Organizational Strategy
Have Organizations Abandoned Strategy? Part 2
(More from an interview with Harvard Professor, Michael Porter in a Fast Company magazine article, March 2001)
"The ability to change constantly and effectively is made easier by high-level continuity [i.e., strategy]. If you've spent 10 years being the best at something, you're better able to assimilate new technologies. The more explicit you are about setting strategy, about wrestling with trade-offs, the better you can identify new opportunities that support your value proposition. Otherwise, sorting out what's important among a bewildering array of technologies is difficult. Some managers think, 'The world is changing, things are going faster — so I've got to move faster. Having a strategy seems to slow me down.' I argue no, no, no — having a strategy actually speeds you up.
"Sometimes the environment of or the needs of customers do shift far enough so that continuity doesn't work anymore, so that your essential positioning is no longer valid. But these moments occur very infrequently for most companies. … Words like 'transformation' and 'revolution' are incredibly overused. …. Every time a new technology is out there [that will change everything] there are 10 times that one is not.
"[Some] managers use the hunt-and-peck method of finding a strategy: try something, see if it works, then proceed to the next. It's basically just a succession of incremental experiments. I say that method will rarely work, because the essence of strategy is choice and trade-offs and fit."
"You don't have to have all the answers up front. Most successful companies get two or three or four of the pieces right at the start, and then they elucidate their strategy over time. It's the kernel of things that they saw up front that is essential."
"The chief strategist of an organization has to be the leader — the CEO. A lot of business thinking has stressed the notion of empowerment and involvement and getting a lot of people involved. That's very important, but empowerment and involvement don't apply to the ultimate act of choice. To be successful, an organization must have a very strong leader who's willing to make choices and define the trade-offs. I've found that there's a striking relationship between really good strategies and really strong leaders.
"That doesn't mean that leaders have to invent strategy. At some point in every organization, there has to be a fundamental act of creativity where someone divines the new activity that no one else is doing. Some leaders are really good at that, but that ability is not universal. The more critical job for a leader is to provide the discipline and the glue that keeps such a unique position sustained over time.
"Another way to look at it is that the leader has to be the guardian of the trade-offs. In any organization, thousands of ideas pour in every day — from employees with suggestions, from customers asking for things, from suppliers trying to sell things. There's all this input, and 99% of it is inconsistent with the organization's strategy. Good leaders are able to enforce the trade-offs."
"A leaders also has to make sure that everyone understands the strategy. Strategy used to be thought of as some mystical vision that only the people at the top understood. But that violated the most fundamental purpose of a strategy, which is to inform each [person] of the many thousands of things that get done in an organization every day, and to make sure that those things are aligned in the same basic direction."
"The best CEOs I know are teachers, and at the core of what they teach is strategy. They go out to employees, to suppliers, and to customers, and they repeat, 'This is what we stand for, this is what we stand for." So everyone understands it. This is what leaders do. In great companies, strategy becomes a cause."