Update on the troubles with strategy

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Here’s my latest msg to the B School academics [remember the point of this is to get some useful strategy methods for executives and consultants]. Will let you all know what response I get.

” …

Have had many useful answers on this. There seems little dissent that:

  • we have a problem with current strategy methods not being valued by the people who are supposed to use them,
  • … which implies we have little useful theory [notably that seeking explanations for profitability is the wrong question], and
  • existing strategy tools focus on the rare issue of choosing strategic position, rather than what management actually does to steer strategy and performance continually through time.

If this is all about right, perhaps any firm’s ‘sustained competitive advantage’  shows up not in persistent higher profitability, but in stronger sustained growth in cash-flows. Perhaps this implies that the question strategy should be asking [in business cases at least] is ‘what does management actually do to deliver sustained growth of cash flows ahead of others?’ On this measure, performance of strong firms might be tens or hundreds of times greater than that of weaker ones, so an answer would seem to be of more interest to our customers .. executives, consultants, students .. than a few percentage points of ROIC or ‘rent’.
It would be useful to hear more from the senior figures in the strategy field as to whether this is all way off-target – I would not want to stand accused of encouraging colleagues down a long, deep and dark blind alley. Maybe there is no problem with the reputation of Strategy in its market-place, with basic strategy theory, or with the utility of the tools and methods that are recommended and taught?

…”

Kim

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