Volatility, uncertainty, complexity and ambiguity are by-products of our fast-paced and globally-connected world. One increasingly common reaction is to question the importance of strategy. If circumstances fundamental to a business model can flip 180 degrees overnight, shouldn’t leaders be concentrating on operations, on continuous improvement, on developing employees’ skills and enabling their adaptability? Isn’t strategy, to all intents and purposes, dead?
The question gains relevance if we remember that, although we like to think in chunks of time – months, interim reporting periods, financial years – there is no end-marker to the operations of a business. Impliedly, what really matters is the process of conducting the organisation. Former head of strategy at Microsoft, Charlie Songhurst, gives this metaphor:
“If you survive long enough, maybe greatness eventually becomes you. [So] what’s underestimated, is if you want to live forever, don’t start thinking about studying centenarians, instead, work out how to not die due to drunk driving or smoking twenty cigarettes a day.”
A great strategy, then, might be simply this: Do good work. Repeat. Keep repeating.
This debate around strategy is not new. In the 1970s, with the publication of his book The Nature of Managerial Work, Canadian academic Henry Mintzberg shook up notions about what managers should be doing, including whether, why and how they strategise. Mintzberg coined the term emergent strategy to differentiate a strategy that develops over time, as new circumstances arise, from a business’s intended strategy. Effectively, he was questioning the need for an intricate, upfront strategy.
Decades later, the argument against a mandatory and detailed strategy is supported by, for example, the LEGO turnaround in the mid-2000s. The iconic company had posted a $200m loss in 2003, sales were down 26%, and it was $800m in debt. New CEO, Jørgen Knudstorp, stripped away the frills of the previous decade’s strategy, which had been oriented around constant innovation. He returned the business to its core: concentrating on operations, focusing on tactile foundation products as a basis for retaining loyal customers and recruiting new ones, and implementing tactics aimed at returning to profitability as soon as possible.
By 2005 sales were up 12% and the company was back in the black. Since then its turnover and profits have consistently trended upwards, spectacularly so in many financial years. What worked for LEGO was Knudstorp’s strategy through action. As a principle of strategy, or a derivative option, it is summarised by the guru of 20th-century shareholder capitalism, Jack Welch, who believed that
“in real life, strategy is actually very straightforward. You pick a general direction and implement like hell.”
Perhaps you are an action-oriented manager or leader in this mould? Pause to consider that this may not always be effective – nor even efficient. “There is nothing so useless as doing efficiently that which should not be done at all,” said Peter Drucker, one of the world’s leading management thinkers and a contemporary of Welch.
Myriad case studies, too, emphasise that sophisticated strategy is critical, making a case in opposition to LEGO (and Welch). Airbnb is one of many interesting illustrations. From its 2008 launch the strategy has been to keep hitting the sweet spot at the locus point between holiday cost criteria, global connectedness, the sharing economy, and technology enablers. Along the way, however, new issues have needed emergent strategy adjustment: regulatory considerations (which differ by country); the trust equation in the marketplace; the increased bargaining power of buyers with the entry of new competitors and as people have become more tech savvy in seeking bargains; the collapse of travel during the recent pandemic.
So, Airbnb has gone through many iterations of its strategy, and as a digitally-based company its strategists know that the next radical competitive or industry force may arise at any time – just like they did.
Are strategies like Airbnb’s best described as disruptive? Are they born from deep analyses and out-of-the-box solutions? Or do they spin off – partly with a momentum of their own – from a super-smart idea? They are a composite of all of these. The lesson from Airbnb’s success is that innovative thinking and breakthrough strategies are now vital to running a future-focused business.
Thinking through the spectrum of ideas about strategy philosophies, it’s evident that it is illogical to hold the view that strategy is obsolete while insisting it’s all about execution. To execute implies that the business knows what it should be doing. This knowing, even in its basic, broad articulation, is a form of strategy.
This can be framed around the understandable focus and dedication, for many organisations, on financial results. If achieving results is the ultimate goal of a leadership team, that goal needs to be identified upfront. If strategy is waived away as inconsequential, someone – a whispered but courageous voice at the back of the room, perhaps – may say something like, “Phew. That’s ambitious. How do you see us getting there?”
The reality for the vast majority of organisations is that discovering aspects of strategy that best suit their business means thinking through the spectrum of options illustrated by the opposites of LEGO – consolidated strategy, pared to its core – or Airbnb, embracing intricate webs of societal, technology and consumer trends.
‘Is Strategy Dead?’ is clearly the wrong question. Like this article’s headline, the premise grabs attention. But it misdirects. Strategy itself is not moribund – it’s the traditional ways of thinking about strategy that are outmoded and will no longer serve your organisation well.
To understand the disillusionment with strategy it’s helpful to identify 5 common reasons why they fall short.
To ensure your company’s strategy is appropriately designed and has the best chance of success, apply these 5 considerations:
Accepting that a strategy is only as good as its execution, it’s important to emphasise a few points about getting things done.
Closing the gap between a strategy and its execution involves attention to what employees feel and think. If they associate strategy with how the organisation fulfils its purpose, one they buy into, there is a basis for embracing the strategy. Further, if they understand that it can, and should, stay evergreen, people will be more likely to relate to new strategies, even those which call for quick adaptations or significant change to their daily work.
Most powerfully, if employees feel that their angles on the business are considered and that they have a voice which can find its way into strategy development, they will be far more likely to engage with the strategy. They will also feel encouraged to nurture their sense of constant curiosity.
This comes down to the company’s ethos, its ways of working. “Culture eats strategy for breakfast,” said Drucker. It’s an old quip, but it sums up perfectly the relationship between the design of a strategy and its execution.
Strategy is probably the most talked about, written about and dissected part of business management. Like many aspects of life, if there is an objective, human nature is to ponder how to achieve that goal.
Clearly, therefore, strategic thinking is still hugely valuable. It is not even remotely dispensable, let alone dead. However, leaders and managers are right to question its construct. The way a strategy is compiled, how it is communicated so that life is breathed into it, and the culture that links a strategy to its roll-out: these are now far more important than they once were.
So, if your company is battling with strategy, think about its derivation – the process, practicalities and people that go into it and then have to make it work.
Ready to rethink your organisation’s strategy for the short and longer term? At Digital Campus we offer various online short courses designed to improve strategic capabilities, including Strategic Thinking Skills Using Behavioural Science and Neurostrategy.
At DigitalCampus we understand the need for bench strength and how to help your company go about building it. Contact us for further information, or visit our website to find out about our range of courses to build bench capability.
DigitalCampus is part of the LRMG group, specialists in igniting the performance of people.
Managing Executive for DigitalCampus • SRE
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