Business Intelligence - the link between Strategy & Execution?

Chickens and Eggs and Strategy and Business Intelligence and Kimchi....

As a strategy consultant, I naturally believe in the power of strategy.  Strategy is a great lever that can be wielded to achieve points of differentiation and competitive advantage.  I would even go so far as to say the absence of strategy will lead eventually to competition based on price alone which is a losing proposition in the long-term.

However, having worked in Asia for the past 25 years and observed the rise of first Japanese, then Korean, and now Chinese companies, it is initially difficult to reconcile theories of strategy with success of these firms.  At first it was easy to diminish the strategic success of Japanese and Korean firms.  They were successful in their early days because, frankly,  they cheated; their governments closed their domestic markets to foreign competition and fostered a hot-house environment where public and private capital fueled fierce domestic competition that when matured produced very competitive exports that exploited weaknesses in U.S. and European competitors strategies or cost positions.

While this rationale still partially works for China, it no longer explains success for Korean and Japanese global players.  The Japanese, I would maintain, are pretty good at strategic planning with the emphasis on planning.  They are notorious for studying markets and competition at length before formulating and executing a strategy.  They sometimes seem to plan forever, but once they begin to execute, they quickly open the throttle wide.  Because of the carefulness of their planning, they can execute with full force.  Because many of their strategies were based on emulating and then improving on foreign competitors offerings, their lack of nimbleness has thwarted their success in the past two decades in the face of aggressive global competition.

Korean firms, however, seem to have no strategic planning function whatsoever.  Unlike their Japanese competitors to the east who aim, aim, aim, and then fire; Korean’s have a tendency to jump straight into a new business, make a ton of mistakes, but work very hard to make course corrections constantly.  Almost like a mouse in a maze, they charge hard into the wall, bloody their nose and make a 90 degree turn.  When they hit the next wall, they change course again.  Doesn’t seem like an endorsement for strategic planning; yet we have truly global players like LG, Samsung, and Hyundai leading markets with great products. 

They are able to make these constant course corrections because of their remarkable work ethic and corporate culture of centralized hands-on management.  I can remember working in Korea in the early eighties when the Japanese themselves were shaking their heads at how hard the Koreans were working.  As one Korean manager explained it to me, "we work harder than the Japanese because the Japanese never had to compete with Japan."

But hard work and even productivity is not strategy.  So, in the absence of planning, how have these truly global competitors emerged?  To answer this question we must break strategic planning down into its two elements:   strategy and planning.  I would suggest that the successful Korean firms have developed very effective strategies, but that they did it without the benefit of much planning.  It is not enough to say they emulated and improved on more successful competitors (which they did) because that strategy alone would not sustain success. Because the essence of strategy is to do things differently than your competitors, this approach is ultimately flawed by design.

As they have evolved from export-driven companies to global competitors, they have had to develop effective competitive strategies.  However, having recently worked with Korean manufacturers, I can attest that they continue to invest heavily into new markets and products of which they have limited experience, without the benefit of much planning or research (and often counter to the findings of research), yet somehow, they often emerge successful.  Again, they are not achieving success without the benefit of strategy; what they are doing, in fact, is achieving strategy without the benefit of planning.

Through a loyal corporate culture that centralizes decision-making and the benefit of an extreme work-ethic, they are able to make constant course corrections until they arrive at a successful strategy.  As an attorney that works with mostly Korean clients put it recently, “Koreans are not good and planning for opportunities or preventing problems; but they are very good at picking up the pieces and moving on.”  For a country that has been invaded by the Mongolians, North Koreans, Chinese, Japanese, Russians, and visited by the American Armed forces, "picking up the pieces and moving on" seems a reasonable strategy.

The secret to strategic success without the benefit of strategic planning is not really mysterious; it is simply developing strategy from experience rather than sterile planning.  We all know the phrase “paralyzed by analysis.”  That is one affliction that does not plague Korean companies.  We are also all well-experienced with long-dry strategic planning processes that result in a 3-ring binder that collects dust on the shelf while business goes on as before. This is planning without execution versus execution without planning.  If i had to choose, I'd most certainly take the latter because there is always the possibility that strategy will emerge from experience.


 

A long-lead in to a simple concept.  Strategy is not created on white boards and flip charts.  Without the benefit of experience the best strategic theories and constructs and plans are impotent.  However, experience without planning is a tough route to strategy.  The Korean corporate culture is uniquely suited to make constant course corrections, but this model is inefficient even for Korean firms. They make it work by over working.  The art of strategy is to put the three elements of strategy together in balance:  strategy formulation, strategy execution, and experience in the market:

Combining experience and planning has often been a challenge in large companies where strategy is created in the C-Suite and Board Rooms and the disparate operations of business units and departments were not always connected into the process.  We are entering the age, however, of the intelligent enterprise.  Companies have invested in enterprise-wide data platforms for the past two decades and now they have began to be populated with data rich enough to support decision-making and to monitor performance.  These business intelligence systems will provide the same real-time reaction of the Korean corporate culture without the bloody noses; and allow it to be combined with the methodical and empirical data-driven planning of the Japanese without the paralysis; and then be executed and monitored by a more decentralized and innovative decision-making organization that is more the domain of the western model sans the bureaucracy and chaos that often gets in the way.

Business intelligence systems show a lot of potential to fulfill this promise, if designed and utilized correctly; however.  A big if, of course.  The art will be in effectively marrying data and strategy in a manner that enables companies to formulate more effective strategies that are dynamic, iterative, integrated across the enterprise and monitored and refined in real-time. But business intelligence systems and applications will need to evolve to provide the tools adequate to the task. Once that happens, dynamic and integrated strategy can be come a reality.


Mark Towery
Managing Director
Geo Strategy Partners
The leading Industrial/B2B Market Research & Strategy Firm