To Boldly Go

Who was more strategic, Neil Armstrong or Captain Kirk? If you are talking about designing and executing a clear linear strategic plan in the old school fashion, Armstrong and NASA had it down pat. But Captain Kirk (aka Bill Shatner; aka T.J. Hooker; aka Denny Crane; aka, Mr. Negotiator) always knew how to reinvent a strategy for the Starship Enterprise while staying true to the core mission: "to boldy go." NASA and the Starship Enterprise present an interesting contrast in strategies that is particularly relevant as competition moves closer to warp speed.

We can all envision those men with crew cuts and pocket protectors in their short sleeve white shirts chain smoking in mission control. They used slides rules and a 64K computer to plot and plan a specific linear trajectory to the moon and back. When Neil Armstrong and Buzz Aldrin took that first small step, NASA reached the apex of its glory. A difficult and complicated strategic plan had been executed.

The mission of the Star Ship Enterprise, on the other hand, was “to boldly go where no man has gone before.” That split infinitive phrase was embedded in our generation’s culture, but it also suggested a lot about where strategic planning should evolve. Unlike the moon shot, the Star Ship Enterprise did not have a destination; it only had a mission. The moon shot was called a mission but it was really a noble goal: “to land a man on the moon and return him safely to earth.” All of the systems and activities of NASA were designed to work backward from that that goal. The moon shot was a perfect application for conventional strategic planning.

But in the years that followed, NASA lost its way. It couldn’t create a compelling reason for funding and had to invent adhoc programs like Skylab and then the ambitious but troubled shuttle program. It stumbled from one poorly conceived strategic plan to the next. NASA desperately needed a strategy, not a strategic plan; a strategy that Captain Kirk himself could have embraced. But NASA was focused on the goal of one small step, while missing the overarching strategy which should have been “one giant leap.” The strategic purpose of NASA is space exploration and that strategic purpose will never be exhausted.

Let’s beam back to Captain Kirk for a moment. Captain Kirk’s mission was not to land on a specific planet; he actually had NASA’s broader mission of space exploration. “to explore strange new worlds, to seek out new life forms and new civilizations, to boldly go where no man has gone before.” There is no destination in that mission. How do you create a strategic plan for that? If you think about it for a minute, businesses do not really have a destination. They want to increase profits for the shareholders perpetually if possible. It stands to reason, therefore, that they should have a constant, enduring and renewable mission. A strategic purpose that transcends businesses and defines the essence of the organization's existence as products and markets and businesses and competitors come and go.

Apollo 11 represented the best of a generation. Infinite optimism combined with linear planning to reach a clear destination. Star Trek imagined a more complicated non-linear universe. A multi-dimensional reality where you needed Mr. Spock’s Vulcan logic as much as you needed his human heart.

The starship enterprise had a strategic purpose. Its mission was constantly renewable, and all of its assets and systems were designed to support that mission. Likewise, the corporate enterprise should be designed to have no specific destination but a clear strategic purpose so that its mission is renewable and enduring.

But what is a strategic purpose. We can simplify and say that all businesses have as their strategic purpose to maximize profits. This would be a true statement; however, one that is totally unhelpful and unrelated to the idea of strategy. The idea of strategy in business competition is to do something different and better than anyone else. The combination of what you do and how you do it defines the business you are in and the source of your competitive advantage. Every decision the organization makes should be consistent with the definition of its business. Every system, activity, and process should be designed to reinforce the source of competitive advantage.

Every investment in assets, people, knowledge, and competencies should be an investment in that business and should serve to strengthen the competitive advantage.
When you have determined the strategic purpose, you can define the strategic core: what business you are in and the competitive advantage you can leverage. From the strategic core, you can build a business model wherein every activity and system reinforces the strategic advantage. The result is something greater than synergy; it creates a centripetal force that multiplies the strategic advantage exponentially.

What you also have is a strategic framework for executive decision-making. Abbreviated decision-making is one of the key advantages of having a strategy. If every decision had to go to the C-suite and be thoroughly contemplated, the organization would soon be paralyzed by analysis. But when the strategic core is defined, it is easy to put decisions through a two question qualification: is it consistent with our definition of the business we are in; and does it strengthen our competitive advantage?

But we cannot look only inward. Like Captain Kirk, we must explore new worlds and seek out market opportunities. How do we achieve strategic market positioning and navigate constantly changing markets on an ever evolving competitive landscape? You need a strategy that is constant in core purpose but at the same time, flexible and adaptive. It lets you know what core competencies to invest in that can be leveraged across markets. You need a strategy that is dynamic.

Now back to the bridge. There is no denying that what made the Star Ship Enterprise's mission possible were great advances in technology. Kirk had an intelligent dashboard at his fingertips from which he could control all aspects of the ship. Today, technology is also enabling businesses to manage from real-time data. The organization is evolving into the intelligent enterprise where the CEO, COO, and CFO can sit at the bridge like Kirk, Scotty, and Spoc and manage from a dashboard of real time information. Information technology is enabling dynamic strategy.

Information is power, however, uncontrolled power is chaos at best dangerous at worst. Without a strategy, IT-enabled business intelligence in the hands of ambitious executives is, to quote P.J. O’Rouke, "like giving whiskey and car keys to teenage boys." As investments in ERP and CRM are beginning to produce usable business intelligence, a clear strategy becomes paramount for discipline in decision-making. When you correctly combine strategy, technology, and intelligence, however you can achieve dynamic strategy and boldly go where no organization has gone before.

Mark Towery is Managing Director of Geo Strategy Partners

Geo Strategy Partners focuses on market research and strategy for industrial and B2B markets.
www.geostrategypartners.com

Strategy is about what you DON'T do

"In every block of marble I see a statue as plain as though it stood before me, shaped and perfect in attitude and action. I have only to hew away the rough walls that imprison the lovely apparition to reveal it to the other eyes as mine see it."

—Michelangelo





Last week I quoted Michael Porter week saying, "The essence of strategy is choosing what not to do." Michelangelo said it with more flair, but the fact that a sculpture is created by what is removed and discarded is a powerful metaphor for strategy. If you've been reading this blog, you know i'm a sucker for a good metaphor and have no qualms about mixing them up.

Knowing what not to do is a fundamental function of strategy. I am personally guilty of the "jack of all trades and master of none" syndrome and have about as much focus in my life as a Swiss Army Knife. But strategic choices are not just about arbitrary focus. It is possible to link some seemingly disparate activities into a coherent strategy. Underneath it all, however, should be a unifying strategy.

I have said before that one of the chief advantages of a strategy is that it enables abbreviated decision-making. You don't have to be Cecil B. DeMille to look at your world through a view finder and decide what goes into your movie and what doesn't. But the essence of your strategy and the DNA of your organization (i.e. Competitive Advantage and Core Competencies) have to drive your choices the same way the theme and plot drives a movie or story.

I still don't understand the appeal or value proposition of Tweeter and why anyone cares about the unfiltered and unedited mundane activities of someone's daily life. I would much rather read a journal or biography that someone has labored over trying to decide what to keep in and what to leave out. A story that has a structure and a central point is a compelling read. A good strategy is no more complicated than that, but it has to be an effective and competitive strategy.

Why is this aspect of strategy important? Because when times are good and markets are growing it is easy to move into new markets or invest in additional areas of competence. When the environment becomes more competitive, those activities that do not reinforce a sustainable competitive advantage will quickly become liabilities. Acquisitions that should not have been made will prove costly to undo. Products that should not have been launched become costly to discontinue or maintain. An overall loss of focus will affect your brand positioning and ultimately be detrimental even in the areas where you had a clear competitive advantage.

Strategy is about trade offs. You need to make clear choices ESPECIALLY when multiple routes to success are availed to you. You have to first decide what business you are in and the source of your competitive advantage. Choices then need to be made with a view toward how they serve to reinforce that competitive advantage or leverage it in yet unexploited adjacent opportunities. A clear strategy is more than focus, it is the architecture of success.

Even a Renaissance man knows the power of strategic trade-offs.

Mark Towery is Managing Director of Geo Strategy Partners

Geo Strategy Partners focuses on market research and strategy for industrial and B2B markets.

Does an Entrepreneur need a Strategy?

An Entrepreneur absolutely needs a strategy, but doesn't necessarily have to deal with all the complexities of a corporate strategy. By definition, an entrepreneur determines an unmet need, and then develops a unique way to satisfy that need.He doesn't have to communicate and orchestrate this strategy across managers and business units.

An entrepreneur is a singer/songwriter. An organization is an orchestSave as Draftra. In many ways it is easier to be an entrepreneur because you only need the basic six string version of a strategy. Then you read your audience and make adjustments in real time.

An entrepreneur is a surfer; a CEO is a captain of a ship. Like a surfer, a good entrepreneur is in tune with his environment and knows how to time the waves and become one with them until they are spent. Then he waits to synch up with the next wave.

When you trade your surfboard for a boat, you have to navigate more than a single wave. That is where the concept of a sustainable strategy comes into play. How do you take advantage of the tides of business opportunity without finding yourself completely off course when the party is over? You need a strategy for aligning yourself with an enduring market opportunity. As a sailboat tacks to take advantage of a prevailing wind, its ultimate course is plotted more strategically. Lighthouses and landmarks point out the strategic destination.

Inherent in this comparison is why entrepreneurs often do not make good managers and good managers do not make good entrepreneurs. The skill-set and mindset is different. It's is why MBA schools do not teach you to be an entrepreneur.


Intrapreneurship, entrepreneurial behavior within the confines of a larger organization, follows the same path in that unmet needs are identified and creative solutions are proposed. However, the work of an intrapreneur is more difficult and complex because of the inertia of corporate bureaucracy. He/she has the advantage of resources, however. The book "Blue Ocean Strategy," by Kim and Mauborgne is a blue print for organizational level intrapreneurship




It's hard to teach elephants to dance, but next to impossible to herd cats. The ecosystem of business strategy has a place for both. And to all you budding entrepreneurs out there, remember "that opportunity of a lifetime comes around about once every six months." Even if you wipe out, there will always be another wave.

Mark Towery is Managing Director of Geo Strategy Partners

Geo Strategy Partners focuses on market research and strategy for industrial and B2B markets.
www.geostrategypartners.com

Consulting the Masters again

Perception is strong and sight weak. In strategy it is important to see distant things as if they were close and to take a distanced view of close things
--Miyamoto Musashi 1584-1645

The New Power of Buyers

One of Porter's 5 Strategic Forces is the Power of Buyers. A recent study by Geo Strategy Partners across 7 Verticals indicates that Customer Satisfaction is considered one of the top quality issues. What hasn't been studied is the degree that Internet 2.0 has given customers more leverage. For a humorous example of that leverage being exploited to its fullest, take a look at "United Breaks Guitars" http://www.youtube.com/watch?v=5YGc4zOqozo

Quote of the Day

A good strategy should be like a gyroscope. Externally dynamic but stable at the core; adaptable to a changing environment but consistently reinforcing its source of competitive advantage; enabling untethered navigation across the competitive landscape while maintaining a perfect alignment between sustainable core competencies and enduring market demand.

--Mark Towery

Is there really Wealth at the Bottom of the Pyramid?

One interesting aspect of Corporate Social Responsibility is “bottom of the pyramid” strategies as outlined in C.K. Prahalad’s book, “The Fortune at the Bottom of the Pyramid, Eradicating Poverty Through Profits.” The premise of Prahalad’s book is that there is money to be made selling products/services to the one billion people making less than $2/day.
The definition of a sustainable bottom of the pyramid (BOP) strategy hinges on two critical factors: high value to the community, and high value to the company. Without both factors in place, the strategy is likely to fail. In recent studies done on bottom of the pyramid strategies of select multinationals, we found most companies have not been successful in creating a profitable business model at the bottom of the pyramid For many, what they call a BOP strategy is actually corporate philanthropy or corporate social responsibility. One notable example was the development of a value segment for GE Healthcare in India.

See Senior Consultant, Nancy Musselwhite's article on BOP

http://geostrategypartners.com/GE%20Heathcare%20BOP%20Article.pdf

www.geostrategypartners.com

What is the difference between Confucianism and Taoism?

...in case you ever need to know...

...to develop strategy we sometimes have to consult the old masters....

Roughly, it's like the difference between an "authoritative" government and a "laissez-faire" one. Lao Tzu is held to be Confucius' real adversary. But it is more accurate to say that the essential difference is the difference between Lao Tzu's direct way to the Tao and Confucius' detour by way of the human order:
Confucius represents the classical, Lao Tzu the romantic,
Confucius stresses social responsibility, Lao Tzu praises spontaneity and naturalness,
Confucius' focus is on the human, Lao Tzu's on what transcends the human,
Confucius roams within society, Lao Tzu wanders beyond. Both are necessary for strategy.

Mark Towery is Managing Director of Geo Strategy Partners

Geo Strategy Partners focuses on market research and strategy for industrial and B2B markets.
www.geostrategypartners.com

Is Corporate Social Responsibility ready for prime time?

Major companies are embracing corporate social responsibility. The new standard, ISO 26000 is under review but the standard will have no governing body and so will have no compliance or certification requirements. Environmental sustainability imperatives carry weight in terms of corporate positioning and PR, but this is mostly green wash. Real environmental initiatives frequently fall into the camp of compliance issues rather than strategic imperatives. What are the real challenges with corporate social responsibility? Our research indicates corporate social responsibility efforts fall across multiple silos in an organization: public relations, citizenship, compliance, procurement, quality, human resources, marketing, etc. As such, it is hard to formulate a consistent strategy without a Chief SRO; and frankly, we do not believe the C-suite really needs to be expanded in corporate America. In our interviews with executives across verticals, we have found that outside of energy utilities, CSR is simply not on the list of strategic imperatives. CSR may be coming, but it's not here yet.

Is Strategy Dead?

A January 25th Wall Street Journal article entitled “Are Strategic Plans Losing Favor” http://online.wsj.com/article/SB10001424052748703822404575019283591121478.html implies that strategic planning is giving way to real-time, adaptive strategies. Strategy is not dead, but strategic planning (read long-term planning) has been dead for two decades. Strategy itself is more important than ever. One of the benefits of good strategy is that it abbreviates decision-making, allowing real-time decision-making and flexibility. One of the challenges in understanding strategy is agreeing on a definition. I addressed this issue in an article entitled "defining strategy" in a blog last week.

Mark Towery is Managing Director of Geo Strategy Partners

Geo Strategy Partners focuses on market research and strategy for industrial and B2B markets.
www.geostrategypartners.com

Is Solar Heating Up?

We just completed a proprietary study of the photovoltaic solar market in North America. Most published forecasts indicate the U.S. solar market will grow rapidly, leapfrog Germany and Spain and ultimately rival China for installed base. As a result, many foreign solar module manufacturers are eyeing the U.S. market. We would caution they not be blinded by the light. While the U.S. solar market is likely to grow dramatically, it is starting at a very low base. Until power grid parity is achieved in the next 3-7 years, growth in the industry will primarily be driven by incentives and subsidies. Even as manufacturers race to become more efficient, the major bottleneck seems to be at the distribution end-user part of the supply chain. We believe it is inevitable that solar will play a niche role in the overall energy landscape, but caution too much exposure to the solar market could result in sunburn.

Quote of the Day

However beautiful the strategy, you should occasionally look at the results.
-- Sir Winston Churchill

Quote of the Day

From the guru himself...

The essence of strategy is choosing what not to do.

Michael Porter

Defining Strategy

Defining Strategy

More relevant today than ever before

It seems conventional wisdom is just now catching up with the idea that strategy should be dynamic - maybe that's because they've been defining it wrong all along.

It is ironic that a word with as many meanings as the word strategy is still often misused and maligned. It is even more ironic that while strategy is the key driver of business success, it is often the weakest part of business planning and execution. While academics love to look in the rear-view mirror at companies that dominate their markets like Walmart, create new markets like Apple, or find a profitable niche in a difficult industry like Southwest Airlines; most can only reverse engineer success rather than offer a formula for ensuring it. Real strategy simply gets lost among clever book titles, esoteric theories, meaningless MBA-speak, and the pressures of daily management.

The latest conventional wisdom seems to have it that strategy is now irrelevant because of factors like the globalization of capital, labor and markets; hyper competition; and accelerated technological developments. Add a world-wide recession into the mix and executives argue that there is no time for planning, meaning no time for strategy. In fact, a January 2010 article in the Wall Street Journal was entitled “Strategic Plans Lose Favor” in the current economic environment. The argument is simply that executives have to act in real time, all the time. Strategic planning, pundits conclude, is dead. They are right but they are also wrong.

Strategic planning is dead and has been for 25 years, but its taxidermic form was so well preserved it has survived beyond its usefulness. To put it simply, strategic planning is a linear process that made sense when North American companies were dominant, markets were stable and growing, and technological evolution was incremental. What was then termed strategic planning was really long-term planning. Five year goals were pretty straight forward and usually equated to market share and financial targets. The objectives defined the path to get there, and the value of the process was that all parts of the organization were working in a synchronized manner to achieve common goals. When executives argue that strategic planning is dead, they are right in the sense that a 5 year linear plan makes no sense in today’s environment.

Strategy, however, is more important than ever. To illustrate this point, it is necessary to state a few of the many definitions of strategy. One very simple but useful definition of strategy is that it enables abbreviated decision-making. One of the reasons having a strategy is important to business is that it allows decisions to be made quickly and by middle managers during the course of day-to-day activities. Ironically, this makes it easier to make quick decisions in real time every day.

If every significant decision had to go to the C-suite for an answer, very little would get done and the organization could not react quickly enough to the market. By defining a company’s strategy, leadership makes some fundamental choices about what business the enterprise is in (another important dimension of strategy), and in so doing defines trade-offs (a key aspect of strategy). Another important part of strategy is about knowing which opportunities to say no to; and by defining this ahead of time, executives in the trenches can make real-time decisions quickly and the organization actually becomes more nimble.

So, if markets and technology are changing rapidly and competition is intense, how can you develop a strategy that can be viable for more than one fiscal quarter? The first thing you do is change your vocabulary from strategic planning to strategic positioning, a key element of strategy.

Strategic positioning is about defining where and how you will compete. While it can be focused on specific markets and products which can change over time, corporate level strategic positioning should be enduring; it should define, in a fundamental manner, the business the company is in – not just in terms of products, services, and markets which can change, but in terms of core competencies that are levers of competitive advantage. Strategic positioning should define the unique way your company delivers products and services better than the competition.

Through this simple exercise we helped a Caribbean Island understand that their strategic positioning on the tourism landscape was not to be like every other Caribbean Island promoting sun, sand, and sea but rather to play up what was unique about the island; rich attributes they had previously considered as weaknesses.

Defining what business you are in also means defining the customer your serve, not just by markets and sectors, but by the need and demand you fulfill and by the value proposition you offer. The ultimate in strategic positioning is finding a true alignment between sustainable core competencies and enduring market demand. It can be argued that no matter how you define it, no market demand lasts forever and no competency can be sustained without a corresponding demand. However, the goal of defining competencies and markets in a way that makes it theoretically possible for them to endure is as important to the process of strategy formulation as the concept of infinity is important to mathematics.

The very vocabulary you use to define both can mean the difference in a strategy that can become obsolete with a sudden change in the environment and one that can endure. The vocabulary also supports the trade-off decisions that illuminate the growth paths to take. Are you in the buggy whip business or are you in the leather business or are you in the propulsion business or are you in the transportation business or are you in the horse and carriage accessories business? There are many ways to define the business of today, but the choice of business definition can define the business of tomorrow.

By helping a commercial construction firm define its core competencies, we helped them resist the temptation to venture into industrial markets that happened every time there was a business boom.

The next critical definition of strategy relates to the strategic business model. In simple terms, a company’s business model defines how it makes money. But a business model has two main parts: the way a company creates value, and the way a company captures that value. A recording artist may create value by writing and recording songs, but capture it (i.e. generate revenue) through concerts, album sales, t-shirt sales, etc. The real key to a strategic business model is making sure the structure, systems, and activities all reinforce each other to add to the source of competitive advantage. This is often referred to as fit, and is more powerful than synergy.

An examination of a chemical manufacturing client’s “DNA” revealed that their competencies lay in two distinct areas: new product development built around an entrepreneurial approach to niche opportunities, and an operational excellence model of delivering certain commodity chemicals to market. The two didn’t “fit” together. We recommended dividing the organization into two companies in order to unleash the potential of both which was done with great success.

Let’s illustrate strategic positioning and strategic business model through a common consumer sector with which we are all familiar. If Publix supermarket’s strategic positioning is customer service, every activity must be structured to reinforce this, from keeping cashier lines short to friendly staff, to easy ingress and egress, to a wide variety of products. If Kroger’s strategic positioning is everyday low prices on a wide variety of items, there will be trade-offs on customer service, but the important factor is that every logistical detail of bringing products to the shelf must reinforce the wide-variety/low-price model. But it also ties to marketing such as loyalty programs and advertising campaigns. They must all be consistent and congruent. Whole Foods on the other hand, has a completely different business model built around fresh, organic and exotic foods. While the mainstream groceries may adapt to changing consumer preferences for organic foods, if they forget that their source of competitive advantage is customer service or price, they will dilute their business model and lose their competitive position rapidly.

What about no-strategy? It could be argued that some offshore competitors do not have a strategy. Chinese companies in particular often emulate industry leaders and compete largely on cost and operational efficiency. This is not a strategy per se but rather an exploitation of a temporary inefficiency in the market. To create sustainable competitive advantage, these companies will need to develop strategies. Korean companies are notorious for investing heavily into proven markets with little strategic foresight or even planning. They seem to have a unique model of reacting quickly to changing environments and making quick course corrections as they learn from their mistakes. By working very hard under centralized management, they have learned to develop strategy from experience.

However, as many of the traditional chaebols become global leaders, their approach to strategy has become more sophisticated. We have recently worked with Korean and even Chinese companies looking for professional marketing and strategy assistance that seems to validate this trend. It would be a mistake to underestimate their ability to develop more sophisticated strategies as their market position becomes stronger.

Ultimately, management that is only about execution and reaction to a changing environment is akin to Darwinism in the animal kingdom. The enlightened homosapien seeks to dominate his environment and alter his destiny. An enlightened executive should do the same.

Finally, a note about execution. Strategy is much about the synchronization of the organization. The basic accomplishment of having everyone singing from one sheet of music creates value and efficiency. An economic development board benefited greatly from a two week strategic positioning review because for the first time, everyone in the economic development business was promoting the same thing. Research has also shown that excellent execution of an average strategy trumps average execution of a good strategy every time. The key to sustainable competitive advantage, however, is doing both well. Strategy should be more than a common sheet of music; it should be a classical score played flawlessly by a talented symphony under the guide of an accomplished maestro.

As the conductor leads the orchestra, empowering employees doesn’t mean an absence of leadership; but the essence o f leadership. Reacting nimbly in real time is not the death of strategy, but the ideal application of it. In times of uncertainty - more than ever - strategy not only matters; it is essential. But it’s all in how you define it.

Mark Towery

Geo Strategy Partners

www.geostrategypartners.com

Mark Towery is Managing Director of Geo Strategy Partners

Geo Strategy Partners focuses on market research and strategy for industrial and B2B markets
www.geostrategypartners.com