Solving the Strategy Delusion

Mobilizing People and Realizing Distinctive Strategies

M. Stigter, C. Cooper

• Publisher: Palgrave Macmillan
• Year: 2016
• Print ISBN:
  9781349999941
  9781137394675
• eBook ISBN:
  9781137394699
• Topic: Business
• Subtopic: Business Strategy
• Index: Business

Solving the Strategy Delusion matters to anyone interested in realising strategy in the 21st century. The book challenges conventional and 'delusional' approaches to strategy. It offers different ways of seeing, thinking, planning, acting, and mobilising when it comes to making strategy happen in a world of volatility and complexity.

1

What’s Going On?

Let’s not beat about the bush. Most of our strategic change efforts aren’t being realized successfully. Most of our leaders aren’t consumed with organizational strategy but are instead overwhelmed with managing day-to-day operational challenges. Most organizational leaders don’t have a longer-term strategic focus but are overridden by short-term performance requirements from shareholders and analysts. Most of our strategies aren’t distinctive and created from the Outside-In but rather from the Inside-Out based on current resources and capabilities. Most of our organizations aren’t really customer centric but are mainly sales and marketing driven. Most of our workforces aren’t engaged but are paralysed by inertia and collectively withdrawing extra-energies. Most of our values and desired behaviours aren’t being demonstrated consistently and enduringly throughout our organizations today. What’s going on?

Simply put we believe that many organizations are trapped in deluded beliefs in relation to strategy. Delusion can be defined as a rigid system of beliefs with which we are preoccupied and to which we firmly hold despite the logical absurdity of the beliefs and a lack of supporting evidence.¹ It is rigid and embedded delusions that are holding back many of our organizations today.

In this chapter we focus on typical strategic delusions relating to embedded beliefs about Change, Planning, Leadership, Customers, People, and Behaviours as illustrated in Figure 1.1. We raise provocative questions in this opening chapter that are further explored and tackled throughout the book. We use the terms ‘strategy’, ‘change’, ‘strategic change’, and ‘organizational change’ loosely and interchangeably.

Figure 1.1 Six typical organizational delusions related to strategy

The Change delusion

Stating that strategic change is difficult to realize is not the point. We all know that. We only need to look within our own organizations to acknowledge the challenges in making change happen consistently and sustainably. If still in doubt we always can refer to John Kotter and other academics to tell us that between 70 and 90 per cent of strategic change initiatives fail.²

But how can such failure rates be endured? The short and simple answer is they can’t. Isn’t it incredible that even prominent organizations, let alone whole industries, are caught out, replaced, or destroyed without being able to manage the inevitably required strategic change? How can it be that a renowned organization goes from 50 per cent global market share domination in one year to just 3 per cent share within four years? Or, how can it be that another company enjoys a 20 per cent global market share when voted the fastest growing company in the world by Fortune magazine only for its market share to drop to below 1 per cent four years later?

Unfortunately, these are real examples as illustrated in Table 1.1 and the frightening thing is that our list could be endless. Are many of our organizations ‘deluded’ when it comes to acting on strategic change? We provocatively would argue: YES! So, what’s going on? There obviously are numerous reasons as to why we often fail to realize strategic change. These will be explored throughout this book. But to start with one underlying reason for failure is that we keep holding on.

Holding on to the nut

Hopefully it’s not stretching the analogy but it is like a monkey holding on to a nut. There is a YouTube video in which a tribesman somewhere in Africa can be seen catching a monkey.³ A hole has been dug into the ground with an opening slightly larger than a monkey’s hand. A peanut has been placed in the hole and the tribesman can be seen hiding behind a bush. Suddenly a monkey arrives reaching his hand into the hole, grabbing the peanut and making a fist with his paw. Now the monkey’s dilemma: the monkey can’t get his hand out of the hole unless he drops the nut. The neck of the hole is not wide enough. Of course, the monkey could drop the nut and easily get his hand out. But he won’t. Despite having at his command the means to escape he doesn’t but keeps holding on to the nut while the hunter walks up to the monkey and captures him.

We tend to do the same in organizational life. ‘When a company is really busy holding on to what it has built, it is difficult to put enough of a push towards something so drastically new and engender urgency in it’, as admitted by Frank Nuovo, who was the former Chief of Design at Nokia.⁴ The ramifications of holding on can be dramatic for companies and some examples are illustrated in Table 1.1.

But many of our own organizations also fail to realize strategic change because of the monkey-trap. We focus on holding on to incremental improvement of existing strategies and offerings. We are busy coming up with new versions of old strategies rather than aggressively seeking disruptive strategic change. ‘I look back and I think Nokia was just a very big company that started to maintain its position more than innovate for new opportunities,’ Nuovo says.

Within our own organizations we also have a tendency to hold on, maintain our position, and look for opportunities from the Inside-Out rather than the Outside-In. We become trapped within an internally driven paradigm where we look at ‘opportunities’ based on current product offerings, resources, and capabilities. We start to believe that strategic change is a response and not an anticipation. Strategic change becomes reactive by thinking from the Inside-Out instead of proactive by sensing from the Outside-In. We subsequently come up with indistinctive strategies and offerings. Then suddenly one day we realize with amazement that things are no longer what they were.

Table 1.1 Common examples of holding on to ingrained offerings and business models⁵

Holding on to ingrained models

So, why did, or still do, renowned companies as illustrated in Table 1.1 face strategic change constraints in the digital age? Why don’t they capture the opportunities of today’s and tomorrow’s global economy?

The short answer is that even the best of today’s companies together with most of our own organizations are holding on to an organizing model designed for an earlier era.⁶ The way we still lead and organize our companies together with the way we strategically think and act is based on a twentieth-century model. We are busy holding on to ingrained organizing models unsuitable for managing today’s complexities and opportunities.

Trying to run a company in the twenty-first century with an organizing model designed for the twentieth century places limits on how well a company performs or even survives. ‘It also creates massive, unnecessary, unproductive complexity – a condition that frustrates workers and wastes money. The plagues of the modern company are hard-to-manage workforce structures, thick silo walls, confusing matrix structures, e-mail overload, and undoable jobs’.⁷ So, we shouldn’t be surprised that most of our companies still earn profits per employee at close to the same low levels earned in the past century.⁸ We simply haven’t become very adept at mobilizing our organizations and people for strategic change in the twenty-first century. Instead we continue holding on.

The Planning delusion

If we dropped into a boardroom or executive team discussion chances are that the relevance of strategic planning is being debated. There is an argument going on that strategic planning has become irrelevant in today’s volatile and fast changing environment. The speed of the new economy has caused many executives to think that longer-term strategic planning is becoming immaterial.

But let’s be careful not to throw the baby out with the bathwater. The need for enduring and distinctive strategies is actually higher in a fast-changing world. The reality is that creating distinctive strategies takes time. The fabled Eureka moments may lead to a novel tactical breakthrough but they rarely lead to distinctive strategic offerings. Strategic breakthroughs come from long-term and iterative strategic sensing, strategic creation, and strategic realization.

So, whilst strategic planning – as we know it – has become irrelevant it would be a delusion to think that our ability to create and execute distinctive strategies has lost any relevance in today’s fast-changing world. Unfortunately, we often confuse strategic planning with strategy creation. We often seem consumed with the process of putting together a strategic plan as opposed to the practice of strategizing. Let’s examine this further.

In search of distinctive strategies

It is not uncommon that once a year the executive team of an organization takes off to a retreat for a two-day strategic planning workshop. The output of such workshops tends to be a plan around strategic objectives that often have been developed during the workshop. Such plans typically include financial objectives like increasing revenue and net income by x per cent within x years; customer objectives like growing market share by x per cent through geographical expansion or the launch of a new product; internal support objectives like rolling-out a new IT (information technology) system within a certain period of time; and people objectives like recruiting and retaining the best employees who are skilled, motivated, and engaged.

Obviously these examples are overly simplified for the purpose of this discussion. Even so many of us will recognize similarly developed objectives. At first glance the described objectives seem balanced, from various perspectives and quantifiable. But to us the above objectives exemplify the many problems associated with developing strategies. Many developed strategies, like our examples, are mediocre and not distinctive. The mentioned objectives do little more than restate obvious aims. They provide no help to anybody within any given organization because they are just another common way of defining the universal objectives of basically all organizations.

The objectives in our example are indistinctive because they have been created from an internal (executive team’s) perspective. Our customers couldn’t care less about us wanting to increase market share. Our people all understand that we want them motivated and engaged because that means higher productivity and performance.

But these so-called objectives are at best ultimate outcomes. What is much more difficult to try and create are underlying objectives from true customer or people perspectives. So, the real question to ask is what the underlying objectives should be that encapsulate value propositions to our customers or people. What are distinct strategic offerings we need to focus on going forward that are of true meaning to our customers (and therefore ultimately result in increased market share) or tha...

Table of contents

• Cover
• Title
• 1  What’s Going On?
• 2  Strategic Sensing – Not Just Thinking
• 3  Co-Creating a Compelling Story
• 4  Co-Creating Distinctive Strategies
• 5  Realizing Distinctive Strategies
• 6  Overcoming Inertia
• 7  Sustaining Organizational Energy
• Afterword
• Glossary
• Notes
• Index