The entrenched 1960s ‘planning’ regime is no longer as relevant as it was at the time of its inception – a period of certainty, predictability and continuity.
One of the greatest strategic challenges faced by business leaders today is the imperative to address the tension that exists between the direction in which business leaders would like to take their organisation as opposed to the direction imposed on them by external environmental forces. This is a challenge that is faced by many companies, as shown by our survey, which found that a substantial 82 per cent of participants agreed that their firm’s strategy content ‘is influenced mostly by industry forces and emerging trends’. 1 
The depth of this strategic challenge is compounded by the fact that both the internal and external environments that leaders must deal with are becoming increasingly unpredictable and difficult to align; in many instances, each are moving in a different and sometimes opposite direction. Further tension is added by the fact that just as business leaders struggle to meet demands for the delivery of year-on-year growth, key elements of the external environment are fundamentally moving in a unilateral state of decline. Worse still, the nature of that decline is one of an erratic and irrational ‘random walk’. Business leaders must therefore possess a capacity for agility and responsiveness in their strategising capabilities if they are to overcome the significant uncertainty and complexity that have become part of everyday business management.
Based on my own research and experience as a management consultant and executive development professional, I have noticed that the necessary level of robustness required to deliver such a strong leadership is not the norm. Rather, the overarching method of doing strategy (strategy as practice) is on the whole anything but agile and responsive. In particular, I have found that the predominant method of making strategy – the production of a static three- to five-year strategic plan – is actually a hindrance to good strategy content and can in fact have a negative impact on the strength of a firm’s leadership. In support of my observations I refer you to just one example (out of many) of survey results that express the extent of dissatisfaction with the process of conventional strategic planning. The results report that of 156 executives in major corporations worldwide, only 11 per cent believed strongly that strategic planning is worth the effort (Mankins and Steele, 2006).
The First Inconvenient Truth of Strategy
The entrenched 1960s ‘planning’ regime is no longer as relevant as it was at the time of its inception – a period of certainty, predictability and continuity. The consequence of this is that in a complex, dynamic and ambiguous world, the content of a strategic plan is bound to become increasingly obsolete the closer it gets to the expiry date of the typical three- to five-year planning period.
The purpose of this book is to provide you with insight into the detail, implications and methods of resolution to the full suite of Inconvenient Truths of Business Strategy that, when combined, act as a major hindrance and blocker to the effective management of strategy in business. In addressing the apparent lack of faith in strategic planning, and all the other issues that are articulated in The Seven Inconvenient Truths of Business Strategy, I propose the application of a fully integrated Strategic Management Framework (Figure 1.1) as a solution – in particular to the system and process components of strategy.
People issues are also addressed within the context of The Seven Inconvenient Truths of Business Strategy, they include individual behaviours and capabilities and the management and effectiveness of those individuals as leaders and members of teams. Ultimately, the people issues related to strategy as practice are assessed in a context of strategy as a profession.
Each chapter in this book addresses The Seven Inconvenient Truths of Business Strategy sequentially. I have also sought to provide a conceptualisation of the content, context and implications that are integral components of the suite of Inconvenient Truths, presented in a story format and viewed through the lens of a tale of the history of the world-famous confectionery company Cadbury. The story unfolds in chronological order, it commences at the time of the company’s foundation in 1824 by entrepreneur John Cadbury who as a man of strict religion, sought to provide his customers and community with a solution to the socially irresponsible habit of excessive alcohol consumption.
Birth of the Cadbury Chocolate Company of Birmingham: A Tale of Values-driven Entrepreneurship
We commence the story of Cadbury at the time of the birth of the business which took place in the same year that Charles Dickens, renowned author and storyteller (A Tale of Two Cities, David Copperfield, Great Expectations), then aged 12, was removed from school following the unexpected imprisonment of his father, who had been found guilty of not paying his debts. Passed into the care of a family friend, Dickens was sent to work in a shoe polish factory (‘the blacking-warehouse’), allowing him to earn enough money to pay for his keep. Conditions in the factory were dire, and are described in John Forster’s book The Life of Charles Dickens (Forster,  2011): ‘The blacking-warehouse wainscoted room had rotten floors and staircase, old grey rats swarmed in the cellars, the sound of their squeaking and scuffling coming up the stairs at all times.’
Thanks to this vivid description of Dickens’s unfortunate circumstances, we can readily summon images of the 22-year-old John Cadbury who in the same year as Charles Dickens’s father’s imprisonment established a spice, herb and condiment shop in the city of Birmingham in the English West Midlands. John Cadbury had a natural entrepreneurial bent, and his first endeavour saw him specialise in the supply of tea, coffee, hops, mustard and similar products to the local townsfolk. Struggling to survive as an independent proprietor in a period long before the business application of the word ‘strategy’ was even dreamed of, John Cadbury intuitively found a way to differentiate his shop and service delivery from many prevailing and potential competitors. He found considerable success with this first business venture; it was achieved through the use of unique and differentiated market-oriented activities.
John Cadbury’s mostly unconscious and decidedly informal strategy focused on dominating the marketplace on two primary fronts. One was the use of alternative forms of in-store presentation that included the discreet placement of Asian ornaments and artefacts as well as the oriental-style clothing worn by the shop assistants. The combination served to promote a distinct air of mystique to his customers. Secondly, John Cadbury was able to attract people from far away, as many of his customers travelled to Birmingham just to view the shop front window, which was unusual at that time. It was designed in the format of small squares of mahogany-framed plate glass. This represented an attractive alternative to the larger single panes of glass used by everyone else. Overall, the appeal of John Cadbury’s shop was based on an atmosphere of sensuality and intrigue on the inside and a unique look and feel to the premises from the outside.
In addition to the market-oriented strategy that focused on attracting customers through a range of distinctive features, John Cadbury’s product range was also unusual. In order to maintain and renew his competencies in this unique market space, John Cadbury also focused on the conduct of activities that would ensure their continual renewal. In particular, John Cadbury invested in skills and equipment that would allow him to reinvigorate his product range as well as continue the refinement of other new products and service offerings. To this end, John Cadbury focused largely on the processing of a rare, and for its time unusual, product made from the mystical cacao bean (or nib) sourced from the far-off tropics in the form of a chocolate-flavoured drink widely known as cocoa.
John Cadbury’s commitment to his belief in the future of cocoa and perhaps chocolate as a commercially viable endeavour led him to establish a separate manufacturing facility in 1832. Located near his shop in Crooked Lane, Birmingham, he devoted the majority of his time to the development and manufacture of cocoa-based drinking chocolate from freshly ground cacao nibs. Such was his commitment to the promise of prosperity the future of chocolate held that in 1849 he chose to give up his involvement in his retail shop altogether, effectively reinventing himself and his business model. He literally transformed his business from a market-focused retailer – a business that benefited from differentiating activities from competitors in the manner described above – to that of a pioneer in the research, development and manufacture of the emerging consumer product cocoa. As you will see later, these business models represent a transformation from an outside-in (market-driven) strategic orientation to that of an inside-out (resource-based) strategic orientation.
The primary motive in exerting his entrepreneurial skills in cocoa manufacture and business in general was the principle espoused by the puritanical religion to which John Cadbury and his family subscribed, one that is still in existence today and is known as the Religious Society of Friends, or more generally the Quakers. Formed in the seventeenth century, the Quaker movement (created by a breakaway group from the Church of England) set out to convert others to what they believed were the proper practices of the early Church. As a Quaker, John Cadbury held a deep commitment to an envisioned future that was based on the hope that the cocoa drink could provide a hearty, healthy alternative to the common alcoholic drink that was being used and abused by many at that time: gin. Representing an extreme social problem, alcohol was seen by the Cadbury family as being ‘a curse on the modern day family and a source of ruination’.
In reality, John Cadbury’s target market was quite ill defined, and although he hadn’t realised it, was fundamentally out of reach, because the customers who chose to visit his shop were usually quite prosperous, and regrettably represented only the privileged few who were able to afford his products. They were not the impoverished drunks upon whom the Cadbury family had chosen to focus their altruistic concerns. Had the Cadbury family had an appreciation of even the fundamentals of strategy, they might have noticed the discrepancy between their vision and their obvious lack of capability to realise their proposed long-term purpose. Instead, John Cadbury, supported by his family, carried on doing exactly the same thing, and although successful to an extent, didn’t live long enough to enjoy the rewards of success which the business eventually delivered to his heirs.
John Cadbury had hoped to contribute to society as well as to build a viable business out of the obscure and bitter-tasting cacao nib that formed the foundation ingredient of the solid chocolate bar we relish today. At the time of John Cadbury’s entrepreneurial endeavour, cacao nibs had to be ground by hand and turned into a powder to be mixed with milk or water as the basis for the cocoa drink. In the early 1800s and for some time later, the product was barely edible. The enormity of the problem John Cadbury faced as a manufacturer learning to tame the science of food processing was similar to the challenge faced by many manufacturers in the early years of the Industrial Revolution: the fact that scientists understood little about why things worked, they just knew that they did.
Examples of challenges similar to those forced on John Cadbury are all scientifically based, and include paper manufacturers who had to fight to find the best way to transform wood pulp into paper, the glass industry whose participants sought to turn sand into glass through the application of intense temperatures, and the steel industry whose challenge was to use extreme levels of heat to turn iron ore into steel. John Cadbury had no notion of how to improve the relatively inefficient and, worse still, elusive science that allowed cacao nibs to be efficiently turned into an edible product. Even so, in the absence of sufficient knowledge of the science of cacao production, John Cadbury resolved to persevere, in total ignorance of any potential advances in chocolate processing technology that might emerge in the future – and the number of years it would eventually take to finally produce a quality chocolate product. For most of his life, John Cadbury clung to his belief that a viable product would become more than a dream. He hoped that such a development would allow him and his team to benefit from the intuitively certain but realistically unknown potential of chocolate. In language that we only understand today, John Cadbury’s business in effect had minimal core competencies in the processing of cacao nibs and the effective manufacture of chocolate drinks, and later chocolate confectionery.
Making Strategy Relevant
As illustrated in the introduction to Cadbury, the over-riding factor of success for industry in the lead-up to the peak of the nineteenth century’s Industrial Revolution was an acquired capability to benefit from economies of scale through mass production of commoditised goods that readily lent themselves to standardisation of product, supported by evidence of international distribution opportunities. In a sense, that was the substance of strategy at that time. It was a period of minimal resources, but a great deal of resourcefulness. The markets of the day exhibited a strength of certainty in the future, and from a market growth perspective, minimal complexity coupled with an absence of ambiguity. For John Cadbury, the actual production of quality chocolate in the form of the cocoa drink would continue as the primary challenge for a long time; he understood (or at least, he thought he understood) what his long term strategy was, he didn’t need a short term strategic plan.
The challenge for a strategy practitioner such as yourself therefore begins with the task of reassessing the relevance of the annual strategic plan to you, in the form that you use it today. To be honest, I doubt that you would be even reading this book if you didn’t share my doubt as to its real value. In writing this book, therefore, my objective is to help you reach your own conclusions as to the value of strategy and relevance of the strategic plan. Overall, my objective is to help you seek resolution of the issues raised that are associated with each of the Inconvenient Truths discussed herein, and to explore how they may help you to improve your strategising capability and the quality of outcomes from your strategy. As illustrated in the Introduction, the issues I have identified as The Seven Inconvenient Truths of Business Strategy are the outcome of considerable research, experience and soul-searching on the topic.
Making Sense of Strategy: SystemsThinking and a Matter of Purpose
If you are involved in any way in a business entity, you will be aware of the extent to which business leaders are driven to identify robust solutions to multifaceted problems. These problems typically relate to a wide variety of issues, which could include topics of marketing, customer service, service delivery, manufacturing, logistics, procurement and all forms of business management. To help you develop solutions to these complex and sometimes ‘wicked’ strategically oriented issues (along with the many challenges laid out in our exploration of The Seven Inconvenient of Truths of Business Strategy), I propose the fully integrated Strategic Management Framework (Figure 1.1) is a tried and tested way to structure strategy that can serve as an aid to help you think about solving your most challenging strategic problems. ‘Wicked’ problems are defined by Rittel (1972) as ‘those problems that are difficult or impossible to solve’. They have also been characterised as possessing incomplete, contradictory and changing attributes that are difficult to explain (Australian Public Service Commission, 2007).
Logically, a good place to start making sense of strategy is the theory, by determining how you can use it to your greatest advantage. Although comprehensive definitions of strategy theory are widely available from the literature, there is regrettably no single universally accepted definition. The reason for this is that, as explained in Appendix 1, strategy is a relatively new discipline in the context of business. As a result, the prevailing approach to understanding the topic is still complex, its research disjointed, and a method of practice that has not yet reached the realms and standard that would otherwise be required at the level of a profession. Since its inception there has also been a lack of integration in strategy practices. In laying a foundation for its recognition at the level of a profession, I propose in this book that strategy, strategic planning, strategy evaluation, strategic renewal, alignment and implementation be treated as a multi-looped and open system – evaluated and realised through a mindset of systems thinking.
In his book The Fifth Discipline, Senge (1990) defines systems thinking as ‘the intangible and unconscious ability to combine unknown, unseen phenomenon into a whole’. To illustrate the application of this principle in practice, I have adapted an example used by Senge. It refers to an unconscious or ‘taken-for-granted’ appreciation of the knowledge that dark clouds in the sky means rain. From a systems thinking perspective, we naturally associate rain with dangerous roads as well as higher dam levels. In the first context, the systemic view of dark clouds and rain implies danger on the roads, which in turn provokes the need for awareness of safety when driving. In the second context, a systemic view of dark clouds and rain invokes a suggestion of water replenishment for farmers and landowners. This in turn leads to an expectation of high crop yields and a reduced risk of forest fires. From there we can extrapolate expectations of crop prices, reduction in the need for fire prevention equipment and so on.
The format for the system I am proposing in linking systems thinking to strategy is explored as a journey of continual strategy renewal – and as an outcome continual organisational renewal supported by a constant alignment and realignment of the fit between the firm and the continually evolving external environment within which it coexists. Renewal, regeneration and sometimes reinvention of that system and the business is informed through a formal programme of organisational learning.
An example of the application of systems thinking to Cadbury is grounded in the values the Cadbury family held as justification for their initial investment in the industry, and the reason for their unreserved commitment to its success. That reason was the discovery of the nutritious but bitter-tasting cacao nib that, in the form of a chocolate drink, could provide a solution to alcoholism as well as a source of satisfaction to consumers and a basis for the sharing of wealth between the Cadbury family and its stakeholders. As observed previously, the apparent disconnect between any form of systemic alignment with the primary objective of chocolate drink being a remedy for alcoholism and the actual market they reached was not noticed by the Cadbury clan. For as long as those values and aspirations prevailed internally, the reality of the market was such that consumers were slow to respond to their product offering; it initially delivered not much more than a product of poor quality (albeit with the best possible ingredients) and a high price (as a result of the use of pure ingredients and because of the imposition of a tax on chocolate). It was also highly uncompetitive in the marketplace because of the predominance of cheaper, albeit lower-quality competitors.
As the external environmental forces shifted over time, however, the system the Cadbury family envisaged did eventually come into being, but more as a result of luck than design (often a factor of strategy that is underestimated by business leaders in general). Changes in the external environment worked considerably to Cadbury’s advantage. These included the elimination of taxes on chocolate and the passing of the UK’s Adulteration of Food Acts of 1860 and 1872 that ensured the prohibition of the use of unhealthy ‘illicit’ substances that had hitherto been the ingredient of choice among many of Cadbury’s competitors. Well known for the promise of ‘absolutely pure, therefore the best’, Cadbury was gifted an immediate competitive advantage over other less scrupulous industry participants. Internally, product quality improved as a result of the Cadbury brothers’ dogged persistence with activities that would ultimately transform their core competencies from a level of novices (driven by trial and error) to those of connoisseurs – producing higher quality chocolate products both efficiently and effectively. As we will see later, such activities are theoretically referred to as dynamic capabilities (Ambrosini and Bowman, 2009), but I prefer to call them transforming activities because this is a more relevant and broad-based interpretation of the theory of dynamic capabilities. Transforming activities are those activities that the firm does to either improve or renew its resource base and as a result, maintain or develop a new form of sustainable/renewable competitive advantage.
Therefore, when seeking an understanding of the definition of strategy, a systems approach provides a holistic view of ways in which strategy can be most relevant and add value for the practitioner. In terms of seeking a conclusive definition of what strategy is, however, my advice to you is not to bother. Rather, I recommend that you re-focus your attention towards an appreciation of the following five specific objectives of strategy that will provide you with a purpose for its use – and then the basis for its maturation into a profession:
Provide an articulation of the way in which the vision of an individual or group of individuals for a business’s future will be translated into the long-term imperatives that combine to form the content of its strategy. This is initiated through a clear and open narrative of the stakeholders’ values and an articulation of what the entity must do (strategic imperatives) in the long term to realise the ambition articulated in its vision whilst remaining cognisant of the organising principles described in its mission. An appreciation of long term is determined by the often unseen ‘rules of the game’ of an industry. As we will see later, Toyota has held the same fundamental strategy for 50 years or so.
Fundamental to an articulation of a long-term strategy is an understanding and agreement among relevant stakeholders of the preferences, aspirations, purpose, goals and desired outcomes that will be reflected in decisions to include, or exclude content. In this context, strategy can be seen to be an aspirational expression of a future that is encapsulated in the firm’s vision and mission which is imagined, expressed and articulated under the influence and at the behest of the entities leaders.
Develop a plan that describes how long term strategy will be implemented and renewed in the short term- its strategic plan and associated programme of continual strategy renewal. The strategic plan is an expression of the immediate strategic goals and objectives that must be realised if the long-term strategic imperatives are to be met, and the subsequent elements of that plan that must be continually evaluated if the strategy and strategic plan are to remain relevant now and into the future.
Provide the basis for leadership by describing the emotive and inspirational reasons why networks, teams and individuals should collaborate to realise a shared vision as well as generally agreed strategically aligned imperatives, goals and objectives.
5. Provide the basis for strategic responsiveness to changes that may materialise from time-to-time in order to inform decision making and business policy. Responsiveness can occur in the three formats of reactive, proactive and designed. A reactive response is required to deal with unforeseen events whereas a proactive response is required to manage anticipated events. A designed response is an outcome from strategy which seeks to influence and/or change the entity’s strategic posture as a result of a deliberate desire to do so. In each case, responsiveness and agility is required to enable the continual renewal and potentially reinvention of the business and to explain the method of transformation required as the organisation adapts to or helps to create changes in its internal operations or external environment that are vital to its survival or more importantly, success.
Provide support to the resolution of ‘wicked’ strategic problems: a process that is both an input to and outcome from strategising activities that address and seek resolutions to problems that are complex (sometimes extremely so) and difficult to solve. Each are aligned to (long-term) strategy (strategic imperatives) whilst also providing relief to the immediacy of those short-term strategic objectives expressed in the strategic plan.
In assessing the value of strategy, especially at the level of a profession, it is necessary to address the fundamental flaw we have identified with the method of strategic planning as The First Inconvenient Truth of Strategy and its role in providing a key purpose in doing strategy, especially as a single approach to the conduct of strategising per se. An explanation of the flaw in the planning approach begins with the fundamentals of long-standing doctrines in strategy that insist that:
- minimal changes in the business environment will impact the business whose strategic plan is based on the predetermined time lapse and linkages for ‘planning’ which are one year for a budget, three to five years for a plan and five to ten years for a vision;
- the annual strategic plan is the primary symbol and instrument of strategy creation through to implementation (never mind that the existence of an overarching long-term strategy is very often ignored in practice or simply not recognised, beyond the generally vague utterings of a vision and mission statement).
Given these fundamental beliefs, it is no wonder that strategy practice and the enunciations of strategy practitioners are regularly misunderstood. The underlying issue and greatest cause of a lack of relevance in strategic planning activities can be summed up in the following observation:
Strategy is about the future, but the future doesn’t exist, so plans that are made are based on assumptions, guesstimates, faith and hope. As a result, the validity of a three- to five-year strategic plan is bound to depreciate in value at least as fast as the assumptions and guesstimates decline in relevance over time. When treated as a steadfast road map to the future, therefore, it is not the people or map that are wrong; rather, it is the timeliness of the content. Relevance is bound to decline as soon as the reality of the actual (physical) road is being built and the future gradually unfolds.
The dilemma associated with the prevailing design of a static strategic plan is therefore the assumption that its application in practice is no more than that of a snapshot of proposed activities that will (must?) be delivered over a relatively short period – board approval given, decision made! I suggest that a more useful way to structure strategy in order to address its apparent shortcomings is to position the strategic plan in particular within the system that I refer to as the fully integrated Strategic Management Framework; and managed on a continual basis within the component of the strategic management framework that I refer to as the Program of Continual Strategy Renewal. A detailed illustration of a fully integrated Strategic Management Framework and the renewal element appears in Figure 1.1 and in detail in Appendix 2 and is explained more fully next.
Overview of the Components of the Fully Integrated Strategic Management Framework
strategy – vision, mission and a strategic architecture;
strategic planning – strategy evaluation, shaping and reviewing;
a programme of continual strategy renewal;
Element 1: Strategy: Vision, Misson and a Strategic Architecture
The first component of the Strategic Management Framework is concerned with the underlying purpose of the long-term strategy. Firm-specific strategy is grounded in a vision for the business which is mostly derived from the leaders’ (or leadership teams’) aggregated determination of an envisioned future. From our discussion of Cadbury, you may almost be able to feel John Cadbury’s perceptions of relevance to an envisioned future: a chocolate empire that would contribute to the resolution of the ills of society, bringing pleasure to all whilst at the same time generating a viable value proposition for himself, his family and his employees.
The firm’s mission defines the values, purpose, direction and the fundamental attributes of the business’s proposed market position, its renewable activities and resource requirements and its constraints. It also reflects the different perspectives that the majority of stakeholders and shareholders will have towards the business as those that contribute to an understanding of its purpose. John Cadbury’s mission was to exercise an altruistic commitment to prosperity, wealth creation and the founding of an environment of good health and welfare for all.
Strategy is the basis upon which individual motivation is captured, anticipated outcomes articulated, aspirations expressed and a desired future identified. An articulation of long-term strategy is provided by the strategic imperatives that must be realised if the firm is to succeed in realising its vision; they also combine to form the makeup and structure of the strategic architecture, as illustrated in Figure 1.1. Examples of strategic imperatives of relevance to Cadbury during the period discussed in this chapter could be to:
- build a competency in the manufacture of cocoa;
- ensure employees have access to a healthy working environment;
- make products that only contain healthy ingredients;
- target those customers who are the most vulnerable.
The terminology applied to a strategic architecture was first coined by Hamel and Prahalad (1994), who defined it as ‘a road map of the future that identifies which core competencies to build’. I have broadened their definition of the phrase to depict a strategic architecture as a formal and substantial structure of strategy made up of the following elements:
- Stakeholder outcomes – These are an articulation of the desired outcomes from strategy that may be financial or non-financial in nature, quantitative or qualitative in content, but predominantly long-term (10 years plus) in focus. In more recent times, the need to address social responsibility issues have become just as important as outcomes addressing economically based objectives.
– Cadbury Stakeholder Outcomes - The Cadbury family and their Quaker colleagues each held similar views regarding social responsibility in business, each set financial and social objectives as outcomes from their commercial activities at very early stages of their development. Financial viability was important to John Cadbury, it was seen as an enabler of the greater social objectives such as employee welfare that he, his father and later his sons would hold dear.
• Renewable market position – Porter (1985) identifies a unique market position as the basis of a sustainable competitive advantage. A market-oriented approach to strategy, as we observed above, is referred to as an outside-in strategy. This stands in contrast to the resource-based perspective of strategy, which we refer to as an inside-out strategy. In view of the dynamics that result from an increasingly rapid change in the external environment that we are experiencing today (as exemplified by increasing changes in customer expectations and behaviours) I refer to a market positioning strategy as one offering a renewable competitive advantage. This is an enhancement to Porter’s definition of a sustainable competitive advantage and a more recent perspective proposed by McGrath (2013) as that of a transient competitive advantage.
– Renewable market position at Cadbury – Cadbury suffered badly in its attempts to attain even a sustainable competitive advantage from its market positioning in its early years although it can be seen to have pursued a renewable competitive advantage throughout its life; with mixed results. Quality was its primary defining advantage early on, and for the first part of its history, product purity served as its primary point of differentiation in the marketplace. As a result of the inherent cost of the product’s purity though, Cadbury found it very hard to compete on price; it was in fact a decidedly competitive disadvantage. A sustainable competitive advantage would finally arrive in the form of its unique taste and high quality dairy milk chocolate product; regrettably long after John Cadbury had died.
- • Differentiating activities – These are the market-oriented activities a firm will conduct in order to differentiate itself from its competitors in the marketplace. Differentiating activities are also the doing component of a renewable market position, they complement the way a firms resources are leveraged into those differentiated/renewable market positions; the construct of an outside in strategy. In highly competitive markets, differentiating activities are known to provide a first mover advantage, and if easily copied, the basis of a defensible market position to be harvested before competitors can catch up. In this context in particular, knowledge obtained from an organisational learning capability will be a primary contributor to a firm’s capacity to stay ahead of competitors (Rademakers, 2014). Arguably, an organisational learning capability is critical to a firm seeking to maintain a renewable competitive advantage.
– Differentiating activities at Cadbury – Trust, business integrity and reliability were key differentiators for Cadbury in the initial period of its life – to the extent that in the late 1800s Cadbury was appointed as an official supplier to Her Majesty the Queen of England. However, ultimately these differentiating activities will lose their value as a competitive advantage, since competitors will be able to eventually copy them, or simply catch up. We will discuss later an example of such an advantage at Cadbury. It occurs in the early 1960s, when the Cadbury value proposition was considerably eroded as a result of the entry of supermarkets into the grocery industry. Following this event, supermarkets literally obliterated Cadbury’s traditional customer base of greengrocers and corner stores and caused it to rethink ways to rebuild its competitive advantage that had previously been secured through its offer of high service, low cost pricing (as a result of considerable economies of scale in its supply chain) and strong relationships with the corner store owners and greengrocers who were traditional purveyors of its products.
• Strategic intent – This is another term used by Hamel and Prahalad (1994), it can be loosely defined as ‘a readily understood and expressed articulation of the direction that the leaders of a business will take their company in the future’. I have adapted their interpretation of the concept to propose it as a description of the driving force for renewal which in general is an articulation of the purpose of the strategy; it is also a basis for transformation, innovation and growth that the strategy and associated strategic plan are seeking to describe.
– Strategic intent at Cadbury – Cadbury’s initial strategic intent evolved as a natural outcome from its vision and mission, and could be identified, especially in its early years, as ‘to provide a wholesome beverage as a viable replacement for alcohol’.
• Transforming activities – These are the doing components of a resource based strategy. They are the physical activities that contribute to the continual renewal of the resource base (and associated competencies of the firm), as well as the transformation/continual improvement of the transforming activities themselves; the construct of an inside out strategy. In differentiating between organisational resources and transformational activities, I apply the concept of dynamic capabilities (Ambrosini and Bowman, 2009) which is a concept not widely recognised by practitioners as it is still a relatively new topic of research. In an organisational learning context, knowledge dissemination can be seen to be an example of a transforming activity as a continuous improvement program. Both transformational and differentiating activities represent things an organisation can do to differentiate itself, compared to market positioning and resources as something an organisation needs to have (examples of each are market share, unique manufacturing skills) if it is to compete.
– Transforming activities at Cadbury – An example of the transforming activities that were vital to the success of Cadbury, especially during the period discussed in this chapter, is the relentless pursuit of perfection in the refinement of its core competency that would eventually result in a prowess in the production of chocolate, to the extent that Cadbury became one of the world’s highest-quality mass producers of milk chocolate products.
• Organisational resources – Underpinning the entire structure of strategy and serving as the basis of the strategic architecture are the organisational resources that are both the tangible and intangible attributes and assets of the business. Organisational resources are either built, maintained or acquired over time, and are essential components of a firm’s level of competitiveness. In this sense they actually contribute to a source of competitive advantage; they are most effective when they are at a level where they are incapable of being copied by competitors. In contrast to the outside-in marketing- oriented strategy described above, a resource-based strategy is said to have an inside-out orientation. In addition to the usual resources of plant, equipment and buildings, resources required to support strategy were identified by Hamel and Prahalad (1994) as including the core competencies of the firm; Amit and Schoemaker (1993) refer to these more broadly as the firm’s strategic assets.
– Organisational resources at Cadbury – Once Cadbury became a full manufacturer of chocolate products, its organisational resources would become its manufacturing prowess and physical assets as well as its strong brand and a highly dextrous workforce that was wholeheartedly committed and dedicated to the success of the business. Although difficult to find in the earlier part of its history, Cadbury’s defining competitive advantage would be the recipe that it finally developed to produce a defining taste in chocolate. Cadbury turned this advantage into a marketing phenomenon also; that was the ‘glass and a half of full cream dairy milk in every 200g of chocolate’.
As we will observe in more detail in Chapter 2, the strategic architecture is in itself a micro system and is illustrative of the synthesis within which the dual perspectives of outside-in (market positioning-focused strategy) and inside-out (resource/core competency-focused strategy) strategic postures are connected and interact. Toyota is an example of a corporation that operates an essentially inside-out strategy which is captured in a strategic intent and complemented by the formality of transforming activities that are embedded within its management doctrine that is referred to as the Toyota Way.
Toyota is also an example of an organisation that has usefully expressed a sentiment that supports the longevity and existence of structure to long term strategy (consistent with the design of the Strategic Architecture) supported by a short term strategic plan. Replacing the word strategy with more contemporary terminology of the day (‘policy’, refer to Appendix 1), Toyota rose to the position of world leader in the automotive industry through consistent adherence to its long-term policy, which as I observed previously has remained unchanged for around 50 years.
Toyota’s success in global markets can be attributed to a suite of strategic imperatives that are quite simple; to quote from its official history (as published on its website):
Toyota resolved to further strengthen the full-participation TQC [Total Quality Control] promotion system and to ensure employee awareness and compliance by collating and clarifying the company management policies in writing. The Toyota Corporate Policy was released in January 1963 and included a basic policy, a long-term policy, and an annual policy. The basic policy expressed the company’s fundamental view toward management, and was comprised of the following three items:
- To develop Toyota into a world leader by gathering resources from within and outside the company.
- To develop Toyota’s reputation as a quality leader through an uncompromising focus on ‘Good Thinking, Good Products’.
- To contribute to the development of Japan’s economy by achieving a mass production system and low prices. 2 
Element 2: Strategic Planning: Strategy Evaluation, Shaping and Reviewing
The strategic architecture is concerned with long term strategy at a level of market positioning and competition in an industry, addressing for example the question ‘Which business should we participate in?’ The strategic plan is the outcome from the next component of the fully integrated Strategic Management Framework (Figure 1.1) strategic planning. The strategic plan is an independent but integral element of the overall system that aligns the firm’s long-term strategy with the short term plan’s method of implementation (or ideally ongoing renewal). At the level of a plan, the strategically oriented marketing question is more concerned with markets and customers. It assumes the questions of which business in which industry are already resolved.
It is important to understand the difference between a strategy and the strategic plan. In the absence of a full appreciation of a long-term vision and associated articulation of strategy, a reliance on the implementation of a strategic plan alone cuts a long-term perspective of strategy short and creates a disjointed approach to the firm’s growth. Apple Inc., for example, lost considerable market share in the mid-1980s. Assuming Apple, like most other companies at that time, was sticking to the normal five-year planning regime we have discussed here, we can appreciate that it would have been a mistake to continue its focus on its commitment to an increasingly outdated product which was Apples version of the personal computer, or PC. Had the founder of Apple, Steve Jobs, not been brought back to lead the company, the more typical response to a decline in market share would no doubt have been enacted: to develop another five-year strategic plan which, in view of the rapid rate of change in the PC market, would again become obsolete well before its implementation could have been successfully completed. The industry was simply moving too fast for Apple and its strategic plan to keep pace. Faced with the reality of what was happening instead of a blind belief in what should have been happening, Apple’s strategic direction seemingly lurched from one strategic plan to another with little real appreciation of what it should have been doing – until the return of Steve Jobs, that is. Building on a re-energised vision of the future for Apple, Job’s disregarded the direction of his predecessor’s strategic plan. Jobs sought instead to re-focus a long term strategy on the renewal of the business through the application of new forms of technology and new forms of technology delivery (the iPod and later iTunes, for example). I suggest that in general, a short-term perspective of strategy that arises from a strategic plan’s horizon alone is bound to result in a reactive response to change. On the other hand, a short-term perspective that is continually evaluated within a context of a long-term vision and strategy will in most cases enable a more proactive response to change. The delightful thing about the Apple story overall of course is that it is a prime example of an organisation benefitting from the design of a deliberate, intended change.
The Apple example points to the value of the notions of strategy evaluation shaping (see Chapter 2) and strategy evaluation reviewing (see Chapter 3 and 7) as the two components of the strategic planning element I refer to above.
Strategy evaluation shaping
Strategy evaluation shaping is concerned with the way that strategy is formed; within the context of the previously described issues of uncertainty, ambiguity and complexity that are a natural component of strategy formation. As a discipline, strategy is firmly focused on the future, but because the future is unknown, many assumptions, guesstimates and other fundamentals of strategic decision making are applied to provide a depiction of an aspirational future which then becomes the primary content of a strategy or strategic plan.
Strategy evaluation reviewing
Strategy evaluation reviewing is made up of two components. The first focuses on the more difficult aspect of outcomes that are the result of those guesstimates and assumptions that are a necessary component of aforementioned strategy evaluation shaping. Although it happens rarely in practice, this content must be monitored for re-evaluation on an ongoing basis. Emerging trends must be assessed, warning signs noticed, the unimaginable imagined and the unthinkable thought through if the short-term strategic plan is not to become too irrelevant too soon. To take the necessity to be constantly aware of the unplanned and unexpected to an extreme, it is hard to imagine that any business leader would plan to enter bankruptcy for example, yet according to the UK government’s Insolvency Service there were a total of 15,279 bankruptcies recorded in the UK over the twelve-month period ending September 2013. Content contained in this aspect of strategy evaluation is treated as an issue of strategic governance and is addressed further in Chapter 7.
The second component of strategy evaluation reviewing focuses on the way that strategy implementation is being managed, in particular, the efficiency and effectiveness of the strategic plans implementation (hence the emergence of the program of continual strategy renewal, discussed in the next element of the Strategic Management Framework below). It can also legitimately focus on an evaluation of the outcome from the strategy per se – that is, an assessment of whether the desired outcomes were actually achieved (for example, ‘increased market share’, or ‘introduced a new manufacturing system’).
Element 3: A Programme of Continual Strategy Renewal
Although the Strategic Management Framework is an integrated system overall, this programme represents a refocusing of the managerial discipline; from that of the professional strategy practitioner, whose role is characterised by practically oriented, but otherwise unstructured, free-flowing creative thought and the preparation of the firm for a wealth creating future. This contrasts with the role of the operational performance practitioner who is more concerned with understanding why things happened in the past as well as the here and now, in the form of immediate responses to performance reports describing short term outcomes and results. In many organisations, the responsibility for operational performance falls within the domain of the chief financial officer (CFO). Increasingly though, it is the CFO who is looking for, and accepting the mantle of, the development of content contributing to an informed strategic management capability that encompasses both elements of strategy development and implementation.
The programme of continual strategy renewal ensures the maintenance of the ongoing relevance of the strategy and strategic plan and provides a home for the application of the more familiar strategy tools and templates that are static in nature and workshop-oriented in practice. I propose that the strategic plan is a fundamental component of the programme of continual strategy renewal. This purpose provides a stark contrast to the often misinterpreted purpose of a strategic plan; that of the sole vehicle of strategy implementation or worse, a list of ‘top’ priorities, some of which may not be strategic in nature at all.
A discussion introducing the content of the programme of continual strategy renewal follows. Aspects of each topic are introduced here and explored further in Chapters 3 and 5 and illustrated in Figure 3.1 and Figure 5.1.
The strategy blueprint adopts the same essential structure as a strategic architecture; it includes the elements of inside-out (resource/competence- oriented strategy) and outside-in (market-focused problem solving strategy) strategy in a linked structure, but is grounded in and derived from the specific content (specifically, strategic objectives) contained within the formal strategic plan. The strategic objectives that are contained in the strategic plan and articulated in the strategy blueprint provide the basis for the focus of the strategic plan’s and by definition the strategy blueprint’s implementation.
Each project identified as a part of implementation is subject to a strategy evaluation reviewing (above) criterion that is a normal component of programme and project management. These include the identification and quantification of relevant performance measures, time frames for results, assignment of responsibilities, and the identification of resources required to deliver the desired outcomes. The purpose of the strategy blueprint is not to provide a template for strategy, but rather to provide a structure within which the short-term strategic plan that has been developed from the longterm strategy can be validated, aligned and acted upon as critical elements of implementation.
As illustrated in Figure 1.1, the strategy blueprint provides content for the strategic change agenda, each is overseen by the strategy evaluation reviewing and monitoring mechanism (the primary contributor to the physical management of strategy renewal) and a foundation for the communication of strategy. It provides visibility to strategy content overall and is a primary focus for stakeholder engagement.
I use the term ‘strategy blueprint’ because it evokes a more action- oriented, proactive and exciting representation of what could be than most other terminology. A strategy blueprint creates a focus on and aura about the continuity of strategy as well as a flirtation with uncertainty that is a natural but often uncomfortable aspect of future-oriented (blue ocean?) decision making. The opposite view is a prescriptive, typecast outcome from a static three- to five-year strategic plan.
Toyota developed its own system of strategic planning which it refers to as Hoshin Kanri. This is a formal process of annual planning and renewal conducted within the highly structured management philosophy that we referred to previously as the ‘Toyota Way’. This discipline is in turn defined by Toyota as the set of principles and behaviours that contribute to the philosophies that make up Toyota Motor Corporation’s culture. It includes the principles of ‘Continuous Improvement’ and ‘Respect for People’. The full suite of managerial philosophies describes the principles and behaviours that are grounded in Toyota’s culture and underlie its entire approach to management, problem solving and decision making over time. These methodologies are in turn used to cascade strategic goals and objectives and thereby inform decision making in a similar format as those that I have referred to as the strategy blueprint, and associated strategic change agenda.
Strategic change agenda
Designed as a dynamic, continual management control mechanism, the term strategic change agenda is used in two ways. The first is similar to the strategic intent described above, a short sharp description of the underlying purpose of the strategic plan as articulated within the construct of the strategy blueprint. Designed in the form of a message a generic example could be ‘enabling international expansion’. A more specific example drawn from the health industry where a hospital may express a strategic change agenda of service transformation as: ‘managing wellness not sickness’. This form of strategic change agenda sits in the middle of the strategy blueprint as a reminder of the strategic plans purpose.
The second application of a strategic change agenda is an extension of the first, in the form of a process; the formalisation of the way in which the content contained within the strategy blueprint will literally be implemented. It is a priority-focused and structured approach to programme and project management.
Strategy evaluation reviewing and monitoring mechanism
The strategy evaluation reviewing and monitoring mechanism is the physical instrument that is used to monitor the implementation of the projects that are identified in the strategic planning process and articulated in the strategic plan itself – through the strategy blueprint and then into the process I referred to above as the strategic change agenda. A second application is the monitoring and articulation of any changes in the assumptions, estimates and guesstimates that were included in the makeup of the strategy and the strategic plan’s background and content (through the activity of strategy renewal monitoring). A third application is an evaluation of the impact that either may have on the strategy implementation programme that may already be under way. In this capacity, it can also be used to deal with any aspects of strategic governance as and when such issues arise (see Chapter 7).
Common examples of appropriate performance measures and target outcomes for those implementation projects include: ‘market share increase – a target performance criteria being 2 per cent increase every year’ or ‘a reduction in costs of 10 per cent by the end of the year’. In the case of project and programmes that have already started, the strategy evaluation reviewing and monitoring mechanism is relied upon to ensure they remain relevant. If they are, they will continue until completion. Alternatively, and much more dramatically, those projects deemed no longer relevant may be stopped/redirected if that action is thought to be more appropriate.
This latter outcome has been known to occur when assumptions that were made to set the initial strategic plan turn out to be no longer relevant. One example of this is a multi-billion-dollar water purification plant that was being built on the southern coast of Victoria, Australia. Funded by the State Government and approved on the assumption that the 10-year drought would continue for some time to come, an incoming government mothballed it as soon as it came into office as, coincidentally, the drought had broken.
Element 4: Alignment
Discussed further in Chapter 6, alignment can also be included as an element of the strategy evaluation reviewing and monitoring mechanism, through the evaluation of measures of fit, which at the highest level addresses alignment between the operations of the firm and the external environment. Measures of fit are also used as an assurance that the strategic imperatives and shortterm goals and objectives are aligned across the organisation. When aligned with organisational learning capabilities in particular, the effectiveness of both individuals and teams is affected by the firm’s position within the cycle of organisational transformation and renewal. Details of the cycle of organisational transformation and renewal will be discussed further in Chapter 3 (Figure 3.2).
Stakeholder engagement is an all-inclusive element of the strategic change agenda and Strategic Management Framework in general. Although it is represented as the smallest component of the framework shown in Figure 1.1, it is the largest factor in the success of its operation. The concept of strategy practice reflects the reality that success is highly dependent on people and what they do, individually, in teams and in collaboration with other stakeholders and parties (each of these issues will be discussed in more depth in Chapter 4). Stakeholder engagement is therefore relevant to all factors of strategic management.
Without adequate engagement of the right people, a framework would just be a framework and strategy would not be realised. Without an adequate learning programme, it is difficult to expect stakeholders to know how to respond to current issues on the one hand (business as usual) and futures thinking on the other (strategically). High-level stakeholder engagement priorities are established as an integral component of strategic management. Their content is also included in the strategy evaluation reviewing and monitoring mechanism referred to previously.
Application of the Fully Integrated Strategic Management Framework: An Assessment of the Value of Strategy
The fully integrated Strategic Management Framework provides a structure for strategy; it operates as a system. Accordingly, it provides insights into the ways different strategy tools and techniques can work together and an appreciation of how to navigate the often confusing and difficult passages that make up a strategy footprint.
In assessing the value of strategy as a management tool, it is difficult to be critical of any individual’s capabilities or apparent lack of know-how and even interest in strategy. As I alluded to previously, in the grand order of things, strategy is a relatively new discipline, and as a result is ill structured, and as a profession, in its infancy. Although there are many, many parts, no one has yet developed an appropriate structure and associated suite of guidelines that can claim to be a comprehensive representation of strategy; hence my proposal in this book to deploy the construct I refer to as the fully integrated Strategic Management Framework. To illustrate the depth of the lack of value obtained from strategy that is representative of the current and apparent over-reliance on strategic planning as a strategy system, SMI research found that although an impressive ‘83 per cent of participants agree that strategy in their organisation is a dynamic system that is constantly revised by the senior leaders’, only ‘21 per cent thought strategy and strategic thinking is one of their main strengths’.
The terminology of strategy and strategic planning was not well recognised in the regular management lexicon until the launch of a few strategy focused books as recently as the mid-1960s. Prior to this, and as illustrated in Appendix 1, long-range planning had been the future-oriented leader’s primary tool of choice. Prior to the development of the notion of futures thinking, strategy was considered to be more a matter of policy. Long-range planning was even more structured than strategic planning is today, and was certainly more quantitative in format. Its predecessor was a mathematical modelling mechanism known as linear programming. This specific tool was deployed to forecast estimates of quantitative values of linear functions (for example, sales volumes, market share, volume growth) which were extrapolated into the future, subject to given constraints (for example, advertising expenditure, number of sales representatives and the launch of new products). To develop a long range plan forecasts were used to rather optimistically (and often overly so) predict a view of what will be in the future. This idea is, of course, nonsense.
Since the concept of strategy has become accepted as a valuable management tool, many significant developments in its theory and practice have emerged. Some of the more commercial applications for strategy tools and techniques have afforded their creators guru status in the popular press – but isn’t that the problem? A lack of agreement about which guru is right, or more broadly, a common acceptance of one true meaning of strategy over another has resulted in its use and abuse in application in many forms and formats; characterised by a predominance of ad hoc solutions over professional practice. Some of these solutions are much more complex than others and are all too often expressed in a way that is hard to understand. Overall, the enormity of the variety of definitions results in confusion and ineffectiveness.
Consequences of an Over-reliance on Planning as the Only Tool for Strategy
The consequences of an over-reliance on planning as the only tool for strategy can be devastating. Consider the fortunes of retailers as a result of the occurrence of the 2008 Great Recession. For example, David Jones, an Australian department store chain, suffered a considerable blow to its credibility through its overly strict adherence to a strategic planning regime. In 2008 its senior management team had established what its board had thought was a rigorous four-year strategic plan. Confident in its content at that time, the board authorised the release of the plan to investors and analysts. With an expectation that it would remain relevant until late 2012, the validity of key elements (the financial services component in particular) appeared to be increasingly doubtful some twelve months before the full plan was set to expire. By March 2012 the board was forced to issue a press release (amid rumours that the CEO was being asked to stand down) announcing that a request to suspend trading in its shares had been made to the Australian Stock Exchange. This, it observed, was a potential outcome attributed in large part to the fact that the economic downturn was having a particularly negative impact on financial performance, but also a recognition of the need for the board to ‘consider the company’s strategic plan’.
As with many retailers at that time, David Jones was seemingly unprepared for the more broad-based but very significant changes that had, and would continue to, adversely impact its operating environment. David Jones faced a number of issues in addition to the onset of the Great Recession. The first was the continual decline in the attractiveness of department stores, whose value proposition was now being seriously ignored by twenty-first-century consumers. The second was the Great Recession’s impact on price competitiveness (a factor also influenced by another externality, the rapid increase in online shopping). The third was an issue associated with the Great Recession in the form of the onset of a ‘buyers strike’ as credit-driven impulse buying gave way to a return to a traditional value of saving instead of spending.
David Jones’s prevailing 2008 strategic plan had literally become irrelevant; a new one was called for and was hastily rolled out before any further strategic decisions or trading in its shares could be made. However, the dilemma for the company was not just the reliance on an outdated plan per se, but its sole reliance on a single management tool whose content had clearly become less relevant in the fast-moving, significantly complex and global environment of modern retailing which saw a transformation in its supply chain that included a rapid swing to online shopping rather than in-store buying.
It doesn’t stop there, though. In addition to the use of an outdated mode of managing for the future, company leaders in general continue to rely on outdated and sometimes underwhelming strategy tools and techniques that are still broadly used in businesses around the world today. This is a result of an over-reliance on an assumption that they will provide sufficient insight, information and knowledge for the development of the strategic plan itself.
Loss of Relevance, Loss of Value
Relevance is defined by Hjørland and Christensen (2002) as ‘something that serves as a tool; applied as a contribution to the realisation of a goal’. As we saw with David Jones in particular, its ultimate strategic goals and objectives were expressed convincingly in its plan, along with a well-articulated and hoped-for outcome. The company’s real future, though, was unfolding independently of any of the senior managers’ expectations (plans). The external environment was literally being steered in a different direction to that which the company leaders thought could possibly be the case. Purely from an observer’s perspective, what appears to have happened is typical of the problems that arise from an overreliance on a static planning methodology alone:
- a lack of appreciation of an aspirational outcome from strategy (vision);
- a lack of articulation of company purpose, complicated by a lack of appreciation of what the problem was that the company set out to resolve (and an explanation of its associated value proposition, defined as being the reason why customers buy from one company over another);
- an imprecise explanation of how the firm expected to compete and renew in the long term (its strategy);
- a failure to address the prevailing wicked problems arising from the emergence of online retailing and the impact of the Great Recession and other contemporary strategic issues;
- an over-reliance on a single view of the future that can be attributed to an over-reliance on process (form-filling) and over-strategising (responding, renewing and monitoring).
Ultimately, David Jones had effectively entered into a strategic drift (Johnson et al., 2011) – a situation that arises when a company responds far too slowly to changes in the external environment and continues (for too long) to pursue the strategy that once served it very well. This is despite the presence of obvious signs that the company is becoming increasingly out of touch with external trends (lack of alignment). This is an unfortunate phenomenon that we will explore further in Chapter 6.
The fundamental premise of our discussion in this book is the resolution of deficiencies in strategy that are driven in large part by an over-reliance on the sole use of strategic planning, its loss of relevance and, in fact, an over-reliance on strategy systems and process all together. A fully integrated Strategic Management Framework is proposed as a tool that complements an essential appreciation of the cognitive elements of strategy (stakeholder engagement). That includes the thoughtful analysis of strategy content, the inclusion of individual and group contributions to strategic thinking, and a consciousness of continual change in the external environment as well as internal capabilities. In relation to grounded strategy theory, the inclusion of cognition can be described as a breaking down of formalised processes that are proposed as deliberate corporate planning rather than emerging strategy – a system of strategic thinking that, as we saw previously, is strategy that literally evolves over time.
Survey Data in the Use and Application of Strategy Tools and Techniques Today
Evidence of the haphazard use of strategic planning and associated tools abounds. In addition to research conducted by the SMI, other research organisations have also contributed to an appreciation of what happens in practice. The physical use of strategic planning as a primary management tool, for example, has been found by Jarzabkowski et al. (2009) to be used by up to 85 per cent of organisations globally; however, this and other similar tools are generally recognised as being very high-level in analysis, but at the same time inconsistent in the way they are used. In a broader sense, we continue to experience a prevalence in the use of independent strategy tools across the board, each attributable to any number of strategy gurus who each trumpet their proclaimed method to be the best way, or in some instances the theory of strategy. Shapiro (1989), for example, includes in the title of a published paper that his approach to game theory is the theory of strategy. In reality, there is always more than one best way to do strategy.
In order to clarify the place and position of strategy today – that is, why strategic planning is so dominant, how other components of strategy were formed, and basically, why strategy is what it is – Appendix 1 offers a brief review of the history of strategy theory.
Is Strategy Worthwhile?
Some businesses have no use for advanced strategy practices and methodologies. If you are lucky enough to run a business that operates in an environment of certainty and high predictability, the use of forecasts (as proposed by proponents of traditional ‘planning’ regimes) can be made with a high degree of confidence and a focus on plans legitimised accordingly. The obvious challenge, though, is the scarcity of such an environment. Feelings of instability, ambiguity and uncertainty have prevailed in economies and in business for ever. What is different today is the level of complexity and the extent of uncertainty that is increasing over time, compared to the availability, quality and depth of strategy research as well as operational ‘business intelligence’ made available through advanced, technologically enabled business systems. A lot of this research represents an illumination and thereby an extension of what is known. Much of the research agenda’s content is new, and sometimes groundbreaking. In an ideal world competent practitioners would cooperate much more deeply with researchers (and the other way around of course, that is researchers cooperating with practitioners) to optimise the power offered by this research, to align with the researchers and to apply their findings in practice, both taking up an opportunity to capture the value offered by the potency of solid and structured strategic thinking.
However, there are many unseen consequences for business entities that don’t have a depth of understanding of strategy. In one of the few companies with which I have worked that didn’t have a strategy or strategic plan, its absence was noticeable. As a business whose fundamental service was the facilitation of gambling, the company attracted significant disapproval from some quarters of society. Apart from a lack of direction, an absence of strategy meant that that company found it difficult to engage the community in the way it was responsibly managing the social implications of its business model. The employees were similarly disempowered, which meant they could not easily defend their employer when called upon to do so, even in social environments.
Just as importantly, when going about their everyday work, I observed a lack of strategy could seriously impair the firm’s decision making capability. If the firm couldn’t articulate what its strategic imperatives were and in which direction the business was going, how could the managers and employees make informed decisions about values, investments, behaviours and areas where the business could improve their strategic position or even operating performance in any serious way?
In the next few chapters we will explore a more comprehensive form of the fully integrated Strategic Management Framework in order to extend its understanding and appreciation by consultants, managers and leaders undertaking strategising activities and as a means to help leaders improve their efficiency and effectiveness in decision making. The content of the fully integrated Strategic Management Framework provides relief for a substantial component of process-focused and people issues associated with the topic of this book: The Seven Inconvenient Truths of Business Strategy.