“What’s been forgotten is that strategy is not a destination or a solution. It’s not a problem to be solved and settled. It’s a journey. It needs continuous, not intermittent, leadership. It needs a strategist. Good strategies are never frozen-signed, sealed, and delivered. No matter how carefully conceived, or how well implemented, any strategy put into place in a company today will eventually fail if leaders see it as a finished product.[…]The strategist is the one who must shepherd this ongoing process, who must stand watch, identify and weigh, decide and move, time and time again.[…]That’s why strategy and leadership must be reunited at the highest level of an organization. All leaders must accept and own strategy as the heart of their responsibilities.” – from Leadership and Strategy Are Inseparable, Chapter 1. Strategy and Leadership
THE STRATEGIST AT THE CENTER OF CHANGE
This book was created out of the author’s experience of teaching at the EOP(Entrepreneur, Owner, President) program, an executive program in Harvard Business School. Working closely with the participants-mostly CEOs-of the program, the author realized that we have to rethink about strategy not as something fixed but as a system that evolves, moves, and changes. Those participants’ passion and continuous investment of time and energy to make their choices right and getting things right for their company made the author see the leader, the human being, at the core of the strategy in action. Hence the title, the strategist.
When we firstly hear the strategist, we may just think a person who develops and acts on the strategy. But here in this book, the strategist means much more than that. It involves the leader who constantly reinforces and even swims against the waves changing their strategy at the heart of fast changing environment. So the leader here is defined not as someone who do the one time job-create vision, create strategy and execute the one thing at one time or forever. Also, the strategy is defined not something that is developed and fixed. The leader is defined as someone fully in charge of the strategy as living things in ups and downs of the environment.
So how to build yourself, the leader, as the strategist? For this, the author discusses in four big themes. First, ‘the industry hurdles’ that the leaders must be aware of, with the example of a real business case(Masco). Second, how some outstanding companies in certain industries were able to make it with the introduction of ‘the importance of the purpose'(IKEA and Gucci). Third, how to ‘build up your purpose’ and ‘organically systemize the strategy around the core(Apple)’ with the introduction of the strategy wheel. And last, ‘the essential strategist’, the key principles to be a real strategist as the author suggests. Let me go through key aspects in a few bullet points.
- The Myth of The Super-Manager
In 1986, Masco, a faucet and other household maker, has built itself firmly as a $1.15 billion company with twenty-ninth consecutive years of earning growth. It expects to generate $2 billion free cash flow over the next few years. What will you do with this ample cash if you were this company? Will you venture into a new business in the furniture industry with the big ambition to transform the furniture business, with the reputation of disciplined and well-managed company with the successful prior experience of growth? What can be the lesson from this company’s failed venture into new business in the disorganized, heavily competitive and low margin furniture industry?
The Super-Managers-mostly CEOs-who are bold, action-oriented and have the can-do-attitude prefer not to think of themselves as in the grip of outside forces. The possibility that industries might drive or heavily influence their own performance-what so called ‘the industry effect’-isn’t near the top of their minds. The lesson is that leaders should be clearly aware that the industry forces are what they inherit, a reality that they have to deal with. The strategist’s first job is to understand them and how they affect the playing field where competition takes place. Without a specific plan that will tackle the long-lived forces in the industry, every process is bound to fall as optimistic thinking and disguised golden opportunities.
- Purpose Will Set You Apart And Set The Stage For Value Creation And Capture
Despite this notoriously difficult furniture industry, however, we can find the successful name – IKEA. What makes this company distinct in this industry and capture a decent profit out of the bloody competition? What can lead a company like IKEA to excel even in a business as tough as this? The author believes the answer begins with purpose and it’s where performance differences start. Nothing else is more important to the survival and success of a firm than why it exists, and what otherwise unmet needs it intends to fill. The author suggests it is the first and most important question a strategist must answer. Every concept of strategy-sustainable competitive advantage, positioning, differentiation, added value, even the firm effect-flows from purpose.
“We are a concept company.” IKEA’s CEO describes the idea that guides the firm. IKEA offers “a wide range of well-designed, functional home furnishing products at prices so low that as many people as possible will be able to afford them.” This serves the company’s aim to create “a better everyday life for the many.” What IKEA calls as “concept,” the author terms it as purpose. Purpose is the way IKEA or any other company describes itself in the most fundamental terms possible-why it exists, the unique value it brings to the world, what sets it apart, and why and to whom it matters.
As another successful case that proves why purpose matters, we can see Gucci led by CEO De Sole in 1990s. What would you do if you were a new CEO in the once a prestigious but now a failing brand such as Gucci in mid 1990s after many dramas in the past? What will be the most critical and urgent thing to tackle?? What can you think about as first? This Gucci case explains how redefined purpose in contingent situation and the great strategy built around for the new purpose sets them apart. A great strategy is a system of value creation, a set of mutually reinforcing parts. Anchored by a compelling purpose, it tells you where a company will play, how it will play, and what it will accomplish.
One thing to note. The idea of corporate purpose can easily lead people to think “competitive advantage.” The author believes the terms purpose and competitive advantage could be used in conjunction with each other, but competitive advantage places the focus on a firm’s competition. That’s not enough. Leaders too often think the heart of strategy is beating the competition. Not so. Strategy is about serving an unmet need, doing something unique or uniquely well for some set of stakeholders. Beating the competition is critical, to be sure, but it’s the result of finding and filling that need, not the goal.
- Turning Purpose Into Reality And It’s Your Turn To Build Your Purpose And Strategy Around It
In creating the strategy wheel with your company’s defined purpose at the center, you need to think of strategy as a system of value creation, rich in organizational detail and driven by purpose. It’s the bridge between lofty ideas and action. But while it’s easy to see it in companies like Gucci or IKEA, it is rare to find a carefully honed system that really delivers. If leaders lack a clear idea about what they want their businesses to be right at the start, they cannot build coherent systems of value creation because they don’t know what they should be designed to do exactly or how their success should be measured.
- The Myth Of The Long-Term Sustainable Competitive Advantage – Apple’s Case
We all know very well the famous history of Apple and the legendary Steve Jobs’ role in their successful rebound. What do you think is the inspiration from this case? It involves the challenge of ‘rising to meet the needs of a new reality.’
Competitive advantage, which Apple clearly had, is essential to strategy, and the longer it lasts, the better. But any one advantage, even a company’s underlying system of value creation, is only part of a bigger story, one frame in a motion picture. It is the need to manage across frames, day by day, year over year, that makes a leader’s role in strategy so vital. This organic view of strategy recognizes that whatever constitutes strategic advantage will eventually change. It underscores the difference between defending a firm’s added value as established at any given moment and something far more important: ensuring that a firm continues to add value over time. This is what endures-the ongoing need to add value, always. The products and services that embody those differences must evolve and change. In Apples case, Jobs learned it the hard way: Stay the course-Reinvent yourself. Leading strategy is a nonstop responsibility; it can’t be outsourced or solved in one great brainstorming session. The only sustainable strategy is one that anticipates change.
- Being The Essential Strategist
The author claims that the most important thing is to understand that you are not a manager of strategy, or a functional specialist. Those roles can be filled by others. You are, first and foremost, a leader. Your goal is to build something that is not already there.
Also, for economic development to flourish, leaders must swim against the stream. They must step forward and take the initiative, energetically showing the way.
One good question to pose to you. In many years from now, what kind of person do you hope to be? what kind of company do you want to be? We need to bring back this fundamental insight lost to a science in the past decades. Just as existentialist philosophers understood the importance of choices that embodies an individual as accumulation of all the choices, it also embodies a company the same way.
But who makes the vital choices that determine a firm’s very identity? Who says, “This is our purpose, not that. This is who we will be. This is why our customers and clients will prefer a world with us rather than without us”? These are the questions the strategist must own. While existence may be given, essence never is. The story, the meaning, the real significance must be made. As a leader, it is yours to create. Others, inside and outside the firm, will contribute in meaningful ways, but in the end, it is the leader who bears responsibility for the choices that are made.
The essential strategist, as you strive for a big-picture view of your business, also need to become intimate with it at the ground level. You need to connect with people throughout the business so that you can both inspire them and learn from them. De Pree, legendary CEO of Herman Miller recognized that leaders have an obligation to provide and maintain momentum: “It is the feeling among a group of people that their lives and their work are intertwined and moving toward a recognizable and legitimate goal.” Such momentum comes from a “clear vision of what the corporation ought to be, from a well-thought out strategy to achieve that vision, and from carefully conceived and communicated directions and plans that enable everyone to participate and be publicly accountable in achieving those plans.” If a leader shortchanges questions of strategy, an organization and everyone in it will suffer. As a strategist, that means your ability to communicate-and to connect with others in the organization-is as vital to your success as anything else you do.
CONTEMPLATION: THIS BOOK IS NOT ABOUT CLASSICAL STRATEGY THEORIES. THIS IS ABOUT A HUMAN BEING WITH STRATEGY IN ACTION
Meeting and talking with CEOs in the field gives you the real chance to feel. It’s something special. You can really open your eyes on human aspect of the leaders in action. Just like the author’s experience as a professor in the EOP program where the author has learned deeply from the EOPers'(Entrepreneur, Owner, President) passion, deep concern and energy, I also had the similar experience while I was working as a regional treasury manager in the global MNC for Asia Pacific region. Since I was dealing with money matters promoting a supply chain financing with bankers to help finance suppliers of our company using their account receivables, the suppliers’ interests who came to the road show was paramount. There I had a rare chance to talk with the suppliers and vendors, saw and heard what their eyes were telling me without even telling me anything. It was such a aha moment for me. Then there comes this obligatory feeling: How can I help them more when I learned a lot about and from them?
The main motivation of the author to write this book is probably how to help the leaders reinvent themselves as an essential strategist so that their company can endure and thrive in a fast changing environment, avoiding potential failures coming from the hurdles they are unaware. At the core, the book’s message is rather about an existential issue than practical methodological issues. If you as a leader are not clear about what your company is to be-why do you matter when you’re gone-, you cannot navigate through the tumultuous and unpredictable future.
Similarly, I have gotten similar messages and insights already from many other authors. Peter Thiel mentioned in his book ‘Zero to One’ that in definitely optimistic future where everything about the future result is clear, you can solely devote yourself for one clear goal. Since you have a clear objective and identity about what you will become, you rarely get lost. And indeed we already know lots of successful people who had this strong conviction about themselves and about the future that they imagined. In current indefinitely optimistic future, nobody is sure about the coming future even if the future will be bright, so you prepare yourself to be everything becoming well-rounded multiplayer without one clear identity about yourself. John Kay in his book ‘Obliquity’ makes a statement that the company who has clear mission statement with vision only can achieve the clear financial goals for the future, not vice versa. If the mission statement of a company doesn’t state the clear essence of the company but only the figures to reach in the future, it’s the wrong way to start. What these authors tell in common is that the essence matters. Why do you exist as a human or as a company matters. Why really matters.
The author covers mainly four impressive business cases in this book-Masco, IKEA, Gucci and the already well-known history of Apple. What I have enjoyed the most was from IKEA’s case, especially about the founder’s deep understanding about his customers he wanted to serve. This purpose at the core enabled him to tackle many hurdles and even turned them into opportunities and this continues until present time.
Their philosophy: “Since IKEA turns to the many people who as a rule have small resources, the company must be not just cheap, nor just cheaper-but very much cheaper…the goods must be such that ordinary people can easily and quickly identify the lowness of the price.” Isn’t this touching? Who wouldn’t be touched when a company deeply cares for us, the customers?
Secondly, the organic strategy wheel of Gucci under the leadership of De Sole was also very dynamic and gave me a meaningful insight. How difficult it is to reinvent yourself into a different one when lots are at stake? The leader as a strategist matters in this kind of situation. Like Apple under Jobs’ leadership, the contingency probably helped to make a successful stride but without the systematic and well-chained value system that enables a tangible realization, it’s impossible.
Thirdly, I liked the author’s insight on competitive advantage versus purpose. Indeed, the term competitive advantage need to be used in the competition context not for the existential context. It was a very good point to make that beating the competition is the result of fulfilling the company’s purpose not the synonym. Strategy is about serving an unmet need, doing something unique or uniquely well for stakeholders. Actually this reminded me of, again, Peter Thiel’s view on beating the competition versus creating value by doing absolutely better than other players in the market.
Lastly, I enjoyed this book since it was a story about living person. The leader. A human being who makes a choice. Life of a company where the living person leads. Compared to my initial expectation that this book might be about some new key trends that we need to learn, this book was not about a classical strategy theory even if there are useful strategic tools covered throughout the book. It’s actually how to guide leaders to navigate through the time. Through vigilance to see the environment they are in. Through continuous reinvention. Through swimming against the tide. This book is rather about the leader with the on-going strategy in action. This aspect helped me to enjoy the book thoroughly. The existential question of why do you matter when you’re gone sat deeply in my mind and heart. This book was a my type of the book in this philosophical sense. For that reason , the famous poem by American poet Mary Oliver the author quoted at the last part of the book thus became my recent favorite. I appreciate the author closed her long story with the beautiful poem, and I also would like to leave it here. Leaders, please remember your every day is a summer day!
The Summer Day
Who made the world?
Who made the swan, and the black bear?
Who made the grasshopper?
This grasshopper, I mean-
the one who has flung herself out of the grass,
the one who is eating sugar out of my hand,
who is moving her jaws back and forth instead of up and down-
who is gazing around with her enormous and complicated eyes.
Now she lifts her pale forearms and thoroughly washes her face.
Now she snaps her wings open, and floats away.
I don’t know exactly what a prayer is.
I do know how to pay attention, how to fall down
into the grass, how to kneel down in the grass,
how to be idle and blessed, how to stroll through the fields,
which is what I have been doing all day.
Tell me, what else should I have done?
Doesn’t everything die at last, and too soon?
Tell me, what is it you plan to do
with your one wild and precious life?
RATING: 5 out of 5
Business, Strategy, Leadership, Entrepreneurship
ABOUT THE BOOK
Author: Cynthia A. Montgomery
Published: 2013, U.K.