Are You a Strategist?
Corporate strategy has become the
bailiwick of consultants and business analysts, so much so that it is no longer
a top-of-mind responsibility for many senior executives. Professor Cynthia A.
Montgomery says it's time for CEOs to again become strategists.
What are the first three words
that come to mind when you hear the word 'strategy'?" That's the
free-association exercise Cynthia A. Montgomery gives to mid-career business
leaders in her Executive Education classes at Harvard Business School. Seasoned
executives, they respond with "plan," "vision,"
"direction," "focus," "advantage."
To Montgomery, the Timken Professor
of Business Administration, this is indicative of a disturbing trend.
"We've lost sight of where strategies
come from and the distinctive role leaders play in the process," she says.
In her new book, The Strategist: Be the Leader Your Business Needs, Montgomery discusses when that disconnect happened, why it's
a problem today, and how leaders can turn themselves back into strategists.
According to Montgomery, the divorce
of strategy and leadership was an inadvertent result of academic research that
started to take hold in the 1980s and '90s. The work brought much-needed
economic thinking to strategy's underpinnings. It armed legions of MBAs and
strategy consultants with frameworks and techniques to help managers analyze
their industries and position their firms for competitive advantage. It also
made it very easy for leaders to think of strategy solely as an analytical
exercise. "If we're being honest, I was part of the problem,"
Montgomery says.
Montgomery and fellow HBS professor
Michael Porter—who is considered to be the father of the modern strategy
field—were among the first researchers who began to study strategy through a
rigorous, scientific process, using large empirical samples to look at
regularities across industries and firms. "We were proud of it!"
Montgomery says. "And rightly so: the work yielded a number of
well-grounded insights that have had a powerful impact on practice. But the
benefits have not come without costs."
Montgomery maintains that strategy
has been narrowed to a competitive game plan, separate from a firm's larger
sense of purpose. This has led to the eclipse of the leader's unique role as
arbiter and steward of strategy. The exaggerated emphasis on sustainable
competitive advantage has drawn attention away from the fact that strategy must
be a dynamic tool for guiding the development of a company over time.
"Strategy has become more about
formulation than implementation, and more about getting the analysis right at
the outset than living with a strategy over time," Montgomery says.
"As a consequence, it has less to do with leadership than ever
before."
Leading
strategy
Montgomery explains that leading
strategy requires confronting four questions: What does my organization bring
to the world? Does that difference matter? Is something about it scarce and
difficult to imitate? Are we doing today what we need to do in order to matter
tomorrow? Being a strategist means living these questions, she says.
For a leader, becoming a strategist
starts with getting clear on why, whether, and to whom your company matters.
While that may sound obvious at face value, it's something that regularly
stymies the veteran leaders in Montgomery's executive classes. "We'll be
talking about Nike or Apple, and the participants will be praising the
authenticity of the company and the clarity of its strategy," she says.
"And then I'll ask a participant at random, 'Do you have that clarity in
your company?' And there's always a pause. That pause gives them away."
To illustrate the importance of
clear purpose, The Strategist touts Swedish home goods retailer IKEA, founded
in 1943 by Ingvar Kamprad-when he was 17 years old. From its early days, the
book explains, IKEA set out to create "a better everyday life for the
many." (http://www.ikea.com/ms/en_US/about_ikea/the_ikea_way/our_business_idea/a_better_everyday_life.html
) The retailer did this by addressing an unmet market need, offering customers
an extensive range of practical, well-designed furnishings at low prices. This
driving purpose steered IKEA to succeed not just on low prices but also with a
singular customer experience that no other retailer has yet managed to
duplicate.
"IKEA has made very clear
choices about who they will be and to whom they will matter, and why,"
Montgomery says.
Clarity of purpose behooves corporations
and nonprofits alike, Montgomery adds. "Look at Doctors Without Borders.
If you go to the website, you'll see incredible clarity about what they do and
why they do it. They won the Nobel Peace Prize in 1999, and they didn't get it
for being murky about who they are and why they matter."
That said, a compelling purpose is
just the beginning of a strategy. "It gives you the right to play, and
puts you in the game," the book states. But at the root it's only an idea.
Strategists also must lead the charge
in creating organizations that can deliver on their intentions. That means
building business models with mutually reinforcing parts. Rich in
organizational detail, and anchored on purpose, such systems of value creation
"make strategy the animating force in a company," says Montgomery.
"They're the crucial link between lofty ideas and action."
To visualize such a system,
Montgomery recommends the time-honored "strategy wheel," in which
purpose is the hub and the supporting factors are the spokes. Drawing from an
HBS case study, she shows how Gucci essentially used such an approach to
support a purpose--"fashion-forward, high quality, good value"--that
saved it from failure in the 1990s.
Who
is a strategist?
Montgomery equally stresses the
importance of recognizing how a strategist lives and leads. To that end, in the
book she cites not only economic gurus, such as Joseph Schumpeter, but also
philosopher Jean-Paul Sartre, military theorist Carl von Clausewitz, and poet
Mary Oliver, who wrote, "Tell me, what is it you plan to do/with your one
wild and precious life?"
Incorporating the role of the
strategist into one's identity is important because leading strategy is not so
much a task as it is a never-ending quest. "For most companies, a long-run
sustainable competitive advantage-the holy grail of strategy-is a dangerous
mirage," Montgomery warns. "The longer you can keep an advantage
vibrant, the better. But any advantage is better thought of as part of a bigger
story, one frame in a motion picture."
Although a company may change what
it makes, the services it provides, the markets it serves, and even its core
competencies, its continued existence depends on finding and continuing to find
a compelling reason for it to exist. Shepherding this never-ending process,
being the steward of a living strategy, is the defining responsibility of a
leader.
And while her goal is to embolden
top leaders to embrace the role of strategist, Montgomery believes it's
important for employees at all levels of an organization to start thinking like
strategists, too.
"What [people] do, and why they
do it, should be driven by strategy," she says. "If the clarity isn't
there, they should push for it and think more actively about how they can be
communicating upward. Learning to be a strategist doesn't happen overnight.
It's like a muscle that you have to flex. Don't wait to see if you might
someday get the chance to drive strategy. It's a skill and a disposition that
take time to hone."
by Carmen Nobel http://hbswk.hbs.edu/item/7022.html?wknews=07182012
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