If you’re reading this column for the first time, welcome to one of the most important discussions that will define you as a manager, young and old alike. I’m willing to bet my entire collection of silver-backed, blue tooth bronze whales that many reading this will already have strong views about strategy. The problem is, so does everyone else. For the record, I see strategy as a process, not as an outcome. For example, in my view, implementing CRM to enhance customer loyalty is not a strategy — it’s a project. The difference is critical in terms of action, accountability and strategic success.
As discussed in my August CIO column, between 60% and 90% of all business strategies — including IT strategies — fail. IT could be, and should be, the big player in establishing the critical processes that enable strategies to succeed.
If you’re still with me on this, here comes your big test. Before we can discuss how IT should not only implement the critical systems that deliver strategy but indeed be the intellectual hub for strategy, we need to establish how you view strategy.
Strategy has been linked with warfare for thousands of years — but not solely. One of the earliest known examples of strategy with relevance to business occurred when Socrates counselled Nichomachides, a Greek militarist who had lost an election to Antisthenes, a businessman, for the position of general. Nichomachides felt Antisthenes was not qualified for such a position. Socrates compared the duties of each and explained that both men — Antisthenes as a businessman and Nichomachides as a militarist — planned the use of their resources to meet objectives. Therefore Antisthenes was adequately qualified for the strategist role of general.
With the fall of the Greek city-states, the viewpoint of using resources to meet objectives was lost and did not rise again until after the industrial revolution.
By the late 19th century, the sophistication of many nations led to strategy being used to describe the management of national policy. Here the focus was not on the deployment of troops and hardware to achieve military objectives but on the employment of national resources for the achievement of goals and objectives. The utilisation of strategy as a management tool has only really come into prominence since World War II. Before then, there were relatively few large multinational companies, the business environment was relatively stable and the need for formalised planning was not seen as important.
However, after the war the business environment began to experience rapid environmental change and competitive pressures. An American academic who knows a lot about this stuff attributed this change in the environment to two significant factors:
1. The marked acceleration in the rate of change within firms.
2. The accelerated application of science and technology to the process of management.
New technologies spurred interest in, and acceptance of, analytic and explicit approaches to decision-making that increased management’s ability to deal with an increasingly uncertain future.
Before we can leave this history lesson I need to explain the evolution of what the leading business schools are now telling their best and brightest.
Before World War II, the pace of change was relatively quiet. For this reason effective budgeting was seen as the process for delivering strategy. After the war there was a need to plan. Budgeting was all well and good but it did not look past 12 months, and back then the pace of change meant that business could forecast five, 10, 20 even 30 years ahead with relative confidence. But during the 60s supply started to outstrip demand and competitive pressures meant organisations had to consider each other when developing strategy. Throughout the 60s and 70s product-driven strategies were the norm but with the advent of consumerism any strategist worth his salt looked to match consumer demand with product strengths while considering the impact on the bottom line (Figure 1).
As the 70s progressed into the 80s and early 90s, organisations still focused on the issues that dominated the strategic marketing era. However, they had to be very cognisant of what competitive forces were going to do rather than what they had done. Also, the smarter companies were starting to lead consumers’ product expectations. This meant organisations had the ability to create demand for products that consumers were not yet fully aware they wanted.
Strategy development during this management phase was dominated by the prescriptive view of strategy (see Figure2 in last month’s column, Why Strategies Fail). The core weakness of this dominant view of strategy is that it treats issues and actions largely in isolation — there is no cause and effect. Thus, we tend to have silo strategies that match the hierarchy of the business — corporate, business unit, operational, IT, HR, marketing and finance. In today’s complex business market, however, issues are rarely confined just to the corporate area or marketing. Most strategic issues these days are interrelated and part of cause and effect (Figure 2). Look at the call for IT to continuously consider the customer in all functions we perform.
Thus a new era of strategic management has been born, strategies should no longer be seen as just outcomes, or indeed one-offs (How often have you been told, “this a strategic event”). All strategy, including IT (Figure 3), needs to show cause and effect within a process that implements them.
Currently IT should provide the information and communication enablers for any strategy. However, in an integrated and dynamic world this is not enough. It is my proposition that those of us with a strong understanding of IT issues (and pragmatic solutions) are best placed these days to provide the strategic intellectual grunt as well. This means moving from being an IT specialist to a business generalist, and the vehicle for this is in a large part strategy — having the ability to understand how to create and implement organisationwide integrated strategy.
In my next article I will focus on how IT can and should start to dominate strategy and strategic delivery. I will introduce discussions with Garth Biggs (CEO at Gen-i) and Dean Hall (northern operational manager at Computerland) and start to show why the integrated view of strategy is not only critical to business success but critical to technologists if they want to be leaders within business.
David Linstrom is managing director of Practical Strategy Consulting. Linstrom is author of At Last — A How To Guide for Strategy, available from www.practicalstrategy.net. He can be reached at firstname.lastname@example.org.
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