A.G. Lafley and Roger L. Martin defines strategy as an integrated set of choices that uniquely positions a firm to create sustainable competitive advantage and superior value relative to their competitors.
Beside its use in military, the use of strategy in business is relatively new. Strategy as a function did not really exist before the 60s. Bruce Henderson shaped the sector by founding the Boston Consulting Group in 1963 with a specialty on business strategy. When it began, BCG was primarily a “high-concept” idea company, relying on conceptual insights applied to specific clients. Competition quickly emerged and the field evolved with different concepts defining each decade leading to today.
Although it has been over six decades and multiple models were built (and sold by consultants), it is estimated that between 70 and 90% of organizations fail to execute their strategies successfully. The causes for which strategies fail are multiple: bad strategies, bad execution, human dynamics, market competition.
While management ideas are mostly fads and models need to be applied on a case-by-case basis, I compiled a list of the frameworks I use the most.
The Evolution of Strategy (Over Six Decades and Thirty Models)
In the 1960s, strategy was largely equated with corporate planning; in the 1970s, strategy was about diversification and portfolio planning; the 1980s are characterized by a focus on core capabilities; the 1990s by the development of less analytic, more people oriented approaches to management; the 2000s were all about innovation and new business models. Some say that the 2010s are defined by the end of sustainable advantage but it is a bit early to tell.
A low degree of understanding of the environment is common in business. In order to define and execute the right actions, business leaders need to understand their context and how it is changing. Wardley mapping aims to solve that with a visual method for exploring, determining and communicating strategy under circumstances of constant change.
- Introduction to Value Chain Mapping (video) - Wardley mapping book
- LEF Wardley Mapping online course - Ben Mosior online course
- Wardley Mapping reference by Ben Mosior and Tasshin Foggleman
- Mapping Maps newsletter
- PNR internal lunch & learn
Managing Technological Innovation: Industry Analysis
Market forces are pretty efficient. Competition tends to push economic surplus to zero. An analysis by McKinsey & Company found that economic profit follow a power curve, with the majority of companies in the middle making almost no economic profit. Furthermore, they found that about 50% of a company positioning on the power curve is driven by the industry. In combination with Wardley Mapping, I found Jerry Neumann slides to be a useful guide to determine where to play.
Strategy Beyond the Hockey Stick
Chris Bradley, Sven Smit and Martin Hirt from McKinsey’s Strategy Practice used empirical evidence from thousands of companies to find the strategy moves that really matters for exceptional performance: programmatic M&A, dynamic reallocation of resources, strong capital expenditure, strength of productivity programs and improvements in differentiation. However, these moves need to consider the human biases and social dynamics that get in the way of clear strategy and strong execution.
Playing to Win: How Strategy Really Works
Strategy is choice. There are five key choices:
- What is our winning aspiration: the purpose of the company;
- Where will we play: geographies, product categories, customer segments, channels, vertical stages of production;
- How will we win: value proposition and competitive advantage;
- What capabilities must be in place: reinforcing activities and specific configuration required to win;
- What management systems are required to ensure the capabilities are in place: support systems required to support choices.I like the Playing to Win framework because it forces people to make decision. Also, it does not consider strategy design in a funnel because the choices consider what is necessary to execute on the where to play and how to win decision.
Ecosystem and Platform Design
The impact of the shift from industrial organization to platform organization is still misunderstood. An industrial organization sells products and services for consumption. A platform organization sells services that support the participants ability to serve each other and helps them to learn and improve. In certain industries, companies are not about B2B or B2C anymore, they are either doing infrastructures, aggregators or fall in the long tail. As such, incumbents need to consider different ecosystem strategic plays if they want to survive. They need to decide if they want to be the shaper of the ecosystems or be shaped by it.
Brightline Initiative - Bridging the Gap between Strategy Design & Delivery
The Brightline Initiative is a coalition led by the Project Management Institute. During their research, they found that executives struggled to bridge the gap between strategy design and delivery. For strategy design, they found that the biggest barriers to successful strategy implementation were the lack of clarity about choices, a weak understanding of what the company has the capacity to achieve, of the environment in which the company operates and of the company’s competitive advantage. For strategy delivery, they found that the biggest barriers were cultural attitudes, a lack of resources made available for implementation and insufficient speed and agility in making changes when needed. In the links below, they present guiding principles to close the strategy design and delivery gap.
Strategy Execution Methodology
There are few methodology that respect the Brightline Initiative guiding principles on bridging the gap between strategy design and delivery. The most well-known is Objectives and Key Results (OKRs). Andy Grove introduced the approach to Intel. The goal of OKR is to define how to achieve objectives through concrete, specific and measurable actions. At PNR, we developed a methodology that merges the traditional strategic planning processes with agile principles. It results in an iterative strategy process where leaders adapt as they execute their strategy and the market changes.
The frameworks presented on this page help answer the Where, Why, What, How and When. Burja Mapping, created by Tasshin Fogleman, helps answer the question, “Who?”. Based on Samo Burja Great Founder Theory, Tasshin created a framework that allows anyone to create a map that reflects their own assessment of the current landscape of power. I find the framework particularly useful when planning change management inside an organization and when looking at ecosystem strategy.