The Elephant Walk
Journal of Business Strategy
Copyright Dow Jones & Company, Inc. All Rights Reserved.
FRIDAY, JANUARY 10, 2003
The Elephant Walk
The existence of a periodical named the Journal of Business Strategy might seem to presuppose a general agreement on the meaning of the phrase "business strategy." For better or worse, there seems to be no such agreement. It may, in fact, be the very lack of such an agreement that makes this magazine necessary: As our understanding of strategy changes and evolves, there arises a need for a forum to discuss, dispute, and debate what we mean by "strategy."
Of course there is no shortage of definitions of the word "strategy." Most, however, seem to beg the question: Strategy is usually said to be the determination of the goals of the organization, and a plan for achieving these goals. True though this is, it doesn't quite capture the spirit of the thing. You can have the wrong goals and a lousy plan to achieve them, and it's still a strategy.
Good strategy, however, is a slippery concept, much like the concept of the deity. Medieval philosophers came to the conclusion that no positive statement could possibly describe the infinite and inscrutable godhead; therefore they resorted to the via negativa, the "denying way," enumerating the attributes that did not pertain to God, in order to develop some sense of what God might actually be like. (Earlier Hindu writers used a similar method in the same quest: neti, neti, or "not that, nor that.")
A similar approach might be applied to a (slightly) less lofty subject, in order to refine our understanding of business strategy.
So, then: What is not "business strategy?"
* Strategy is not shrink-wrapped or service-marked. If your competition can buy it, then it is almost certainly not strategy.
* A strategy that can be replicated by one's competitors with equivalent or greater success is not a strategy.
* Strategy is not a sub-function of the budgetary process.
* "Strategies" are not strategy. A gaggle of unrelated tactics, un-integrated by some broader unifying theme, can never rise to the level of strategy.
* Today's strategy cannot be next year's strategy; in fact today's successful strategy usually becomes tomorrow's necessary ante into the game.
* Strategy is not quantitative, though numbers may be useful in defining it. (If numbers were an infallible guide to strategy, then they would be useful in borderline cases, and they almost never are.)
* Strategy is not business as usual; if it is not at least somewhat uncomfortable, it is probably of little use.
* Strategy is not a selection of goods to be pursued; it is closer to the truth to say it is a selection of goods to be forgone in favor of other goods.
* If there is no decision involved, there can be no need for strategy.
* Strategy is not the development of ideas inside a headquarters building followed by the attempt to make external reality conform to these ideas.
* Strategy cannot be represented in spreadsheet form. Spreadsheets are the most effective method yet devised for the concealment of unexamined assumptions.
* "Shelfware" is never strategy. That is, strategy without action is not strategy.
* Neither is strategy a "to-do list" without preamble. Action without some framework of reason is not strategy.
* Strategy is not brittle; it does not dissolve or crack when it encounters reality.
* Strategy is not long-winded; if it cannot be stated in a paragraph, or, still better, a sentence, then it is not strategy.
* Neither is strategy a bumper sticker or slogan. Bumper stickers rarely outlast a hard winter.
* A strategy that does not anticipate major change, even its own demise or irrelevance, is not a strategy.
* Strategy is not the creation of a future. The future is far more to be endured than created.
* Neither is strategy mere reaction; it is somewhere at the interstices of creation and reaction.
* Strategy is not about certainty; it is about the acceptance and management of irreducible uncertainty in the external environment.
Now that we know what a strategy does NOT look like, can we make any positive statements about strategy?
Maybe an example will help. Rosa- beth Moss Kanter wrote a very good book awhile back entitled When Giants Learn to Dance, about organizational change ow Louis Gerstner, the savior of IBM, has written a highly readable account of the turnaround entitled Who Says Elephants Can't Dance? (I myself am now considering writing a book entitled When Giants and Elephants Do the Tango, Get Out of the Way, but that is neither here nor there.)
In his book, Gerstner writes: "Good strategies start with massive amounts of quantitative analysis, hard, difficult analysis that is blended with wisdom, insight and risk taking."
But this sentence is yet another example of one of my neti, neti statements above. I don't mean to suggest that Lou Gerstner knows less about strategy than I. Had I been CEO of IBM in 1993, it would likely now be the Hudson Valley's largest supplier of scrap metal.
Yet still I beg to differ: Good strategy does NOT start with "massive amounts of quantitative analysis." How dare I contradict Mr. Gerstner? Well, he started it. "Keeping IBM together," he writes, "was the first strategic decision, and, I believe, the most important decision I ever made.... I didn't know then exactly how we were going to deliver on the potential of that unified enterprise, but I knew that if IBM could serve as the foremost integrator of technologies, we'd be delivering extraordinary value."
Clearly this decision came before "massive amounts of quantitative analysis" could have been performed, since he admits he had no idea of the net present value of this strategy, its costs, or even how he and his team were going to execute it. But it is nonetheless a great example of strategic thinking, and it went directly against received wisdom at the time, which was to spin off "extraneous enterprises" and "focus on core competencies." But what exactly makes what Gerstner did great strategy?
* First, it was a broad, visionary idea-the opposite of a tactic or an operational initiative. It was such a large idea that it had the potential to serve to integrate all the activities of this monstrous, incredibly diverse company.
* Second, it offered immediate, intuitive guidance and direction for action: What each component of the company should do, which ought to be invested in, which ought to be shuttered, what strategic holes had to be filled, and where to look for acquisitions.
* Third, it was focused on what the external world seemed to be asking for, rather than on what IBM happened to be good at internally at the time.
* And finally, it was a risk o one knew at the time that IBM would be able to pull off its systems integration strategy; but Gerstner knew instinctively that avoiding risk was the most dangerous thing he could possibly have done.
So even if Lou Gerstner is wrong when he says that strategy starts with numbers, rather than hunches, he's a pretty good strategist in my book. But don't try to follow his act too closely. Those elephants can be dangerous to tailgate, especially if they've been out all night dancing.
Patrick Marren is a consultant on future strategy. His clients have included the U.S. Coast Guard, the Department of Transportation, Federal Aviation Administration, the Panama Canal Commission, various aspects of the U.S. military, and numerous Fortune 500 companies. He lives in Crystal Lake, IL and can be reached at marrenp Copyright c 2003 Thomson Media. All Rights Reserved.
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