Timeless Business Strategy

Without strategy there is only drift - Thomas Friedman

2022-07-01T12:36:00.005-07:00

Why bother having a strategy?

It's a fair question, after all many companies have failed with solid and effective strategic plans in place and many have thrived without them. There is even great debate within the strategic management academic community as to whether a strategy should be developed and followed (called deliberate strategy) or whether it emerges (appropriately emergent strategy) as a result of everything you do anyway.

Before I tackle this question it is important to state that this blog is for people in business (probably small-medium businesses who don't like paying for expensive consultants) and not the academic community. In an academic sense this question is large and this is not the appropriate forum to try and add the required academic rigour to the discussion (you'd get bored anyway).

Why bother having a strategy is actually not an easy question to answer in a few words (believe me I have been sitting here trying for a while). I think the quote that starts this blog though is very apt, without strategy, without a planned way forwards, without some sort of stake in the ground about what you want to do and where you want to be you are just adrift and to a far greater extent, success and failure are at the mercy of external factors. The concept of strategy as we know it today originated from the military and to use Sun Tzu's words from 2,500 years ago.

It is a matter of life and death, a road to either safety or to ruin. Hence it is a subject of inquiry which can on no account be neglected.

Safety or ruin..........

We (well most of us) certainly don't live our own lives without some idea of where we want to be living, what we want to be doing etc etc. We think that having a plan for the future is more likely to lead us to safety.

Maybe the real confusion is really over what is a strategy. It certainly isn't a weighty document produced by a large international accounting firm. That I believe is the illusion of a strategy, something so important looking and expensive (ouch) it couldn't possibly be wrong, hmmmmmmm.

Many good, maybe the best, strategies are carried around in peoples heads who are constantly working in, and on, the business. Often they don't even credit their actions as strategy. I interviewed people from two companies as part of the work I was required to do to gain admittance to the PhD programme, both said we didn't really do any strategic planning. They didn't do any formal planning but they sure had a plan of attack and executed them very successfully.

I was hoping to start this blog with an short, inspirational piece but on reflection that was rather over ambitious in much the same way as trying to stun the strategy world with my PhD thesis isn't going to happen (even Einstein had a more modest PhD and then turned the world upside down with his theory of general relativity). I hope though over the course of the next two years I can take a lot of what I learn and discover in the strategic management field and pass it on weekly in an easy to understand and relevant way.

Today's final words, yeah, have a strategy........

Double Hermeneutic

2022-07-01T12:36:00.004-07:00

I came across this term (pronounced 'her men you tic') in my strategic management PhD travels and was quite intrigued by it as it's both simple (despite its name) and very enlightening. Hopefully I'll do the simple part justice here!!!!

It was coined by Anthony Giddens, a famous British sociologist, and it reveals a major difference in the way we should (stress on the should) theorise about the natural world versus our social world and of particular interest to me, theories about how we should manage people.

In essence, a theory about our natural world has no impact on the natural world which remains the same no matter what we think. For example it was previously thought that the world was flat (and yes there are some of you still out there) but that didn't change the shape of the earth which remained a sphere (oh yes it is). This is a single hermeneutic.

However in the social sciences this isn't the case and, if for example, a management theory gains sufficient currency then this can start to influence how managers act despite the robustness or validity of the theory. This is double hermeneutic, there is no universal truth to be discovered and our theories alter practice.

I blogged a while ago about the two management authors who brought 50,000 copies of their own book so as to push it up the best sellers list. If managers then brought the book because it was a best seller and implemented their suggestions we end up with management practice being led via a cunning marketing strategy.

It is a rather interesting perspective (well I think so anyway)..............

If planning is everything, Maybe its nothing.

2022-07-01T12:36:00.003-07:00

A blog back on my subject area, strategic planning or strategic management to use the correct term for the academic field.

I have been reading an interesting article entitled 'If planning is everything, Maybe its nothing' written back in 1973 by Aaron Wildavsky. It is almost a fore runner to one of the largest debates in strategic management, whether strategy should be planned and deliberate or it emerges naturally as part of general management activities.

The article makes some very interesting points but it does read a little gloomily as though Mr Wildavsky hasn't got a lot of time for planners in general. His particular interest is planning in the 3rd world (although it wasn't called the 3rd world then) and he observes that in amongst all the money poured into formal plans and planning, the results have been pretty disappointing.

It raises another interesting argument/point and that is the difference between the plan and the outcomes. He appears to be arguing that separating the two doesn't make sense as the whole point of planning is to arrive at some specific place in the future and if we miss then planning has somehow 'failed'. But implementation of plan will be subject to numerous events internally and externally and whilst we use the term plan, we don't use the term control or crystal ball.

Unfortunately the article doesn't really offer a solution to not planning, just seems to bemoan planning in general. If the world is so complex and we can't get our heads around it, then what action should we take.

My (very non-academic) thought is that like most physical journey's (a holiday at the beach), you do sit down at the beginning and work out where you want to go (the Riveria) and how you are going to get there (planes, trains and automobiles). If things change along the way (the Icelandic volcano spews a bit of ash stopping flights), you adapt, you may have to make new plans but in the absence of shocks to the systems, you carry on and hopefully reach your destination.

Management Books - Gurus or what??

2022-07-01T12:36:00.002-07:00

I've been reading a couple of articles looking at the concept of management gurus and came across this story which is either outrageous or really clever and I'm still not sure which.

In 1995, management gurus Michael Treacy and Fred Wiersema secretly purchased 50,000 copies of their business strategy book The Discipline of Market Leaders from stores across the nation. The stores they purchased from just happened to be the ones whose sales are monitored to select books for the New York Times bestseller list. Despite mediocre reviews, their book made the bestseller list. Subsequently, the book sold well enough to continue as a bestseller without further demand intervention by the authors

Bikhchandani, S., Hirshleifer, D., & Welch, I. (1998). Learning from the behavior of others: Conformity, fads, and informational cascades. The Journal of Economic Perspectives, 12(3), 151-170.

The central question for me is just where should we (managers, strategists, leaders etc) be getting advice and education from regarding what is and what isn't best practice? What is and isn't backed up by credible research? What we should and shouldn't be doing?

It seems like the management guru (and publishing) industries are taking over from the traditional academic communities and on the whole this doesn't appear to be a good thing. I remember starting (well done to those who finished it) to read Jack Welch's biography and my recollection of it was a collection of stories about making decisions on Americas most expensive golf courses. Is this what we should be aspiring to????

Management urgency - What can we do by Tuesday??

2022-07-01T12:36:00.001-07:00

In order to get stuff done you need sometimes to create a sense of urgency - what can we do by Tuesday? It doesn't matter whether it is a strategic issue, a work project, study or something at home. If it needs (or you want it) to get done then getting some focus on it can only help.

One of my business clients has a very important strategic issue that needs to be resolved and the impact of what happens will be very, very material to their business. We have developed a good solid plan of attack (and should win as we have all the cards) but unfortunately it is difficult to get the required people to 'get the lead out'. An important meeting needs to take place but everyone seems to be busy and we are aiming for about three weeks away, having already waited for two.

That is classic lack of organisational urgency. Contrast it to what the actions would be are if the building is on fire!!!!! I have tried to speed things up by basically demanding the meeting earlier and if some of the management team can't make it then so be it.

My business strategy PhD has a similar problem for me, the goal is maybe three years away and so given that it is easy to think I'll fly into it next week/month and you suddenly find six months later you are in a hole. Bottom line if you want it to get done, create that sense urgency and watch people start to speed up.......

Michael Porter - the 5 forces model

2022-07-01T12:36:00.000-07:00

Organisations don't operate in a vacuum and so it is important that when organisations engage in strategic planning or thinking they take a good honest look at the industry(s) in which they operate.

Michael Porter outlined a technique for industry analysis in his 1985 book 'Competitive Advantage' which was developed into the (hopefully) very familiar model - Porters 5 forces. Whilst not the only or exclusive tool that can be used, it provides a nice and simple way to look at the prospects of profitability in an industry and can be done over dinner on the back of an envelope (in true entrepreneurial style).

Porter’s 5 forces model is a tool for analysing an industry or market to gain an indication of the likely future profitability. If you are operating in an unprofitable industry, no matter how strategically well positioned you are, it will be difficult to deliver consistent bottom line profitability.

The model looks at five critical areas in a market and assesses the relative strength of those areas:

1. Threat of new entrants – how easily can a new organisation enter the market?

2. Rivalry of existing competitors – how strong is competition for market share?

3. Pressure from substitutes – how many viable substitutes are available?

4. Bargaining power of buyers – how much leverage does the buyer have to affect the price?

5. Bargaining power of suppliers – how much leverage do suppliers have on the market?

The following model displays Porter’s model and the strengths in relation to the petrol industry (in New Zealand).

A quick look at the forces reveals that apart from oil suppliers there are few strong pressures that are likely to impact on the profitability of the industry. As price increases can be simply passed on via petrol pump price increases then this should be (and is) a very profitable industry to be involved with.

No tool is accurate in all situations and we would be foolish to expect that given the complexity of the business environment. Porters 5 forces though is a simple and effective way to get a feeling for industry profitability.

Add it to your strategic thinking/planning agenda, what's the worst that could happen......

Mintzberg and Waters' strategy model

2022-07-01T12:35:00.004-07:00

It is interesting how some strategic management models come and go whilst other ones seem to survive the test of time. In 1985 Henry Mintzberg (one of the leading strategic management thinkers) and James Waters developed a model to demonstrate how the strategy that is ultimately delivered is made of two parts; deliberate strategy (what the organisation set out to do) and emergent strategy (what happened on the way).

In their original paper the model looks just a little clunky, word processing not as it is today, but very recognisable for all scholars and practitioners.

And although the concept of the model hasn't changed at all, it does look a little funkier with a 'lick of paint'.

The model still communicates with a simplicity that belies the revolutionary nature of what it was at the time. It looks obvious with hindsight that of course we haven't got a crystal ball and the world changes so where we end up is a combination of where we were headed and what came along on the journey.

More importantly though and sometimes (I think) not as well recognised in the model is that without the intended strategy we don't have an overall concept of where we are headed. You have to imagine that along with those emergent arrows going in roughly the same direction there are hundreds of arrows pointing in all manner of other directions. Without this, it is much harder to judge which opportunities we should take heed of (the arrows going in our direction) and which we should ignore.

This is the important concept of strategic intent - what is it you actually intend to do. Without this you end up a little like Alice............

"Would you tell me, please, which way I ought to go from here?"

"That depends a good deal on where you want to get to," said the Cat.

"I don’t much care where--" said Alice.

"Then it doesn’t matter which way you go," said the Cat.

"--so long as I get SOMEWHERE," Alice added as an explanation.

"Oh, you’re sure to do that," said the Cat, "if you only walk long enough."

Strategic Intent

2022-07-01T12:35:00.003-07:00

I recently picked up a very small book in the strategy shelves of my local library. It was from the Harvard Business Review classics series and it dealt with strategic intent. I didn't really need to get the book out being quite familiar with the term and having read the book Competing for the Future by Hamel and Prahalad but it just looked appealing so I grabbed it anyway (I love reading about strategy and that doesn't make me a nerd).

For me strategic intent is a key part of the actual essence of strategic management and more specifically strategic decision making. It basically puts a dirty great big stake in the ground about where you want to be in the future (kind of like what you want to be when you grow up). Once this is established, all actions, tasks, plans, tactics, budgets etc etc need to be moving towards this and not away from it. There is a nice saying - the only way to work towards an objective is to work towards an objective, you shouldn't head off in the opposite direction.

Hamel and Prahalad use the Apollo program as an example, it was America's strategic intent to put a man on the moon and return him safely. Once this intention (or vision, mission, guiding principle or whatever you call it) is established, it crystallises effort towards this goal. If it is easy to understand, worthy, a stretch but achievable then it is these sorts of strategic intents that really can fire up an organisation. How exciting is it to have the goal of returning 12% ROCE (return on capital employed), doesn't really make you leap out of bed in the morning.

I find strategy exciting and organisations that don't find the idea of working towards a worthy future goal exciting are probably not the most fun places to work. Have a check of your own organisations strategic intent and ask yourself the following;

What is it?
Is it worthy and exciting?
How many people around here know it?
How many people around here get it?

Until next the blog..................

Strategy as Framing Contests

2022-07-01T12:35:00.002-07:00

Cognitive frameworks is the area of strategy that I'm particularly interested in and whilst it sounds a bit technical, it is simply the way you see the world. We all have mental models we use unconsciously to help us interpret the world, without these we would be forced to have to rethink the world for each situation we came across.

For example, confronted with a shop, we have a model in our heads about how these things called shops work and as long as the experience we have is in line with our model we can engage quickly and efficiently. Now go to a shop in a foreign country and things take much longer initially as you have to reinterpret the world to make sure your model works in this slightly altered situation.

It is the same when confronted with a problem that is strategic in nature. If the problem fits one of our existing models of how the world works (for example a new competitor opens nearby) we will try and solve the problem using what has worked for us in the past. The problem with strategic problems is that sometimes (lets make that usually or even always) they don't neatly fit our models but rather than adapting our model, we usually try and crush the problem so it fits with our model. This is another area cognitive simplification but lets not go there right now.

Sarah Kaplan researched and published a very interesting article in this area called 'Framing Contests: Strategy Making Under Uncertainty'. The paper showed that when there are differences between how people see a problem and its potential solution, they tend to try and exert their cognitive frame on others in order to make their view, the organisations view - hence the title framing contests. This is different than our traditional view of strategy as more of a joining of minds to develop a shared and agreed 'optimal' solution.

One of the very interesting aspects I noted was people were much more aware of the operation of other’s frames than that of their own.

“If they find facts to support their view, they grab it at face value. Anything that contradicts their view, they put through a micro-fine sieve.”

This is in line with previous cognition research that indicates when we receive a piece of new information that concurs with our view of the world we tend to accept it whilst anything that contradicts our view, we tend to reject. Rather than have to change our minds, we simply filter the information.

I'll pick up on this point at an organisational level later as organisations tend to do the same.........

Management thinking - mindless, mindful and out of our minds

2022-07-01T12:35:00.001-07:00

Every now and again you come across a really good quote that is also quite helpful. The above comes from an exceptionally good review on Managerial and Organisational Cognition by James Walsh (Walsh, J. P. (1995). Managerial and organizational cognition - notes from a trip down memory lane. [Review]. Organization Science, 6(3), 280-321).

More fully 'research suggests that we can be mindful, mindless and out of our minds when taking action in organizations.' Now space and the amount of time you want to spend reading this blog doesn't allow for a full review on managerial cognition and decision making but in essence the quote isn't quite as harsh as it initially reads.

Mindless refers to making decisions without taking into account new information, simply put, following what we have always done despite warning signals. This situation is also linked to 'cognitive or managerial inertia', where managerial perceptions of what is happening lag behind changes in either the internal or external environment, sometimes referred to being asleep at the wheel!!
Mindful refers to using new information as the base for decision making. This type of decision making is quite rare and used in unusual or rare situations where previous managerial ideas aren't applicable.
Out of our minds when some pressure forces us to act before we have time to adequately think. 'How do I know what I think until I see what I say?' - that's one to bend your head around a little.

Complicating this is that as human beings we are very good at seeking out and accepting information that agrees with our view of the world and disregarding or treating as inaccurate information that contradicts our view of the world. Called information filtering, this can lead to what researchers have dubbed 'blind spots'.

It must have been written countless scores of times about the complexity and speed of today's economic environment and the difficulty this poses for strategic decision making in organisations. However decisions still must be made and given the environment, the ramifications of these decisions will in all probability be greater.

What helps is knowing when you are being mindless and just carrying on the path that you set disregarding the signs. People from outside the organisation/industry can be invaluable as they can sanity check the situation and ask the 'dumb' questions. Independent directors, advisors (that you pay for short bursts of work, no one needs to be milked by consultants) and the like can be very usual for organisational decision making.

Beware 'accounting logic'

2022-07-01T12:35:00.000-07:00

Strategy and strategic thinking is about the future, what is likely to happen, how the environment will look, what we need to be aware of and therefore what decisions should we be taking today. It is frequently written that we are in a period of fast paced change and we need to be able to lead and plan in a complex environment under conditions of uncertainty. The future is unlikely to be an extrapolation of the past so we need to ensure our thinking isn't dominated by projections based on the past.

In my travels as a manager and more recently as a consultant I have often come up against a phenomena which I label 'accounting logic', the use of primarily historical financial information as the basis for decision making. Now I have nothing against accounting and accountants (though some think I have) but the information that they provide can't be given more weight than other sources of information when strategic planning but it often is used as the primary yardstick.

This can create a number of problems but one of the most critical is organisation and managerial inertia. If the financial numbers are still okay then we don't need to change course despite what new information about the environment is known. Management becomes wedded to the success of the past and misses the turn off to the future. The following picture sums up the logic.......

History is littered with examples, one of the most famous being IBMs reluctance to embrace PCs as the mainframe market was just to lucrative. Today, video rental stores and CD stores are soon to be extinct no matter how good their current cash-flow maybe.

The key point is you can't rely on financial information to paint you a picture of how the world will be it simply tells you how good it has been. If you rely on 'accounting logic' when making decisions, well you're ok so far..............

Rewarding A while hoping for B - Kerr

2022-07-01T12:34:00.005-07:00

Now this is a management classic both in terms of its relevance and insightfulness. On the folly of rewarding A, while hoping for B came out in 1975 and I have used it often in my time as a manager and consultant. Kerr, S. (1975). On the Folly of Rewarding A, While Hoping for B. [Article]. Academy of Management Journal, 18(4), 769-783.

In a nutshell (and I encourage you to find and read the article as it is also very well written and therefore an easy read) we behave the way we do in response to a number of factors which are summarised in the following diagram.

In nearly all situations in the work environment (and in life in general) there are consequences to our actions. Some consequences are positive like a pay rise and some are negative like being fired. It isn't rocket science that we, as individuals, act in a rational manner and try and maximise the positive consequences whilst minimising the negative consequences.

This article highlights that often the reward systems in our organisations are often set up to reward one type of behaviour when we really want (hope) for another type of behaviour. If you really want your sales force to create long term relationships with clients, don't bonus them for new business, bonus them for retaining clients. My particular favourite example in the article contrasts WWII with the Vietnam war.

The Vietnam war was indeed a study of disobedience and rebellion, with terms such as "fragging" (killing one's own commanding officer) and "search and evade" becoming part of the military vocabulary. The difference in subordinates' acceptance of authority between World War II and Vietnam is reported to be considerable.

Consider, however, some critical differences in the reward system in use during the two conflicts. What did the GI in World War II want? To go home. And when did he get to go home? When the war was won! If he disobeyed the orders to clean out the trenches and take the hills, the war would not be won and he would not go home. Furthermore, what were his chances of attaining his goal (getting home alive) if he obeyed the orders compared to his chances if he did not? What is being suggested is that the rational soldier in World War II, whether patriotic or not, probably found it expedient to obey.

Consider the reward system in use in Vietnam. What did the man at the bottom want? To go home. And when did he get to go home? When his tour of duty was over! This was the case whether or not the war was won. Furthermore, concerning the relative chance of getting home alive by obeying orders compared to the chance if they were disobeyed, it is worth noting that a mutineer in Vietnam was far more likely to be assigned rest and rehabilitation (on the assumption that fatigue was the cause) than he was to suffer any negative consequence.

If you observe a behaviour in your workplace that doesn't seem right or make sense, try and see what the underlying reward system is encouraging, chances are the behaviour makes sense to the individual doing it. Cost shifting between departments inside an organisation adds no value but if you get bonuses on your departments result then it makes absolute sense.

This concept has served me well over the years and has helped organisations make sure what the actually want, they reward.

Cognitive frameworks - what you have in your head.....

2022-07-01T12:34:00.004-07:00

I'll try and make this easy to understand as what is usually going on in our heads is a bit of a mystery to everyone including ourselves.

Managers get inundated with information all day every day and confronted with problems that require them to somehow pull all the appropriate information together to be able to make solid decisions. We meet this challenge by employing cognitive frameworks as a means of framing problems in a way that makes sense to us facilitating information processing and decision making.

For example, we have a cognitive framework about driving and road rules which has been built up through initial learning and then from practical experience. This allows us drive efficiently and with confidence as our cognitive framework means we do not have to reinterpret and analyse each situation we encounter. However, when we first drive in a foreign country we are very aware that we need to take extra caution to understand how the road rules work. Our cognitive framework needs to be refined through additional learning or experience to cope with the changed circumstances.

A well-worn management 2x2 matrix (what in management cannot be displayed in a 2x2 matrix) attributed to Abraham Maslow demonstrates the stages of competency we go through when learning new skills. When it comes to driving our cognitive framework allows us to be unconsciously competent and we do not need to think about what we are doing, we just do it. When we arrive in a foreign country we revert to being consciously incompetent, we are aware that the rules are different and we need to learn them, but (hopefully) quite quickly progress through conscious competence to unconscious competence again.

Let us consider the conditions of competence and incompetence, a word with quite negative connotations, in the business world. Clearly the terms are two poles on a continuum where incompetent means unable to perform the task at all and competent means able to perform the task with a high degree of skill, an expert. Many business disciplines have their own qualifications and this allows an understanding of where an individual currently sits on this continuum. An accredited Chartered Accountant has demonstrated a high level of competence in that area and has developed a comprehensive cognitive framework on the required area. To rather state the obvious, they would not however be seen, or see themselves, as competent in legal matters which is a discreet area with its own qualification system.

Competencies and cognitive frameworks become very visible in situations where we receive quick and comprehensible feedback. Hitting a golf ball provides instantaneous feedback on our golfing competency and likewise, sitting in a room of Information Technology (IT) professionals may (for most of us will) indicate that our own cognitive framework regarding IT is hardly comprehensive and we are in fact consciously incompetent.

Being consciously incompetent is not actually a problem for managers in fact it is vital that they are aware of what they do, and do not, know. In the example above, if the situation calls for in depth knowledge in IT, we simply call on the IT Manager or hire an IT consultant to provide the necessary skill set. As managers are primarily generalists it is the same for issues dealing with areas such as; legal, financial, architectural or human resources. It is when managers are unconsciously incompetent that they are likely to run into difficulties.

Not being competent in a subject matter area does not mean managers cannot make competent decisions regarding that subject matter. What they require is the appropriate information and analysis to enable them to make their decision, as happens day-in day-out in organisations everywhere.

How does this relate to strategic planning?

When an organisation is confronted with a strategic problem or issue who should be involved and how comprehensive should their strategic management cognitive framework be? If strategy and strategic decision making is so important, it would be nice to think those engaged in the activity had a pretty good cognitive framework to call on..........

Business strategy made simple

2022-07-01T12:34:00.003-07:00

I figure anyone looking for strategy made simple really needed to hear the words - it doesn't exist!!!

But before you click away ask yourself if you would ever dream of searching for 'legal advice made simple or 'accounting the quick way' you know you would just be asking for trouble and yet with strategy, which after all is helping set the direction and future fortune of the organisation, we want it in an hour with fries and six pack abs......

If you are reading on then the news gets better because it isn't a dark art either. You don't need to pay truckloads of money to high powered consultants who will likely just regurgitate from the text book they were given in their MBA programme. That option to me is the illusion of strategy as if the future is more assured based on the amount of money the advice cost.

There is no real short cut and like any business discipline you need a blend of knowledge and experience to really do it well. Look at the hours and years you have invested in other aspects of your business. The accounting area probably has chalked up over 100 times the hours that you could chalk up to strategy and they are just trying to keep the score, they aren't really in the game.

And in a nutshell, that is what doing strategy is all about, it is being in the game.

Pinching Friedman's words and adding some of my own;

Without knowledge of the whole there can be no strategy, and without strategy there is only drift, and in drift there is only luck.

So sorry no short cuts, there isn't the equivalent of liposuction for strategy but I suggest you start getting in the game and quickly before the game moves town.........

DiY strategy - I don't think so

2022-07-01T12:34:00.002-07:00

A quick look in the business section of any book store or a search on-line will reveal an absolute multitude of books on strategic management. Professor Richard Whittington (a prominent academic in the area of corporate strategy currently at the Saïd Business School of the University of Oxford) said it beautifully at the start of his 2001 book 'What is strategy and does it matter' when he observed that there is a basic implausibility about these books. If they genuinely offer the secrets of strategic planning, something we pay top executives a great deal of money to perform, why so many books and why so cheap?

I can't help likening them to books on sex education where you can gain some of the basics but just by reading the books you will never become expert or even that good, you have to get a little experience........... Yet the management guru industry and the popular presses churn them out by the score in the same vein as they churn out books on how to get fit the easy way.

Does this mean you shouldn't buy a book on strategy? No, you should but the key message is that don't expect it, or let it, become your strategic planning bible. Strategic planning is about thinking because every situation faced will be unique and the people facing it will have never been there before. So the book can give you an idea about maybe how to start going about the process but it is more like a star on the horizon than a map to the future.

If you are going to buy a book, and I encourage you to do so, these authors are pretty good (in my humble opinion);

Henry Mintzberg - should be the most popular but Henry has never been drawn to become a popularist
Richard Whittington - Always provides a very balanced view
Bob de Wit and Ron Meyer - Have produced a good postgrad level text (though there are bound to be others)
Robert Grant - Always worth reading

This list is in no way meant to be exclusive as there are stacks of books on strategy I haven't read (I don't have the time to read them all even if I had the inclination!!!) but merely a good place to start.

Strategy is different

2022-07-01T12:34:00.001-07:00

During my recent PhD reading and thinking I've come to the conclusion that strategy, although lumped in with all the other management areas, is different, fundamentally different. And because of this it needs to be thought of and treated differently as well and I don't think that is done.

Why is strategy different?

Two things;

It is about positioning the organise in a future environment
The competition are doing the same thing so you are competing.

A simple analogy is a car race - The team decides what strategy to start with and what to do in the race, every other activity is about keeping the car on the road and making it go faster. To bring this into a business context, strategy is about what to do and every other activity is about efficiency and effectiveness.

For this reason strategy it is a skill set that differs and you really can't just think about it every now and again and hope to be good at it or even competent. The teams that race cars spend countless hours week in week out thinking about how they are going to tackle situations and what they should do. Imagine if they only met at the start of the year and that was the strategy done for the season!!!! It would make the drivers job pretty difficult.

So you need to start thinking differently about strategy and putting in time to get better at it. After all it is the pointy bit of the arrow and once the arrow is flying it is to late to change...........

This area starts to bring in the concepts of proactivity and reactivity but today I'm out of time...........

Mintzberg - strategy for direct research

2022-07-01T12:34:00.000-07:00

I wasn't going to be doing much posting on this blog as I got busy in my PhD but it happens to be quite a good way to review bits and pieces in the strategic management field and also share them with anyone who is interested.

For those interested in business strategy and strategic planning should have come across Henry Mintzberg in your travels. Not only is he incredibly insightful and has been for decades, he has a very good ability to juggle academic rigour and practitioner applicability and his writing style is understandable, interesting and very engaging.

Way back in 1979 he wrote a paper about direct research which is has applicable today as it was then when it comes to thinking about how to effectively research strategic management. There is a big spilt in this area between;

those who believe management research should try and emulate the methods of scientific research;

Trying to investigate actors’ subjective processes, because they are considered unobservable in an objective fashion, might introduce the very guess work and dogma that science has been trying to eradicate since the enlightenment.

and those who believe that anything involving human beings and human cognition can't be effectively researched that way and the results are "the pretence of knowledge"

The social world cannot be understood in terms of causal relationships that do not take account of the situation that human actions are based upon the actors’ interpretation of events, social meanings, intentions, motives, attitudes and beliefs.

Henry's article (and my own view) is very much aligned with the second view point. He writes;

I see two essential steps in inductive research. The first is detective work, the tracking own of patterns, consistencies. One searches through a phenomenon looking for order, following one lead to another. But the process itself is not neat.

The second step in induction is the creative leap. Every theory requires that creative leap, however small, that breaking away from the expected to describe something new. There is no one-to-one correspondence between data and theory. The data do not generate the theory - only researchers do that - any more than the theory can be proved true in terms of the data. All theories are false, because all abstract from data and simplify the world they purport to describe.

Management research is still battling to break free of scientific shackles which seem to result in research into the insignificant at expense of the interesting (not my words but I can't be bothered trying to find out who's they are!!!!).

The paper Henry wrote (Mintzberg, H. (1979). An Emerging Strategy of "Direct" Research. Administrative Science Quarterly, 24(4), 582-589) hasn't dated and I have used it to help my arguments and it is well worth a read if you have access to research databases.

Recognising patterns in strategy

2022-07-01T12:33:00.004-07:00

Sometimes it seems as though the people involved in strategy must have a rare intellect able to hold multiple conflicting threads of information whilst including future possibilities and probabilities finally coming up with something interesting.

But do they really.

In a similar manner have you ever wondered how chess masters can play 25 games at a time and still win nearly all of them? On February 8-9, 2011, Iranian grandmaster Ehsan Ghaem-Maghami achieved the Guinness world record for most simultaneous chess games. He played for 25 hours against 604 players, winning 580 (97.35%) of the games, drawing 16, and losing 8. A brain the size of Texas.......

But this experiment tells us something.

First, present a grandmaster and a novice with a position from an actual, but unfamiliar, chess game (with about 25 pieces on the board). After five or ten seconds, remove the pieces and ask the subjects to reproduce it. The grandmaster will usually reconstruct the whole position correctly, and on average will place 23 or 24 pieces on their correct squares. The novice will only be able to replace, on average, about 6 pieces. Repeat the experiment except that now the 25 pieces are placed on the board at random. The novice can still replace about 6 pieces and the grandmaster-about 6!

The chess masters recognise patterns in chess easily and given the pattern they see they have a pretty good idea of what to do. So in reality they aren't really playing simultaneous chess games, they are more solving chess puzzles one after the other after the other etc etc.

Strategists, at least good strategists, are doing something similar - given the environment and what is happening internally what are sensible strategic moves we should consider. Obviously given the additional time available strategists have the luxury of gathering any required information and thinking trough the issues before deciding what is to be done.

The key point to note though is that the chess master can't do this after not having played chess for a year. The patterns will look unfamiliar and he/she is likely to stumble far more. Strategists need to be doing strategy more often than annually if they are going to become, or stay, good.............

Reviewing strategic decision making - interesting article

2022-07-01T12:33:00.003-07:00

As dear old Henry [Mintzberg] said - we are all too frequently presented with aspects of the trivial new at the expense of the significant old. There have been many clever minds and wonderful papers and articles written on strategic management but often they are forgotten, seen as now out of date whereas they are often principles based and just as insightful today as they were all those years ago.

One such paper I struggled to find again, but thankfully did, was written in 1988 by William Starbuck and Frances Milliken (Starbuck, W. H., & Milliken, F. J. (1988). Executives' perceptual filters: What they notice and how they make sense. In D. C. Hambrick (Ed.), The Executive effect: Concepts and methods for studying top managers (pp. 35 - 65). Greenwich, Connecticut: JAI Press.) on the subject of Executive perceptions. The reason it is a little hard to get hold of is that it is part of an edited book but I have included the reference above for those keen enough to want to track it down.

It makes a number of very interesting observations about Executive perception and how filters are employed for them to make sense of what they see and how this flows onto strategic decision making. In this blog though I'd just like to highlight quite a simple observation but one I think potentially effect a lot of us and the way we see and then look at the management world of decision making.

'People seem to see past events as much more rationally ordered than current or future events because retrospective sense-making erases many of the causal sequences that complicate and obscure the present and the future.'

This basically means as we look back, the links that occurred to get us to the present seem somehow obvious and 'relatively inevitable' as though they were always going to happen and therefore we should have been able to see the now obvious, previously. A simple example, once the St Louis cardinals won the World Series it doesn't seem that surprising and somehow they were always on track yet 6 weeks previously they actually appeared to have little to no chance. Once we know what happened it all looks so obvious but off course it isn't.

So in management when we review decisions or projects we often do so with the outcome known and this equally colours our view of the merits of the decision or project.

'Knowing that bad results occurred, observers search for the incorrect actions that produced the bad results. On the other hand, organisational success is often credited to executives accurate and insightful vision.'

I think this is summed up beautifully with the following. Imagine you are on a Board faced with a strategic decision that has a medium element of risk but a balancing element of reward. You decide to go for it and there are off course two future possibilities, success or failure and these will now colour the decision even though the decision is taken with the best information available at the time.

If it fails (the decision and decision makers maybe looked upon as) - a poorly thought through and rash decision that did not take into account the risk sufficiently
If it succeeds - A courageous and far sighted decision in the face of adversity

The key point is of course that success or failure contains a myriad of factors, many outside the control of the organisation so success or failure may have a lot to do with luck and circumstance. The key learning, try to look at past decisions within the context they were made and not the now obvious context of the present. This may stop incorrect witch hunts or the promotion of individuals based on luck.......

The annual strategic planning retreat

2022-07-01T12:33:00.002-07:00

More synonymous with food and drink than thinking and planning, the annual strategic planning retreat is etched onto many organisations calendars. It is meant to be the place where the company's future direction is discussed, debated and the outcome is a well crafted plan positioning the organisation in the attractive industries of the future....

The problem is that business, opportunities, threats, moments of crisis etc don't wait until you have had your strategic planning retreat. They come up at random moments and require reaction if the organisation is not going to miss the turn off to the future.

Imagine strategy in a military sense, lets wait for an annual planning session to determine how we are going to fight this war!!!! It just doesn't work does it. Strategy is more a constant process than an episodic one with information constantly being checked and input into the thinking process. The key question that should always be in every strategists mind when information comes is - so what does this mean? So what does this mean??

I have a hunch that strategists in business may be rarer than you think and though there are many people out there who have the word 'strategy' in their title, this may be a little illusory. I was once employed by a NZ Govt. department with the very posh title - Regional Strategic Planner. I lasted three months before resigning as only the word 'Regional' was accurate, certainly there was no requirement for strategy or planning, concepts that didn't seem to be understood at all.

My research is going to look into this very area, what and where are the 'real strategists' and what skills and competencies do you need to be a 'real strategist' and not a well dressed impostor..........

Hope is not a risk management strategy

2022-07-01T12:33:00.001-07:00

I used to tell people - hope is not a strategy but I heard a financial analyst on TV and he added the words risk management and I kind of liked it so now it is - Hope is not a risk management strategy.

Quite simply, if any of your strategy is based on hope then it is time to rethink your strategy. Hope and optimism are good things but you can't rely on them and therefore your strategy(s) need to be far more robust. A client of mine recently experienced a significant change of policy from a key supplier, one that impacted directly on key aspects of their growth strategy. Their reaction seemed to be 'lets carry on and hope they don't implement' mine was to attack and get that policy changed or change our strategy. Hope just isn't enough.

Imagine a military leader writing a report saying 'we were outflanked but we carried on and hoped we would win the engagement anyway'. You would expect, as would his/her troops, that the leader would react to this change and develop a sensible and sound response, one that took positive steps in resting back the advantage. Writing that it reminds me of the trench warfare military tactics of WWI, that seems as though it was essentially a hope based strategy, one that turned young men into dead men at an incredible rate.

Their are two key words in that previous paragraph, react and advantage. Strategy is essentially about gaining advantage relative to your competition and when the environment changes or new information is available that materially effects the situation you must react.

I love the saying - Hope is not a risk management strategy!!!!!!

Strategy - decision making V implementation

2022-07-01T12:33:00.000-07:00

It has been a little while since I have added to this blog, mainly due to business and keeping my more regular blog updated. I may import these blogs into my main blog over time, we'll see.......

It is quite an interesting area of strategy, just how connected or disconnected are the processes of decision making (working out what to do) and implementation (actually doing it). In the real world of course they are just two parts of ultimately the same question/problem and viewing them as separate doesn't seem on the surface that helpful. But.......

If a strategy fails to deliver the intended outcomes is it a fault of the strategy or the implementation? Even if a strategy has been fully implemented it may have been done in a sub standard manner.

It creates this paradoxical position for the creation of strategy. Do we limit the position we want to be in the future by our known (or assumed) ability to get there or do we set the "right" strategy knowing that we haven't got the organisation to get there? And that raises a number of other questions about what are we actually trying to achieve bearing in mind that an organisation doesn't exist separate from the people inside it. No point in developing a rocket that can take people to Mars if it can't keep them alive for the whole journey.........

Strategy, as Mintzberg eloquently argues, is more a craft than a science and often it is the experienced managers and strategists who develop strategies that feel right. They make sense for the organisation and they are within the capabilities of the organisation, or at least not a bridge to far as some form of stretch is often positive for mobilising resources.

Like all matters in the strategy sphere, there isn't black and white and often even a huge debate about which shades of grey we are actually talking about!!!!!!

The importance of knowing what you don't know

2022-07-01T12:32:00.003-07:00

Being an expert and knowing a great deal about a subject area is an advantage, a big advantage. In business you may know a lot about accounting (if you're unlucky) or law and you can both use this to advantage in your own company as well as for others as a director/advisor/consultant.

It is stating the obvious however that an expert in one area is not therefore an expert in all areas. It does beg the question why we ask our accountant or lawyer for advice on business in general. Especially accountants who have somehow become seen as more general business advisor's when they remain a limited expert in one area only, an area that faces towards the past and not importantly the future.

Letting that go for a minute, I think what is very important is to know what you don't know in areas of business that we sometimes think wrongly are more like common-sense. Marketing and branding, human resources, IT and (god forbid but yes) strategy and governance are just a few examples where people often like to have a go rather than get someone who actually knows what they are doing.

The problem is that we can't know how badly (or well I suppose) we have done because we can't turn the clock back and see what would have happened if we had actually paid for someone to do the job properly or at the very least provide us a little bit of advice and at least get us pointing in the right direction. By not using experts we think we are saving money and the only way this logic works is that we have to assume that the expertise will be no better than our own 'common-sense'!!!!! Yeah Right!!!!!

Strategy and governance (my own areas of interest) are to me the most obvious. A company run by inexperienced, often owner/directors, that isn't running well would benefit hugely by replacing the directors with an experienced, knowledgeable and balanced board. Yes you may have to pay them more than you pay yourselves but always remember.........

IF YOU PAY PEANUTS, YOU GET MONKEYS..................

Strategic everything equals strategic nothing

2022-07-01T12:32:00.002-07:00

Business is now awash with strategy and almost none of it has anything thing to do with strategy. The word strategy or strategic is just put at the front of existing terms to make them sound mystic and important and it is all basically bollocks. Goodness knows it is rare enough to find actual strategy rather than check box exercises or the annual rewrite of the mission, vision and values (and I'll return to organisational values in another blog soon as that is an interesting aside).

This morning on the business news site I subscribe to I saw the following headline -

APN New & Media, publisher of the New Zealand Herald, has appointed Deutsche Bank to undertake a strategic review of its media assets.

If we take the word strategic out we have -

APN New & Media, publisher of the New Zealand Herald, has appointed Deutsche Bank to undertake a review of its media asset

And so the question is of course what is the point of the word strategic except to make it sound important and justify the appointment of very expensive consultants.

Unfortunately if this was an isolated example it would be interesting but when I saw this it was the straw that broke my blogging back and I just had to write about it as the business community is now inundated with strategic everything. I went to Google news and typed strategic business and this is what the headlines (all from the last 9 hours) say:

Harnessing Strategic Business Growth
APN undertakes strategic review of its NZ assets
While we have already taken significant strategic steps to transition our business to the new digital media landscape, we are excited about the financial ...
The first in the industry to link both business strategy and portfolio strategy with transaction management and execution, PortfolioCommand(SM) combines ...
Supertankers Delayed in China as Nation Fills Strategic Reserves
Bar Harbor Bankshares Announces Strategic Acquisition of Border ...
The company selected GlobalEnglish after an exhaustive search for a strategic communications partner capable of providing a global, scalable solution that ...

Admittedly a couple of those stories are strategic but the rest use the term for aggrandisement and the bottom line is the word is now generically used instead of the word 'important' when it needs to be used at all.

I plan to double my charge out rate as a consultant in the future as I no longer plan to read anything, I will be strategically reviewing documents.......

Strategy information

2022-07-01T12:32:00.001-07:00

There is an absolute truckload of books, journal articles and magazines dedicated to strategic management and strategic planning. This is quite interesting as it seems most of the great minds in the area recognise that we don't actually know that much about strategy let alone how to do it well.

Why so much stuff, because it sells.......

There seems to be an insatiable demand for literature on the subject and plenty of authors happy to meet this need. Just stick "strategic planning" (in quotes) into the book section of Amazon and how many hits are there in the business and investing section? I'll tell you because I have just done it a jaw dropping 19,013!!!!!!!!!

Out of curiosity lets look at some other notable areas:

strategy - 33,858
"strategic planning" - 15,140
"performance management" - 1,662
governance - 7,629
"project management" - 6,088
marketing - 427,950 (WTF?????????)
leadership - 25,316
Accounting 101,526

To be absolutely honest I'm not sure what that piece of quick and dirty research tells us, maybe that publishing a book on marketing is the way to get your toe in authoring business. Also the more an area is subjective the more opportunity there is to peddle the 'right' answer. Accounting being the exception but all business have to do accounting properly thanks mainly to the tax laws so that maybe related to compliance.

There are plenty of strategy books telling us the right way to do it to get the right answer yet there is no right answer, it just is not possible.

‘Strategic decisions involve analytic approaches that are different from those presented by other business functions—in particular, strategic decisions are not amenable to solution by algorithm, no matter how complex or sophisticated’[italics added]’ (Grant, 2008).