Experiencing strategic conversations about the central forces of our time

Citation

Abraham, S. (2003), "Experiencing strategic conversations about the central forces of our time", Strategy & Leadership, Vol. 31 No. 2. https://doi.org/10.1108/sl.2003.26131bac.001

Experiencing strategic conversations about the central forces of our time

Stan Abraham

A report on the Second Annual Conference of the Association of Strategic Planning, "Exploiting Strategic Alternatives" in October 2002. Stan Abraham, a Strategy & Leadership Contributing Editor, covered it for the second year in a row. He is a cofounder of the Association for Strategic Planning and a professor of management at Cal Poly Pomona (scabraham@csupomona.edu).

Peter Schwartz, an internationally renowned futurist and business strategist (Chair, Global Business Network), and Dr Richard Goodman (Chair of the ASP conference committee) jointly designed the format and content of the conference. Their intent was to make it interactive for the attendees by giving them a chance to exchange ideas with each other and with the speakers and facilitators. Thus was born the idea of introducing strategic conversations into the conference.

A strategic conversation is a free-ranging discussion on a topic of strategic interest to an organization. The goal is to produce ideas and thinking that are ultimately useful in the strategic-planning process and that might not be captured in the formal process itself.

The conference began with six separate morning presentations on major forces (economic, socio-political, biological, evolving business models, digital, and security)[1], then Schwartz raised questions designed to stimulate strategic conversations in the informal afternoon discussions with the presenters. We start with a brief summary of Schwartz's lunchtime remarks.

Peter Schwartz: Real strategic thinking often occurs in the conversations that take place, sometimes entirely informally and sometimes more formally, during the strategic-planning process. My friends at Bell South used to call this the HERs process - hallways, elevators, and restrooms - because that's where the most interesting conversations happen. And during those conversations, real decisions are made, real issues are confronted, real knowledge is developed. This conversational mode is key to the process of learning.

Whether formal or informal, a conversation is the learning vehicle whereby the group adjusts to a new worldview to enable strategic plans to be developed and implemented. The sequence is: shared conversations and shared learning become the vehicles for changing one's mental maps, and then for developing better strategic plans. The purpose of this conference is to experience strategic conversations as a tool for shared learning.

Editor's note: Two of the six conference presentations from the morning session follow (the most popular and the most dramatic, respectively). After each, we've inserted Peter Schwartz's lunchtime suggestions for questions designed to promote strategic conversations in the conference's afternoon sessions.

Morning session: evolving business models

Pierre Loewe, founding director of Strategos and Executive Director of the Strategos Institute

We are finding out that, over time, strategies die faster. Change is accelerating amid discontinuous technical and social disruptions. Price erodes relentlessly. Deregulation, globalization, and venture capital spur the formation of new businesses. Markets become saturated more rapidly with ever-steeper penetration curves. Consumers, with nanosecond attention spans, are increasingly bored, and companies battle for their attention. Gaining market share and sustaining the gains are becoming more difficult, as even the markets companies compete in are changing.

A business model has five elements: (1) whom do we serve (links, buyers, segments)? (2) what do we provide (benefits/solutions, products and services)? (3) how do we make money (value levers, cost levers)? (4) how do we differentiate and sustain advantage (brands, nodes)? And (5) how do we provide it (channels, partnerships)?

Examples of recent business models evolutions are: (1) Rolls Royce, from selling products to selling results - being responsible for a product (jet engines for commercial airplanes) to being responsible for performance (hours that the plane is in the air and performs well); (2) eBay, from a producer-to-consumer auction to a consumer-to-consumer auction on-line.

Coming up with a new business model involves two divergent-convergent stages: (1) In the discovery stage, divergent thinking is required for broadening perspectives, and convergent thinking for synthesizing and learning, resulting in a unified view of the present and near future; (2) in the direction-setting phase, divergent thinking is required to define new strategic alternatives, and convergent thinking to make choices from those alternatives that result in strategic-architecture opportunities. The final stage in the process is realization (implementation).

The thinking process involved in coming up with new business models, manifests itself in a series of questions:

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  What other business models exist that we might be able to use?

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  What opportunities open up if we view the organization from the basis of competencies rather than products or markets?

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  How do we make money today? What alternative (economic) engines are possible for us?

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  What is everyone in the industry doing (what are the industry "orthodoxies")? What possibilities open if we look at alternative directions?

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  What unmet or unarticulated needs of customers are not being solved today?

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  What discontinuous changes are occurring in the marketplace that we could leverage?

Peter Schwartz's questions for strategic conversations on the topic of business models: Are there any new business models? Michael Porter taught us a long time ago that the only way you can win is to differentiate or cut costs. Be cheaper or different. So, has anyone yet figured out how to make money other than being cheaper or different? For the five years or so preceding mid-2000, it was pretty easy to make money - demand was rising, there was lots of cash, and the environment rewarded innovation and experimentation very quickly. Now, it's a much tougher environment, and is likely to be so for quite some time. You're going to have to be a great business in the short run and an innovative business in the long run. So how do you have a highly profitable core business that generates sufficient profits to fund the evolutionary thrust of the organization? How do you control costs while at the same time innovating radically? What business model enables you to generate a lot more profits than your competition?

Morning session - biological

Dr Gregory Stock, Director of the Program on Medicine, Technology, and Society at UCLA's Geffen School of Medicine, and author of the recently published book, Redesigning Humans: Our Inevitable Genetic Future

Who will we become as people as we gain increasingly more control over our biology? What is the reality behind the biotech hype? Biotechnology (particularly our understanding of the human genome) has the capability to revolutionize who we are and what we experience - changes in how healthcare is provided, how we experience and manage our emotions, the way we have kids, and how long we live.

First, we need to quickly review the state of the study of the human genome. The Human Genome Project maps genes and variances of genes. According to Craig Venter, President and Chief Scientific Officer of Celera Genomics, in five years people will be able to get their entire genetic sequence for $1,000. The impact of this will be enormous. Take a characteristic you like about yourself, e.g. your public-speaking ability, or any aspect of your temperament. In the future you'll be able to select characteristics like these for your kids. Understanding the human genome pulls back the curtain on how individual humans work. We'll see the first wave of these changes within the next decade. Individual DNA profiles will find their way into tools and protocols used in everyday healthcare, and the cost of a "DNA chip" will fall along the traditional microchip cost curve.

Following are some major implications (next 5-15 years) of these advances:

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  Medicine/Healthcare. Preventative healthcare will be possible with the help of medications. You'll be able to find out whether you're at high risk for a number of diseases, and will have the ability to intervene to lower that risk.

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  Pharmacogenetics - or the tailoring of drugs, or "personalized medicine". This will eliminate the need for large trial-and-error drug trials, which are very time-consuming. Pharmacogenetics will be less resource-intensive than gene therapy. This raises a number of questions, such as, how will the FDA approve tailored drugs? How will the industry grow, given that the current regulatory structure is not well suited to this emerging industry? Probably, in the future, many small biotech companies will likely spring up.

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  Life insurance and genetic privacy - currently it's based on sharing unknown risk. But what happens if you know your risk? How do we manage what insurance companies know and how they use genetic information? Also, we leave our genetic trail everywhere, in the skin cells that we leave behind and in our hair that falls out. Can we ever protect the privacy of our genetic profile?

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  The justice system is now using knowledge about genetics to argue that criminals have a "predisposition" toward certain behaviors. We cannot deny the differences in traits of subgroups in the population. Should such people be "let off?". In the future, police will create a profile of a suspect based on biological evidence - the DNA they "leave behind".

We'll see at least three more impacts even sooner, constituting the biggest immediate changes:

1. 1.

   Changing our biology.In the future we'll be able to modify our biology, that is, to change our life expectancy. (Peter Schwartz has bet that the first person to live to 150 is alive today) How will we deal socially and politically with five or six generations living contemporaneously?

2. 2.

   Altering our emotional state.Today's Prozac and Ritalin will be surpassed in efficacy by new products. What if we could take a drug that made you like yourself no matter what you were doing? Would you still make the kinds of personal sacrifices as you strive for a "better" life? Would you still try to "be all you could be?". What would be the economic implications for an economy like ours that is founded on a strong work ethic?

3. 3.

   Genetically modifying reproduction.The question is not how biotechnology will change the way we reproduce, but rather when. We're talking about "designer" children. What if we could pick a temperament for our child, just like we can pick the right breed of dog to own? The ability to screen embryos for genetic purposes, e.g. take out a cell from a growing embryo (which doesn't hurt it), and screen it for cystic fibrosis, which we can already do, will become commonplace. In the future we'll be able to screen children for temperament, which research shows that 50 percent of people would want to do. Altering the characteristics (genes) of the first cell will enable artificial chromosomes to pass from Mom and Pop to the kids and beyond. It's going to happen in the near future.

Peter Schwartz's questions for strategic conversations on the topic of advances in human biology:I believe Greg Stock is right. We are in the midst of the biggest revolution this species - not just this culture - has ever seen, and that the range of biological options that we will face over the next 20 years will be so large and so complex with consequences so enormous that it will pose huge challenges for us as individuals, for our society, and for our companies. Are we going to see a "bio-differentiation wave?". Are we doing things both biologically to ourselves and to physical and industrial processes, which are all associated with the new biological revolution? Are we ready for this transformational wave of biological revolution?

Note

1. These were given by Dr Ed Leamer (economic), Dr Richard Goodman (socio-political), Dr Greg Stock (biological), Pierre Loewe (evolving business models), Jeff Lawrence (digital), and Brent Woodworth (security).