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No Excuses for Avoiding Strategy

An insightful article by Frank Cespedes a Senior Lecturer at Harvard Business School and author of 'Aligning Strategy and Sales" (Harvard Business Review Press, forthcoming).

In this article he points out that speed of change does not eliminate the need to have a strategy as context for making decisions over the long-haul. Oh so true!

Main thesis:

1. "Business today, like yesterday, requires choices and trade-offs, whether or not you acknowledge that within and beyond the C-suite. As a guiding principle, however, adaptability is analytically useless for doing what any coherent strategy must do: specify where we do and don’t play in specific markets and how we propose to win in places where we do choose to play.

2. If your firm doesn’t do this, then over time in a competitive market, one or both of two parties will choose for you: either competitors or (in voting with their feet) customers....neither of which necessarily has your best interests at heart.

3. Strategy has shrunk. For many firms and even for some prominent strategy consultants, the concept is now nothing more than “just-in-time decision making” or “ a few critical initiatives” or other variations on “adaptability.”

4. Driving this view is a set of assumptions: that making and integrating strategic choices “assumes a relatively stable and predictable world,” and that the speed of information flows and change in our high velocity world makes a search for sustainable advantage an ephemeral exercise that’s not worth it.

Key Points:

How different are we....really, from what has come before? The idea of information overload was the basis for Alvin Toffler’s pop-sociology book Future Shock in 1970. That’s a few business generations ago: think mainframes with spindle cards, Nixon, and gas guzzlers; your parents were probably younger than you are now. You can look at history too: creative destruction has been the fruitful norm, as Schumpeter emphasized, at least since the steam engine.

Adaptability is more important. To use a retailing metaphor: every strategy has a sell-by date and, despite the polemics of adaptability pundits, few have ever denied that. Stability is not a necessary assumption behind the notion of strategy as integrated choice. In fact, the point of industry analysis frameworks is to help managers dissect entry barriers, substitutes, and other forces that are changing their markets.

So consider why some in your organization might equate strategy with adaptability. Sometimes (often?) it is what people say when they’ve not done their homework about the market or don’t want to commit to tough choices that mean more and less resources for different functions and business units. And not making these choices never helped any company adapt to disruptive change — from Western Union in the 19th century to the latest firm upended by a new technology or business model in the twenty-first.

You can and should be alert to market changes while also providing employees with more than enigmatic descriptions of strategic direction like “constant innovation” or “great service” or even “customer-centricity.”

If you don’t clarify choices and their implications, then, as in a Rorschach inkblot test, employees (and especially salespeople and other customer-facing groups) will fill in the blanks with their own constructions.

The result is diverse behaviors that fragment your resources and increase the risk of becoming a global mediocrity: a firm that’s good at many things but not great at any particular things, and that’s the surest way to dissipate any competitive advantage.

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