Strategy: Staying with what works
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"Creative destruction" and the "innovator's dilemma" and "disruptive technologies" get a lot of press. The result is that too many businesspeople act as if they believe that they need to blow up their old strategy and start over every couple of months.
In 2009, Forbes Insights and SAP released a study called "Closing the Alignment Gap." The gap was the gap between strategy and operations.
After surveying 200 top executives in large companies around the world and interviewing some of them in depth, Forbes and SAP came up with some startling findings. Ninety-three percent of the executives had "updated or revised their corporate strategy or priorities" because of the recession.
The companies Tom Hall and I studied for Ruthless Focus don't seem to swing strategy around that way. Wal-Mart and Publix, for example, have been in business for more than half a century with the same strategy.
They've been through the ups and downs in the economy. Laws and regulations have changed. They have adjusted, but the adjustments were tactical or operational, not strategic.
The fact is that for most businesses, most of the time, it's not necessary to blow it all to smithereens and have it all made over new. And staying with the same strategy has benefits.
If you stay with the same strategy, you can stay with the same workforce. You can get the kind of longevity that gives people time to develop their knowledge and relationships, the seeds from which competitive advantage sprout.
If you stay with the same strategy, your people can put their creative energy into profit-building innovation. Otherwise they put that energy into adjusting to the newest strategy.
The moral is: stay with a strategy that works until it's time to change. Don't change because you've got a new CEO or to impress the business press or the analysts.
Check out my latest book, Ruthless Focus, at Amazon.
Posts about Ruthless Focus
Ruthless Focus: How to use key core strategies to grow your business
The Story of the Book
Annotated Table of Contents
Keep it Simple, Strategist
Ruthless Focus on the Business Basics
Theo Albrecht, Trader Joe's, and Ruthless Focus
Ruthless Focus: What about Toyota?
Ruthless Focus: Three Kinds of Crisis
The story of Yahoo's shifting strategy
Tom Stemberg, Staples, and the Two Strategy Questions
How Doing Acquisitions is like being a Fighter Pilot
Learning about Differentiation from Barbeque
Danger, Trader Joes!
Categories: Ruthless Focus, Leadership Reading, Strategy
Tags: Ruthless Focus Leadership Reading Strategy
Hi Wally,
I'm skeptical of any findings like those of the Forbes/SAP study simply because they're using terms that mean many things to many people. So their conclusions are pretty useless. (Well, they do make for attention getting headlines.)
"Strategy" is one of those fuzzy vague terms.
What I know for sure: Most people and their companies are focused on the wrong things. They’re spending time and money where they’ll get little return. And they’re doing too many things poorly instead of doing a few things well.
That's where I see great opportunity for improvement and I doubt we need a massive study to prove it.
I enjoy your blog, by the way. Always insightful.
Dov Gordon
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Thanks for the comments and the kind words on the blog, Dov. In general, I agree with you on the findings of those surveys, but I think the findings here match up well with the behavior I see in many companies. I think there's a vast misconception about what is strategic and what is tactical. Strategy shouldn't be changed often. You may switch tactics because of a recession, but your strategy (everyday low prices, eg) shouldn't change unless there's a major, permanent change in the market.
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Thank you, Wally. I definitely agree with your point.
I was taking the opportunity to sound off against these silly "studies" that sound so authoritative but really lead people nowhere. Or worse - in circles.
Dov
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Great comment, Dov. I know precisely the ones you mean!
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Sometimes it's better to think in the box.
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Or, perhaps, to not worry about redesigning the box.
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Hi Wally nice blog!
I agree that a radical change in strategy must be avoided. Some flexibility is inevitable due to changes in the business environment. Southwest is another example of a low cost strategy - consistent for more than 36 years but has incorporated innovative changes (tactical) tin the delivery of the main strategy.
If the vision & mission are based on beliefs and values the strategic direction remains well aligned. The organizational culture and people too back the strategy with commitment.
Regards,
Dilip
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Thanks for adding to the conversation, Dilip. The companies we studied were all very innovative. I think at least part of the reason is that having a consistent strategy gave workers two benefits. They didn't have to spend time and attention on learning what the strategy was. They developed deep expertise in their own area of contribution. And thus they had time, attention energy, and expertise to apply to innovation.
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Hi Wally,
Thanks for an insightful response. Allow me to present a slightly different view on this - in a survey conducted a few years ago 2700 executives across the world reported their greatest strategic challenge is to create organizations that are at the same time: Innovative & efficient. This is because the measures and systems & type of people that foster one are often at odds with the requirements of the other.
Best regards,
Dilip
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Thanks for coming back to add more. You interpret those survey finding as resulting from the observation that "the measures and systems & type of people that foster one are often at odds with the requirements of the other." My take is that the executives responding to the survey imagine that their job is to drive innovation and efficiency. If you believe that, then your statement is true.
But I see the job of top management and every boss as enabling, not driving. There are plenty of companies who model that: 3M, Nucor, Toyota, etc.
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Hi Wally,
I'm curious to get your take on this article in Forbes: "Stop Focusing on Your Core Business - It has become the fast track to oblivion."
My take is in my post, "Why “best thinking” beats “best practices” every time"
Dov
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Thanks for coming by and adding to the dialog, Dov. I think readers of this blog will benefit from your analysis of the Hartung column and from the many insightful comments there. Here's my take, essentially reproduced from my reply to a comment on another post.
That column is written to make a provocative point but there are two weaknesses. The first is that he doesn't actually suggest anything. All he does is maintain that "focus isn't all it's cracked up to be."
The second is that he's simply wrong about his core point. He lists several companies, including Circuit City, Fannie Mae, AIG, Lehman, Delta Airlines, etc. and says "The leaders of the above listed great companies weren't stupid, or lazy or so arrogant as to ignore important business concerns."
I haven't researched all the companies on his list, but for the ones I do know, his statement simply doesn't hold up. Circuit City didn't fail because it stayed focused on its core strengths, but because it lost focus on the business basics. I wrote about that in my post, "Good to Crap." AIG and Lehman both gave up the ghost for a similar reason. Same with Fannie Mae.
The core recommendations in Ruthless Focus are pretty straightforward.
Develop a simple and effective core strategy.
Focus ruthlessly on that strategy until it doesn't work anymore.
Focus ruthlessly on the business basics.
If you do that, you have a framework for innovation. You have a framework for developing a powerful company culture. You have the framework for maintaining an excellent and committed workforce. In other words, you have the framework for long term competitive advantage and profitability.
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