What is strategy? … and the strategy life-cycle

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Just working on the first chapter of the textbook 2nd edition, and thought it needed a bit more on this question – found the only way to explain to newbies was to go through an organization’s life and track what ‘strategic management’ actually does over that time-horizon. Main messages are:

  • The choice of strategic ‘position’ [what to provide, to whom and how, relative to rivals] is a very rare activity.
  • Substantial strategic initiatives [acquisition, new market entry etc] occur occasionally.
  • By far the majority of the task is steering [a.ka. implementing] the strategy from period to period.

So – how come the attention in all the textbooks and journals is in precisely the opposite priority?

This took me on a tour around some interesting examples – Blockbuster vs Netflix in video rental, Alibaba.com [China’s eBay-beater], IKEA, etc. And also onto Michael Porter’s ‘What is Strategy?‘ article [HBR, Nov/Dec 1996], which got me really annoyed, because it totally dismisses everything except the first task – though that shouldn’t have surprised me I guess.

See a draft of this new section here [forgive the baby steps approach, but it has to work for new-comers to strategy as well as you experts!].

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Comments

  1. Nikos K. Kokkalakis  December 19, 2008

    My answer to your question, Kim, I am afraid will disappoint many, but I think strategy is simply the answer (deliberate or emergent!) to the question: what to do? This omnipresent question continually tantalizes managers at various levels of activity and at different frequency in time, as you point out. All the tools and fads revolving around ‘strategy’ try to shed a light on that question –from its particular angle each. None, in my opinion, suffices by itself. Managers who ultimately prefer to rely on logic and instinct to decide ‘what to do’ in a complex, real world, may, after all, know better than strategy theorists…

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  2. Kim Warren  December 22, 2008

    Thanks for your comment Nikos. I could not disagree for a moment that multiple tools and methods are needed to develop and run strategy [I don’t think I have argued otherwise?]. The problem I am raising is that the majority of tools address a question that very rarely arises in an organization’s life, and that there are few tools available for the questions that persist.
    Relying on logic would be a professional approach, but we need to be certain that our logic is correct, which is where formal, codified frameworks and methods become relevant in othe professions. I also agree many organizations succeed on the basis of CEO’s gut instinct – until they don’t that is. Herb Kelleher, the eponymous hero of Southwest Airlines, told the Strategic Management Society when thanking them for their life-time achievement award, that he didn’t know what strategy was and had never written a strategic plan. The problem arises when such heroes either lose their touch or move on. Southwest struggled after Kelleher’s departure, and there are frequent reports of firms having to call back departed CEOs to fix things – MacDonalds, Starbucks, Apple, etc etc.
    Kim

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  3. Nikos K. Kokkalakis  December 30, 2008

    Right. I think you are also touching on another tantalizing question: why so many long-tenure, ‘heroic’ CEOs seem to leave a mess behind? Is it that they tend to shape business models–however successful for a time–too tailored to their own personal idiosyncrasy? Maybe ‘intuitive’-type CEOs are inclined to do that more than ‘analytical’ types? Then again, if more CEOs are intuitive than analytical (because the former are more successful at this role?), we may have to content with the cyclicality of business performance and the turbulence of CEO succession driven by these humans’ corporate lifecycle. (Anyway, this may give the occasional anti-heros a turn at the helm, which, I think is not too bad! But their time will pass too. Are there any once-and-for-all fixes in business?)

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