage hearts and minds; E-Customer, an insight into evolving customer behaviour; and Adaptability: The Art of Winning, the rules needed to adapt successfully in an age of uncertainty. Max has an MBA and a PhD from Warwick Business School. He can be reached at max@maxMckeown.com. He writes on www. maxMckeown.com and www.twitter.com/maxMckeown. Author’s acknowledgements Thanks to the many thousands of people who have worked with me in strategy sessions around the world. Comparing strategy theory with strategy in the real world is the heart of The Strategy Book. Particular thanks go to those who have offered comments and feedback throughout the writing process, and to those who have discussed strategy ideas with me over the years. They include Sotirios Paroutis, David Wilson, Simon Collinson, Jan-Henrik Andersson, Steve Cummings, Mikal Lewis, Jon Pincus, Cesar Malacon and Mike Chitty and Olivier Van Duüren. They also include the thinkers, alive and dead, whose work inspired this book. Thanks also go to my publishing team – to Liz Gooster and Elie Williams who both improved the book through their work as editors. And to Laura Blake who showed dedication and remarkable patience to ensure the high quality of the book you’re about to read. Publisher’s acknowledgements The publishers are grateful to the following for permission to reproduce copyright material: Figure on p.172 from HOW COMPETITIVE FORCES SHAPE STRATEGY, Harvard Business Review, March/April (Porter, M., 1979); Figure on p.174 reprinted with the permission of Free Press, a Division of Simon & Schuster, Inc., from COMPETITIVE ADVANTAGE: Creating and Sustaining Superior Performance, by Michael E. Porter. Copyright © 1985, 1998 by Michael E. Porter. All rights reserved; Figure on p.178 from reprinted with the permission of Free Press, a Division of Simon & Schuster, Inc., from COMPETITIVE ADVANTAGE: Creating and Sustaining Superior Performance, by Michael E. Porter. Copyright © 1985, 1998 by Michael E. Porter. All rights reserved; Figure on p.182 from The Knowledge-Creating Company: How Japanese Companies Create the Dynamics of Innovation by Ikujiro Nonaka and Hirotaka Takeuchi (1995) by permission of Oxford University Press, Inc; Figure on p.188 from ‘Strategies of Diversiication’, Harvard Business Review 25(5), Sept–Oct, pp.113–25, (Ansoff, I.); Figure on p.192 from Blue Ocean Strategy: How to create uncontested market space and make the competition irrelevant, Harvard Business School Press, (Kim, W. C. and Mauborgne, R., 2005); Figure on p.194 from Evolution and Revolution as Organizations Grow, Harvard Business School Press, (Greiner, L. E., 1988); Figure on p.196 from The Discipline of Value Leaders: Choose your customers, narrow your focus, dominate your market, Perseus Books (Treacy, M. and Wiersema, F. 1995); Figure on p.198 from Images of Strategy, Cummings, S., and Wilson, David C., © 2003, Blackwell Publishing Ltd, Reproduced with permission of John Wiley Publisher’s acknowledgements & Sons Ltd; Figure on p.202 reprinted with the permission of Free Press, a Division of Simon & Schuster, Inc., from A FORCE FOR CHANGE: How Leadership Differs From Management by John P. Kotter. Copyright © 1990 by John P. Kotter, Inc. All rights reserved; Figure on p.204 from The Balanced Scorecard: Measures that divide performance, Harvard Business Review (Kaplan, R. S. and Norton, D. P., 2005); Figure on p.206 from Making Strategy Work, Wharton School Publishing (Hrebiniak, L.G. 2005); Figure on p.208 from The Condor business process re-engineering model, Managerial Auditing Journal, 15, 1/2, pp.42–46 (Vakola, M., Rezgui, Y. and Wood-Harper, T. 2000), Emerald Group Publishing Limited; Figure on p.214 from The executive mind and doubleloop learning, Organizational Dynamics, 11 (2), pp.5–22 (Argyris, C. 1982), ©1969, Elsevier; Figure on p.216 adapted from Strategy Safari, 2nd ed., Pearson (Mintzberg, H. 2009) p.12, with thanks to Henry Mintzberg; Figure on p.218 from Seizing the White Space, Harvard Business School Press, (Johnson, M., 2010); Figure on p.220 adapted and reprinted with permission from ‘The Fortune at the Bottom of the Pyramid’ by C. K. Prahalad and Stuart L. Hart from the First Quarter 2002 issue of strategy+business magazine, published by Booz & Company. Copyright 2002. All rights reserved. www.strategy-business.com. In some instances we have been unable to trace the owners of copyright material, and we would appreciate any information that would enable us to do so. xvii Introduction What can The Strategy Book do for you? You can use the secrets in this book to become an effective strategic thinker and leader. The Strategy Book can help you understand strategy. If you are ambitious, you can use the powerful strategy tools in this book to shape your future. The Strategy Book has its own strategic advantage. It is easy to read without dumbing down its strategic ideas. It is simple to use but is still based on a core set of intelligent strategic foundations. It offers clear explanations of tools that will help make sense of complex leadership situations. The ideas in this book are based on hard-won experience and knowledge. I’ve worked with some of the most admired companies in the world. I’ve also worked with smaller companies who are some of the most ambitious companies in the world. Some were feeling complacent. Others were facing problems and crisis points. All of them wanted more success. This book helps with all of those situations. And it also helps people who are studying strategy as part of a course or degree. A lot of the books you have to study are either too shallow or far too long. The chapters here are about giving you the best ideas in strategy but wrapped up in a usable, enjoyable package. How to use this book The Strategy Book is organised into six parts. The irst ive tackle the really important challenges that a leader of any team of any size will face in creating strategy and making that strategy work. Each part is sub-divided into speciic action topics. You can dip Introduction in and out of each section as you feel relevant. These parts have been written clearly so that you can beneit from my experience as a strategist whether you are a novice or an expert. Each of the action topics has the following structure: ■■ ■■ ■■ ■■ ■■ ■■ ■■ ■■ ■■ ■■ Headline description so you know what the topic is about, why it’s important and have a brief summary of how the contents will help. Strategic examples so you can read about a successful company that faced the same kind of challenge and used the same kind of principles to solve their problems. This is a powerful and memorable way to learn. Strategy ratings so you have an idea how important the principle is in your work as a strategic thinker. The Strategy6 are the key principle and are worth reading irst. This section also lets you know how often a strategic challenge will be used and who should be involved. Objective – why you should take the subject seriously as a leader and what you should be trying to achieve. Context – how the subject its into the broader pattern of leadership and the kind of situation you are dealing with to achieve success. Challenge – why the subject is dificult and valuable. And also ways of succeeding with the challenge effectively as a strategist. Success – what has to happen to succeed with the challenge. Strategists’ measure of success – ways you can assess your progress. Strategists’ checklist – a summary of the actions you have to take to put the strategy principle into action. Related ideas – a suggestion of an idea from another writer that supports or complements the strategic topic. The sixth part is the strategist’s toolkit. The most important models and tools of strategy are explained in very precise, practical and eficient terms. You can move from the toolkit to xix xx Introduction the action topics. Or you can move from speciic action topics back to models that help you to organise your thoughts. There is also a list of further reading if you want to dig deeper. And naturally there is an index to make it easier to ind your way to speciic topics. The Strategy Book is clearly structured and easy to use, something that you will ind yourself referring back to again and again. What is strategy? Strategy is about shaping the future. That’s the reason we’re interested. And that’s the best deinition I can offer you. But as a strategist it can also help to understand some of the different arguments about what strategy is and isn’t. You don’t have to know the whole history. You don’t have to get a doctorate or an MBA. But it’s helpful to be informed. Frequency – Read irst, review occasionally. Key participants – First, you. Then, everyone. Strategy rating – Strategy6 Google made the decision to give their engineers permission to experiment in free time. They used this free time to produce an online video service. This experiment taught executives the importance of online video so they bought YouTube as a priority when it became popular. As a result, they have two of the most popular search services in the world. Was this strategy at work? Objective There are some beneits to understanding the history of strategy as it’s usually told in business schools and text books. It helps you to discuss strategy knowledgeably and to see its limitations – as well as its purpose. Ancient strategy – The word strategy has its origins in the Greek word strategos which means general or someone who has an army (stratos) to lead. It was irst used in Athens (508 BC) to describe the art of leadership used by the ten generals on the war council. They developed principles of effective leadership and achieving objectives. This included approaches to war and motivating soldiers. Similar concepts about strategy emerged in Asia, most famously in Sun Tzu’s Art of War (written 200 BC) which is still bought by xxii What is strategy? people today. In his book, Sun Tzu lists different principles that leaders may follow to win and achieve their goals. It set a pattern for books about strategy that is still followed. Experienced executives and consultants always share their experience of planning for success. Corporate strategy started getting a lot of attention from the 1950s. It was only after the Second World War that strategy books appeared for business leaders. Alfred Chandler was a historian who, in the 1960s, examined the relationship between strategy and organisational structure. He concluded that the strategy chosen by the company will lead to changes in the structure of the company. His work also shows that strategy was not a new concept in business, since it was based on what companies were already doing. Igor Ansoff was a manager and mathematician often described as the father of Strategic Management. His book – Corporate Strategy – was published in 1965 and was a comprehensive attempt to explain how managers could plan for a more successful future. Ansoff was the most prominent writer of an approach to strategy that became obsessed with detailed planning. It was a perfect it to a management style that was all about control. It led to a view that CEOs could work with strategic planning teams to analyse the past to predict the future. Early computers were used to help crunch the numbers and print the plans used to issue orders to real people in middle management and on the front lines. Henry Mintzberg is a Canadian professor and contrarian who mocked planning obsession. He argued that only some strategic plans ever happened the way they were intended. The big picture – or strategy – was decided by a stream of individual actions. He believed that most strategy emerges from adaptation. Arguments between planning and learning approaches continue today (see page 216). Michael Porter (also a professor) continued the mathematical approach to strategy. For him, strategy was about detailed What is strategy? analysis with clear models. These models were designed to determine what position the company should take in relation to other competitors in the market (see pages 173–6). Context In some ways, the intellectual history of strategy is more complex than my short introduction. Yet in other ways, it’s simpler. Some argue for the more creative, human side, while others argue for the more analytical side of strategy. Both are important, so a strategist asks what balance of these approaches is most helpful in any particular situation. ■■ What are you doing at the moment? ■■ How does that compare to your competitors? ■■ What do you want to achieve? ■■ How can you create something people want? The irst two questions are analytical, they are about positioning and benchmarking. The second set of questions are creative, and are about desire and contribution. They are interrelated but the balance between them varies. The balance depends on your personal preferences and circumstances. Challenge If your market is stable and you’re happy with your situation then you may choose to keep planning and adapting in a predictable way. But if your market is dynamic and you want your situation to change, then you may choose to inject more creativity into improving what you offer and achieve. This book includes tools for both analytical and creative strategy. It also includes my opinion that creative, dynamic strategy is the more helpful approach to take. The analytical tools can be used creatively to contribute something worthwhile and – if you wish – dificult to copy. xxiii xxiv What is strategy? Success You’ll know that you understand the principle when you see the difference between creative and analytical approaches to strategy. You will also be able to combine the tools (see page 165) and the principles throughout this book to think like a strategist about the bigger picture and what you want to contribute. You can study everything from ideas about how to run a strategy meeting to why reacting is more important than planning, to speciic strategies that you can choose to use or adapt. The overall aim is to improve your ability do something worthwhile. Something better than merely sustaining a competitive edge. Strategists’ measures of success ■■ ■■ ■■ ■■ ■■ The basic origins of modern corporate strategy are understood. The difference between creative and analytical strategy is recognised. Creative and analytical tools and principles are used together. Stable and dynamic markets are treated differently. You know there is more to strategy than beating or copying your competitors. Pitfalls Over-reliance on any particular approach to strategy is dangerous. You would be missing the big picture if you believe that you can ignore analysis, creativity or the action that makes creativity and analysis come to life. Your organisation may have a traditional approach to strategy. You will have to look carefully at how well the approach is working and what improvements can be made. What is strategy? Strategists’ checklist ■■ Consider the differences between analytical and creative strategy. ■■ Think about whether your company takes a more analytical or more creative approach. ■■ Explore whether the traditional approach is well suited to the environment you are facing. ■■ Keep referring back to the basic distinction as you proceed through the book so you don’t forget that all tools can be used in both ways. ■■ Introduce both analytical and creative approaches to your team. Discuss how they have been used in the past and how you could alter the balance in the future. Include the discussion as part of a team meeting. Related ideas Richard Whittington argues that ‘strategy is hard’. If strategy was easy, every company would succeed, but they don’t. The important part is to learn how to think better and think differently. He introduces four schools of strategy: Classical, which seeks to maximise proit with deliberate processes; Evolutionary, which seeks to maximise proit with emergent processes; Systematic, which seeks plural objectives with deliberate processes; and Processual, which have plural objectives with emergent processes. xxv part one Your strategic self Strategy is about shaping the future. But even clever planning doesn’t always work in the real world. And that’s the reason for this book – to help you to use strategy to igure out what to do now to get what you really want later. This book can help make strategy work more often. There are strategy tools and processes that can help, but the real heart of strategy is the strategist. It’s what you know, how you think, and how you get people to care enough about what you are doing to achieve your goals. It’s also about setting in motion the sequence of events that will shape the future in a way that you like. The more you understand the people who make events happen and the connections between what they do and those events, the smarter you will be. You have already used strategy to get a lot of what you have. You got a job. Or you got an education to get a job. You might have saved money for a holiday or a home. Maybe you romanced your partner, wife or husband. You did something in the past to try and get something better in the future. Becoming a strategic thinker – a strategist – is about getting better at shaping events. In the business world you need to understand how strategy is usually done. You need to know how to create strategy that convinces others to support you (including your boss or shareholders). And you need to know how to make strategy deliver success in the real world. Strategy that works. There is no guarantee that the future will turn out the way you want. Just writing a plan does not mean that the plan will happen. The world is more complex than our ability to plan, but that’s part of what an effective strategist learns to accept. You learn that reacting and responding to events is just as important as planning. Some business schools and consultancies have sold the promise that strategy can solve everything. In their hands, strategy has become a cult that believes in the magical power of a few models. They have weakened practical emphasis on the art of strategy and left some non-MBAs wondering if there is any room for entrepreneurial instinct. Others have become cynical about strategy. They hear the word and disengage. They expect bad or boring things to come from any strategic planning process. They predict job cuts or mindless changes. Or just expect meaningless wafle that is incomprehensible in the real world. And there is some truth to this view. Yet we have been trying to shape our future for as long as we have been human. It is in our nature to interpret our experience to provide shortcuts for a better future. This is what strategy is about and how it can be of value in the real world. To become an effective strategist, you need to start with yourself. Begin by understanding how one thing leads to another. Get yourself an education in the basics of strategy tools and models. Pay more attention to where you are, what’s happening around you, and how trends create opportunities to get to where you want to be. Shaping the future Strategy is about shaping the future. Corporate strategy is about shaping the future for an organisation. You use strategy to igure out how to achieve your purpose and ambitions. You move between where you want to go (ends) and what you need to do to get there (means). Great strategy is the quickest route from means to ends to shape your future. Frequency – Every problem, every opportunity! Key participants – The whole organisation. Strategy rating – Strategy6 The Cheesecake Factory has grown into a billion-dollar corporation. Its recipe for success is based on a small number of strategic ingredients. The founder created a ‘unique concept with the broadest, deepest menu in casual dining’ and the best cheesecake he could make. They spend $2000 per employee just on training to make sure people deliver the best customer experience. These are strategic decisions. They are not accidental, although they did not all come from planning. They are part of a strategic package. They shape the competitive environment. They stop copycats. And they shape the future in ways that are desirable and believable to investors, managers and employees. Objective Shaping the future of an organisation involves every part and everyone. Strategy considers things inside and outside the organisation that will make a difference to its success. The strategist also looks for opportunities and threats to the future of the organisation. Ideally these are explored with imagination, ambition and a creative understanding of customers, products and resources. Shaping the future To shape the future requires a combination of thinking, planning and reacting to events that emerge along the way. These provide key strategy questions: ■■ What do we want to do? ■■ What do we think is possible? ■■ What do we need to do to achieve our goals? ■■ When should we react to new opportunities and adapt plans? What do we want to do? This establishes a sense of what is desirable. Organisations tend to have an overall purpose. Sometimes purpose is very precise and deliberately agreed; sometimes the purpose of the organisation is very ambiguous. There may be many different opinions about what the organisation is for and what it should do. These opinions may conlict and compete with each other. This is all of interest to the strategic thinker. What do we think is possible? This introduces some sense of practicality. You look at opportunities in the world contrasted with the resources that the organisation either has or can obtain. But looking at opportunities can also expand a sense of what is possible beyond what has been done in the past. What do the achievements of others and trends in technology and consumer desires allow your company to do next? What do we need to do to achieve our goals? This includes the necessary strategic moves to achieve the overall goals of the organisation. It includes the style of leadership as well as the structures and processes of the organisation, and the projects, tasks, roles, products and services that have to be done to achieve organisational aspirations. Ideally these actions work together in some – more or less – harmonious way so that the sum of actions is greater than their parts. 5 6 Your strategic self When should we react to new opportunities and adapt plans? Our views of the future are incomplete. When we write our plans or decide on an overall purpose we don’t really know what is going to happen next. Small and big events will happen that challenge the existing strategy. New opportunities will emerge that are bigger, better or just different from those we thought of the irst time. Context Shaping the future depends on context. You can’t control the waves of human desire and endeavour with strategy, but you can create strategy that surfs those human waves, contributing to them or beneiting from them. It follows that you need to understand the context for any attempt to create strategy. There are probably some low competition, high stability markets but it is safer to assume your strategy will face high competition, low stability. So this book will make the same assumption and give advice on strategy that can be effective in such a situation. Each section answers questions that are needed to create a strategy that can be used to shape the future. There are sections that explain how to create strategy, think like a strategist, win with strategy, make your strategy work, build a strategic organisation and troubleshoot your strategy whenever it stops working. Challenge A lot of organisations still set in motion grand plans to a better future. The larger the organisation, even now, the more likely it is that they have a strategic planning team who produce strategy documents as a result of lengthy inancial analysis. This plan is then ‘cascaded’ or passed down the hierarchy until it reaches middle management, at which point it often disappears. The front line may have to work in structures, processes or role descriptions that were designed as part of the plan. This Shaping the future planning, command and control approach often leads to out-ofdate strategy and out-of-touch leaders. Some people argue it isn’t even possible to plan because events are so unpredictable. They claim it is better just to organise as eficiently as possible. Then you just hope evolutionary market forces (what people want and what people sell) will be a natural it to whatever you are doing. The trouble with this evolutionary approach is that it doesn’t really address what you need to try and do to make it more likely that your company is a natural it. And that’s why clever strategy is somewhere between the extremes. It does try to plan deliberate actions to shape the future, but it also tries to stay close to local events and to react to them. In this way, strategy is transformed into a learning process that becomes – at its best – smarter through experimentation. Success Progress is made when the organisation moves towards a strategy that learns its lessons and adapts to new opportunities. In this way, you can beneit from strategic thinking that is clever rather than one-size-its-all strategy. You will also see people at all levels more involved because managers are interested in what is really happening at the front line. Your strategy efforts will use strategic principles and tools to better prepare the organisation for shaping the future. Your strategy will craft a response to external waves, needs of customers and actions of competitors. Your strategy will consider the nature of the business (its purpose, style and products) and the ways that it organises internal resources, processes and people. Strategists’ measures of success Understand (and apply) the main strategy questions. Use the differences between planning, coping, adapting and shaping covered throughout this book. 7 8 Your strategic self Consider a wide range of internal and external aspects. Accept the need to build a strategic organisation to achieve shared purpose. Establish a lexible, continuous approach to strategy. Pitfalls It’s important that efforts to introduce more strategy don’t lead to less strategic thinking (or worse results). There are lots of naturally strategic people who see opportunities, see new patterns and adjust the work of the organisation to take advantage of these. It’s also important not to simply replace one set of words with another. The idea of strategic thinking is to improve results. Strategists’ checklist ■■ Remember that inward-looking planning is not suficient because of the high levels of external change and competition. ■■ Work your way through the strategy questions (see page 167) and answer them for your business. It provides a valuable template for developing creative strategy that is straightforward enough for all sizes of business. ■■ Understand the importance of a learning approach to strategy. This means that as many people as possible are engaged with strategy so that they can adapt what they do to support the purpose of the organisation. And so that they can feed back valuable information to their leadership team in order to adapt the oficial strategy. Related ideas Howard Thomas and Taieb Hafsi offer a useful (although academic) way of looking at what strategy is and whether it matters. For them, strategy is a mixture of rules of thumb and creative methods. It helps people understand and transform reality. This means that strategy tools are only valuable if they Shaping the future stay close to reality. Some techniques are useful only for making speciic decisions. The most powerful tools will help people navigate the process of shaping the future. Without this, strategy is nothing. 9