Major confusions about strategy
Even the academics can’t agree on strategy
I confess I am a bit of a reductionist. Reducing business management concepts to the essential components, I believe, helps executives to embed the concepts in their organisations and accelerate performance. That said, strategy is nothing if not complex, so all the more reason to prepare executives to deal with that complexity. However, if executives find understanding strategy a challenge, be assured that academics find researching the concept challenging as well.
The reason for the difficulties, however, is simple. Strategy is not easy because the essence of a business strategy is to develop and maintain a competitive position. To be competitive means being perceived, by those customers the strategy is targeting, as providing a greater value from what is already in the market. What typically happens, however, is that organisations try to shortcut the development process, looking for models and frameworks supplied by academia (and by management ‘gurus’), only to dumb down their own strategy development to the point that their strategies are undifferentiated from their competitors. They may, in fact, end up only harmonising their offering with the competition, leading to commoditisation and no alternative but to cut prices. Sound familiar?
In my role at Henley and as a result of my current research for my DBA, I have come across a lot of literature that aims to explain strategy and provide models and frameworks for business executives to use in developing their business strategies. However, taken as a whole, there is little agreement and a lot of contradictions. Two of the pioneers in this field, Mintzberg and Ansoff, have even crossed swords about this. Mintzberg believing that a single definition for strategy is unhelpful (1987) and Ansoff responding by saying lack of clarity for business organisations is equally unhelpful, including Mintzberg’s ‘use of a definition of strategy which is at variance with the current practice of management’(1991).
Renowned author Richard Rumelt, in his book Good Strategy/Bad Strategy (2011), highlights that most companies have strategies that are undifferentiated. Gary Hamel, co-author of Competing for the Future (1996) and one of the ‘gurus’ is quoted as commenting on this saying, ‘This is hardly surprising, since in recent years the very idea of “strategy” has been dumbed down by a deluge of naive advice and simplistic frameworks.’ This same man has introduced, to name a few, the Core Competencies, the Passion Pyramid, the Hierarchy of Employee Traits for the Creative Economy, Strategic Entrepreneurship and the Logic of Alliance Value Creation.
Confused? There are basic principles that every executive should understand and they shouldn’t be misled into thinking there is a silver bullet in the latest blockbuster book on strategy. Tools and techniques can be learned and having a widespread view of strategy will make an executive more agile in today’s marketplace.
For those interested in learning more about strategy, The Strategy Programme at Henley is designed to provide executives with a forum where they can critique their current business strategies and acquire thought processes and tools that will enable them to challenge their organisations and contribute to the creation and implementation of better and truly competitive business strategies.
Programme Director, The Strategy Programme