Strategy in the media

Citation

Henry, C. (2015), "Strategy in the media", Strategy & Leadership, Vol. 43 No. 6. https://doi.org/10.1108/SL-09-2015-0076

Strategy in the media

Article Type: CEO advisory From: Strategy & Leadership, Volume 43, Issue 6

Craig Henry

Craig Henry, Strategy & Leadership’s intrepid media explorer, collected these examples of novel strategic management concepts and practices and impending environmental discontinuity from various news media. A marketing and strategy consultant based in Carlisle, Pennsylvania, he welcomes your contributions and suggestions (craig_henry@centurylink.net).

From execution to “strategic choices”

Operational tough guys like to tease effete strategy types by voicing the claim that: “A mediocre strategy well-executed will always trump a great strategy poorly executed.” It’s a good sound bite, to be sure, but how can they tell that a strategy is “great” if it is “poorly executed” and presumably produces mediocre or worse results?

They can’t. The question is fundamentally unanswerable; there is no objective basis by which a strategy can be declared “great” in the event that its results are bad. If the pudding was mediocre, it is hard to argue that the recipe was great. And even when the results are good, you can’t be sure the strategy is: if you are the CEO of an oil company and the prices of oil skyrocket then your company’s results could still be great as long as your strategy is anything but terrible. Bottom line, making claims about the greatness of failed strategies or judging the relative values of strategy versus execution are not useful expenditures of brainpower.

Yet the idea that a poorly executed strategy could still have been great persists, which suggests that there may be some subtle truth to be ferreted out.

This truth is rooted in the fact that at its most basic level, strategy is about making choices under uncertainty and competition – and the choices need to be made from the top of the organization to the bottom. Managers (and many academics) distinguish between these choices, calling those made by senior managers “strategy” and those made lower down the pecking order “execution.” But all the choices, irrespective of where they are hierarchically located, are in fact strategic choices … In the real world, there is no meaningful distinction between strategy and execution.

And yet it is true that a strategy is only as good as the weakest link in the choice-making chain. If a lower level of the organization makes poor choices, it doesn’t matter how brilliant we might think the choices of the levels above happen to be. The results will be a function of the weakness of the choices at that lower level … .

So if “well-executed” simply means that that choices lower down a given strategy’s cascade of choices are pretty good, then a strategy whose choices at the top were mediocre could indeed trump a cascade that starts off great with great decisions at the top but then has a very poor one somewhere down the chain.

But although the people who are peddling the idea that execution is different from strategy may be touching on an important truth, the distinction they make between execution and strategy is still wrong-headed because it diminishes the likelihood that the people low in the strategy cascade will actually make good choices.

Roger Martin “Why Talking About Strategy ‘Execution’ Is Still Dangerous,” Harvard Business Review Blog, 15 September 2015 https://hbr.org/2015/09/why-talking-about-strategy-execution-is-still-dangerous

Blindspots that wreck forecasts

In his book Predicting the Future, Nicholas Rescher writes that “we incline to view the future through a telescope, as it were, thereby magnifying and bringing nearer what we can manage to see.” So too do we view the past through the other end of the telescope, making things look farther away than they actually were, or losing sight of some things altogether.

These observations apply neatly to technology. We don’t have the personal flying cars we predicted we would. Coal, notes the historian David Edgerton in his book The Shock of the Old, was a bigger source of power at the dawn of the 21st century than in sooty 1900; steam was more significant in 1900 than 1,800.

As Amazon experiments with aerial drone delivery, its “same day” products are being moved through New York City thanks to that 19th-century killer app: the bicycle.

But when it comes to culture we tend to believe not that the future will be very different than the present day, but that it will be roughly the same. Try to imagine yourself at some future date. Where do you imagine you will be living? What will you be wearing? What music will you love?

Chances are, that person resembles you now. As the psychologist George Lowenstein and colleagues have argued, in a phenomenon they termed “projection bias,” people “tend to exaggerate the degree to which their future tastes will resemble their current tastes.”

… . This over- and under-predicting is embedded into how we conceive of the future. “Futurology is almost always wrong,” the historian Judith Flanders suggested to me, “because it rarely takes into account behavioral changes.” And, she says, we look at the wrong things: “Transport to work, rather than the shape of work; technology itself, rather than how our behavior is changed by the very changes that technology brings.” It turns out that predicting who we will be is harder than predicting what we will be able to do.

… . Forecasters have a tendency to take something that is (in the language of behavioral economics) salient today, and assume that it will play an outsized role in the future. And what is most salient today? It is that which is novel, “disruptive,” and easily fathomed: new technology.

Tom Vanderbilt, “Why Futurism Has a Cultural Blindspot,” Nautilus 15 September 2015 http://nautil.us/issue/28/2050/why-futurism-has-a-cultural-blindspot

Marketing’s focus turns to analytics

A new research report on marketing analytics shows that brands plan to increase their spending on the category by a whopping 73 percent over the next three years. For big market cap B2C companies, it’s closer to a 100 percent increase. The category not only shows massive growth, but also a lot of funding – more than a billion dollars of VC money has been invested in data analytics companies so far this year … .

It turns out that marketers are spending well over a third of their budgets (on average) on analytics. This in spite of the report finding that levels of confidence in analytics’ ability to generate insight are mediocre, at best. The report also finds that marketers aren’t that advanced in their analytical approaches. The author of the report, VB Insight’s Jon Cifuentes, says that “Algorithmic attribution, mix modeling, and other advanced methods are actually pretty rare in market.”

Part of the challenge is due to the gigantic skills gap in most organizations around data science. Most marketing organizations are lukewarm on both how good their own insights are and how good their business partners are at making their insights actionable. That’s not entirely surprising, since digital marketers stay at a job for only 1-2 years, on average, and companies don’t have very formalized strategies.

Andrew Jones, “New research: Companies plan to massively increase spend on marketing analytics” Venture beat 21 August 2015 http://venturebeat.com/2015/08/21/new-research-companies-plan-to-massively-increase-spend-on-marketing-analytics/

Going digital means leading a transformation

In the alphabet soup that is today’s crowded C-suite, few roles attract as much attention as that of the chief digital officer, or CDO. While the position isn’t exactly new, what’s required of the average CDO is. Gone are the days of being responsible for introducing basic digital capabilities and perhaps piloting a handful of initiatives. The CDO is now a “transformer in chief,” charged with coordinating and managing comprehensive changes that address everything from updating how a company works to building out entirely new businesses … .

Given these demands, it’s not surprising that the number of people in CDO roles doubled from 2013 to 2014 and is expected to double again this year. We find that companies bring in a CDO for two primary reasons. The first is when they need to approach the complex root causes that must be dissected, understood, and addressed before any substantive progress on digitization can be made. And the second is when the CEO realizes the organization can’t meet the primary challenge of creating integrated transformation within its current construct. … five areas CDOs themselves must get right if their organizations are to successfully transition to digital.

1. Make digital integral to the strategy. Digital isn’t merely a thing – it’s a new way of doing things. Many companies are focused on developing a digital strategy when they should instead focus on integrating digital into all aspects of the business, from channels and processes and data to the operating model, incentives, and culture. …

2. Obsess over the customer. While most companies say they know their customers, CDOs must make it a driving passion and core competency of the organization … .

3. Build agility, speed, and data. CDOs can build strong foundations for change by creating a “spirit of digital” throughout the organization. …

4. Extend networks. In a digital world, threats often do not come from established competitors but rather from innovative technologies that enable new businesses, start-ups that undermine established business models, or new developments outside the way the company defined its competitive space.

5. Get stuff done. CDOs are ultimately judged not by the quality of their ideas but by their ability to lead different types of teams, guide projects, overcome hurdles, and deliver integrated change.

Tuck Rickards, Kate Smaje, and Vik Sohoni “Transformer in chief”: The new chief digital officer,” McKinsey Insights, September 2015

Reciprocal action and wargaming

Reciprocal action refers to action in a strategic context, where no single “player” solely determines the outcome. In plain language, a state involving reciprocal action means that you don’t always get what you want … .

Michael Handel offers a useful description of reciprocal action in conflict “… the reciprocal nature of all action in war means that attempts to grasp its complexities through a static, unilaterally based concept will never succeed … . a realistic approach must consider how one’s adversary interprets the war as well.” Colin Gray: … “Every cunning plan has to succeed against, not blind nature, but rather an adversary with whom you conduct a permanent tactical, operational, strategic, and political-moral dialogue.” This dialogue is the crux of reciprocal action.

“But,” you protest, “red teaming is the practice of introducing reciprocal action into decision making!” And I agree, at least in theory. When the client uses the output from the red team to enhance the dialogue, they are to some degree accounting for reciprocal action, certainly more than when they fail to consider the adversary at all.

Too often, however, clients view the vulnerabilities red teams identify as the penultimate phase of the game. All the clients need to do then is fix the vulnerabilities, and they win, right? – game over! (If only the adversary would agree to play by these artificial rules.) This kind of thinking perpetuates a static, defensive, and short-term mindset …

Here’s an example. Let’s say you own system X, and you hire a red team to explore its vulnerabilities. The red team returns with a set of very real vulnerabilities, which you proceed to patch. You’re safer, right? Yes, you probably are, at least in the short term. But if the horizon of your reciprocal action stops there, you might be sorely disappointed down the road. Most likely you chose to mitigate the vulnerabilities using the most direct and efficient means. So far, so good. But what if these means are also ones your adversary finds easy to counter? You’ve cut the dialogue short. Now your post-red team confidence, though high, is also false. You might even be in a worse situation than before … .

Wargaming excels in two areas where traditional red teaming is weak. First, it helps the client explore the reciprocal interplay between players, and second, it encourages players to counter risks and seek opportunities. On both of these counts it more closely models the real world and in so doing broadens the client’s perspective.

Mark Mateski “Let’s Game This!”, Red Team Journal 17 September 2015 http://redteamjournal.com/2015/09/lets-game-this/

Knowledge management: beyond the photocopier

While some lessons can be learned by watching … other lessons are harder to learn through observation alone. No matter how many times you watch a surgeon perform open-heart surgery, chances are you won’t ever learn how to pull off a triple bypass.

And yet, in business, companies routinely expect employees to pick up new job knowledge through vicarious learning – through reading descriptions of tasks in knowledge-management databases or by observing colleagues from afar. “The predominant analogy for vicarious learning is the photocopier,” says Christopher G. Myers, assistant professor of Organizational Behavior at Harvard Business School. The idea: Watch what other people do, make copies of the good things and dispose of the bad things, and we are good to go.

But good knowledge transfer doesn’t quite happen that way, and organizations that practice watch-and-learn vicarious learning run the risk of undertraining their key employees, says Myers … .

The limitations of traditional forms of knowledge management come from two sets of assumptions, he argues.

The first assumption is that the most important elements of a job function are observable, ignoring the crucial tacit knowledge that can influence how someone carries out his or her job … .

Perhaps even more crucial, those systems assume that the person undertaking the learning wants to duplicate exactly what the other person is doing – despite the fact that they may be perpetuating mistakes made by a predecessor or simply following procedures that may be a bad fit for a person of a different personality and skillset.

“The major shift theoretically is moving from a language of transfer, of taking fully formed knowledge and passing it from one person’s head to another, and instead talking about co-creation and building it together,” he says. “What that means practically is vicarious learning must be more interactive. Both the learner and the sharer of knowledge bring things to the table and together create something new.”

Michael Blanding, “Knowledge Transfer: You Can’t Learn Surgery by Watching,’ HBS Working Knowledge, 8 September 2015 http://hbswk.hbs.edu/item/knowledge-transfer-you-can-t-learn-surgery-by-watching

Beyond Big Data: intangibles still matter

Business schools throughout the world hammer into future business leaders the importance of data, analysis, and techniques to use data to shape behavior. The slogan “what gets measured, gets done” has become more than just an idea but a primary guiding principle for many MBAs who have become managers and executives. Consequently, data driven methodologies using modern digital technology like management by objectives (MBO), balanced scorecards, and six-sigma have gained popularity and wide acceptance. Clearly, behaviors can be influenced through rewards or punitive action taken based on performance data to yield improvement. However, history shows that the problem with action based solely on tangible data, with little regard for human factors, is that the vast majority of change or process improvement initiatives fail (as high as 80% in some studies) to produce long-lasting, permanent results … .

From my own research and discussions with leaders in business and education, a picture is beginning to emerge suggesting that key leaders seem to be either unable or unwilling to appreciate the value of intangibles that drive behavior and performance. Several recent studies of my own in illustrate this point.

Our study to gain insight into how national culture affect the success or failure of cross-nation ventures involving companies from different countries yielded insight into how executives factor cultural differences into due-diligence and implementation phases of a merger or acquisition. Results from this study indicated that executives were very aware of the importance of culture on the success of the venture. Yet they focused attention almost exclusively on data driven financial and operational issues. Vast amounts of effort was expended to analyze financial, operational, and market data in the due-diligence phase and to set firm, measurable, financial and operational goals for managers in the new venture with little actual effort dedicated to addressing the cultural differences. Despite knowledge that national cultures play a vital role in the success of cross-national ventures and that historically as many as 80% of these types of ventures fail, executives tended to ignore the intangible elements when it came to implementation.

… The result is that correct data interpretations of data without considering the big picture organizational inter-relationships and intangibles contribute to the 80% failure rate.

Herb Nold, “ What You Can’t Measure … . MATTERS!” Drucker Forum 19 August 2015 http://www.druckerforum.org/blog/?p = 950

Culture change and strategic transitions

Many companies have a huge gap between their culture and strategy – a problem that only gets bigger in larger companies, especially when they are in transition. Management at all of these companies have a common reflex: Scream louder about goals and policies as the gap between culture and strategy widens.

This is pointless because culture eats strategy for breakfast! Feelings and emotions trump rules and structures.

Yet we pay more attention to strategies than to culture.

That’s because changing a strategy is relatively simple. And changing a culture is extremely difficult: It takes perseverance; it takes willpower; and most important, it takes authenticity.

So here are six tips for successful change management:

1. Bring alignment to existence/purpose and feelings. Whatever your strategy is, your entire workforce needs to believe in it. There is no point in talking to the head, when the heart is not listening. There is no point in communicating KPI’s if employees don’t see the value of them. You have to involve your workforce and talk about the reason why you have certain goals. Ultimately the workforce needs to consciously and voluntary adopt change … .

2. Changing is unlearning. When organizations change, they often are afraid to lose clients. They will bet on both the old and the new. Multiple paradigms in an organization is no recommendation. Companies must say goodbye to their old ways. They will have to unlearn – and to unlearn is much more difficult than to learn!

3. Respect the change curve. The “old” had a purpose. It wasn’t wrong, but it changed to survive. Nobody wants a wired phone today, but there was nothing wrong with a wired phone in the 20th century.If there is a lot of change there can be multiple layers of old and new. People used the old way to get the organization to where it is today. And their experience can be a fantastic source to enrich the “new”. That is something to respect … .

4. What about hierarchy and leadership? People don’t need managers. If they need something then they need leadership. Leaders show the way. Leaders walk the talk, which means being authentic. People see right through an unauthentic person, weak promises or sophistry. Without leadership there is no change.And you need more than leadership: You need champions, non-managers, people from all levels of your organization who take initiative. Who show how it’s done. These people are most valuable. They are the change agents …

5. Reward positive results and behavior. Reward the people with the guts to experiment, the change agents that show change results. And make those results and rewards public.

Patrick Willer, “Culture Knocks Out Strategy,” Innovation Excellence,” 1 September 2015 http://www.innovationexcellence.com/blog/2015/09/01/culture-knocks-out-strategy/#sthash.afMRg6Mi.dpuf

The liberal arts are not obsolete – even in Silicon Valley

In less than two years Slack Technologies has become one of the most glistening of tech’s ten-digit “unicorn” startups, boasting 1.1 million users and a private market valuation of $2.8 billion. If you’ve used Slack’s team-based messaging software, you know that one of its catchiest innovations is Slackbot, a helpful little avatar that pops up periodically to provide tips so jaunty that it seems human.

Such creativity can’t be programmed. Instead, much of it is minted by one of Slack’s 180 employees, Anna Pickard, the 38-year-old editorial director. She earned a theater degree from Britain’s Manchester Metropolitan University before … she found her way into tech … . It’s her mission, Pickard explains, “to provide users with extra bits of surprise and delight.”

… Throughout the major U.S. tech hubs, whether Silicon Valley or Seattle, Boston or Austin, Tex., software companies are discovering that liberal arts thinking makes them stronger. Engineers may still command the biggest salaries, but at disruptive juggernauts such as Facebook and Uber, the war for talent has moved to nontechnical jobs, particularly sales and marketing. The more that audacious coders dream of changing the world, the more they need to fill their companies with social alchemists who can connect with customers–and make progress seem pleasant.

George Anders, “That “Useless” Liberal Arts Degree Has Become Tech’s Hottest Ticket,” Forbes 17 August 2015