In a recent blog posting on Forbes.com, Rick Smith states that the practice of strategy as it is taught and practiced is DEAD.
I suspect that he is exaggerating to get us talking and thinking, but my interpretation and summary of the article along with my thoughts:
- Incrementalism has been disrupted by disruption – that is, it is no longer sufficient to make incremental improvements.
My Response: This is nothing new. Disruptive tech and disruptive global competition has been around for the last 20+ years.
- The past is no longer a good predictor of the future – the future has been clouded over by the rapid changes in technology and society.
My Response: The future ain’t what it used to be – It never was. Each successive generation of consumers and companies has always been different than the past.
- Competitive lines have dissolved completely – competition and competitors can come from anywhere.
My Response: OK, you have a point. But competition has always come from both inside and outside of the industry.
- Information has gone from scarcity to abundance – knowledge used to be the strategic discriminator.
My Response: But, all resources go from scarcity to abundance. It is not the abundance of information that results in competitive advantage, but what the firm does to convert the information to knowledge.
- It is very difficult to forecast option values – big decisions are increasingly risky.
My Response: The future has always been dim. We are just smarter about how little we know.
- Large-scale execution is trumped by rapid transactional learning – the ability to execute a big program, like six-sigma, is no longer as valuable as flexible and quick responses to market and environmental changes.
My Response: Yes, but we still need large-scale programs PLUS rapid testing of strategies. But, I agree that the pace of change has certainly picked up!
The author says that strategies today are guided more by the actions and reactions of the employees, not by the strategists and senior management. Along those lines a recent academic article proposes that losing middle, operations management is more damaging than losing senior management.
In my opinion, this has always been the case. Today’s strategy practice is just more rapid and riskier than it was in the past – middle management and the front lines know more, a lot more today, about the changing environment than senior management.
But I do agree that companies are doomed if they predict the future based on the past and believe that incremental improvements will win the day. Examples may include Dell and Sears and, perhaps, even Yahoo.
In summary, to win at strategy today, companies must have both a long-term direction and be making numerous low-cost experiments that keep them abreast of the changing environment. Examples? Google? Amazon?
Your comments and thoughts?
Let me know. Prof Goeltz
Bermiss, Y Sekou and Murmann, Johann Peter, The Impact of Functional Background and Top Executive Mobility on Firm Survival (April 22, 2014). UNSW Australia Business School Research Paper No. 2014 STRE 02. Available at SSRN: http://ssrn.com/abstract=2470068 or http://dx.doi.org/10.2139/ssrn.2470068