Strategy in the 21st Century

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Jim Champy

“Strategy” is a content free word. My shelves are lined with books by thoughtful academicians and practitioners who craft their version of the word’s meaningand how a strategy should be executed.

A learning organization must develop its unique version of a strategy and what it means for the company and its people.

In the Beginning

No single definition captures the full meaning and importance of the word. I usually begin a strategy exercise by referencing Peter Drucker’s definition: “Strategy is understanding where you are today; where you want to be in the future; and how you are going to get there.” Peter had a knack for simplifying big ideas.

Strategy purists would argue Drucker’s definition ignores the importance of differentiation and that “how you are going to get there” is a matter of execution, not strategy. I would agree with the first point, not the second.

So here is a more complete definition, from the 21st edition of the book, “Crafting and Executing Strategy,” as written by a group of academicians and published by McGraw Hill: “A company’s strategy is the set of actions that its managers take to outperform the company’s competitors and achieve superior profitability.”

What’s Important Today 

But in this world of “disruption” and with the challenge of managing new information technologies as productive assets, not just added costs, learning organizations must get out of theory and into practice.

My advice to learning organizations for developing a 21st Century strategy:

  • Keep the expression of strategy simple so every person in the company understands where the company is going and how it will affect their work
  • Put as much energy and attention into execution as you do finding the big idea that will make you a serious competitor

Finding the Big Idea

In 2008, I was intrigued by the new, emerging business models, so I began researching the source of the ideas behind those new businesses. I published the results in a book, “Outsmart! How to Do What Your Competitors Can't."

My conclusion from this research: there is no single method for finding a big, differentiating idea.

There were companies that saw opportunities their competitors didn't see; there were companies that were able to think outside the “bubble” of their industry; there were companies that changed their frame of reference about the business they were in, allowing them to be more expansive about what they might do. 

I was always amused by my friends at Hallmark, who would tell me they were not just in the “greeting card business”; they were in the “social expressions business." That positioning allowed them to produce all kinds of tchotchkes.

But finding a big idea was often serendipitous, like for Under Armour. Its founder, who played college football, had found a fabric that provided more muscle compression. So he had a tailor make him a shirt from fabric that would improve his athletic performance.

His teammates liked his new shirt, so he began selling shirts to his teammatesand Under Armour was launched as a performance oriented provider of athletic wear.

If there is one piece of advice I would give learning organizations looking for a new strategy, it’s to walk in the marketplace—get to know your industry and competitors really well, try to find your customers’ unmet needs, the industry's inefficiencies and opportunities. And while you're doing this, be thinking about how technology might dramatically change your business.

Strategy must be done in markets, not in rooms behind closed doors.

Keeping It Simple

Expressions of strategy are often contained in multi-page volumes. Learning organizations must do better. The enterprise will not grasp all the meanings in that volume.

I learned this years ago from the CEO of a major utility company. The company was undertaking dramatic changes in its business model. The CEO was a brilliant communicator and held regular open “town meetings” to describe how the company would change. 

One day, I encountered him in a very bad mood. When I asked him what was wrong, he told me he was still meeting people in the corridors of corporate headquarters asking him where he was taking the company.

He then told me his strategy wouldn't be sufficiently grasped by everyone in his company until a person who worked in the cafeteria understood what it meant for his job. That’s the communications standard I would set for a learning organization. Every person must know what a strategy means for their work.

The challenge is that strategy documents are generally too dense and vision statements too abstract for the full population of a learning organization to grasp.

Executives and managers engaged in a strategy process may know what they mean by a “vision”—they have most likely been talking about it for months. But I can guarantee that people who do real work in the company don't.

My solution: develop a set of principles that describe the basis of a company’s competitive position and how the company will operate as it executes a strategy.

I haven't seen this done, but I was encouraged to find this quote by Michael Porter, the person who, over the years, has written the most seminal works on strategy: “The underlying principles of strategy are enduring, regardless of technology or the pace of change.”

Sustaining Momentum

Every major change requires a “road map”—Who is going to do what, where and when? What are the business processes that enable strategic change? I would bet that if you ask that question of the CEO, of even a learning organization, she or he would not have a clear answer.

Companies are generally designed to do day-to-day work. Very few companies are designed to execute a new strategy. How will you even know if your strategy is working? What will you be measuring and what will be the metrics of success?

I have always believed execution is an integral part of the strategy process. What if a learning organization doesn’t have the capabilities to execute a new strategy or the time to develop those capabilities internally? Does that mean an acquisition is required? And how does that acquisition get leveraged or integrated into the current organization?

These are all questions a “roadmap” should raise—and the challenges a strategy should anticipate.  The successful execution of strategic change should be a natural act in the 21st century for a learning organization.