Musings On Growth & Strategy

Strategy is such a misused and misunderstood term. We hear and use the term most days, tossing it around as though we know what we are talking about. Indeed, in some quarters it has become something of a status symbol, separating the real work of MBA-armed executives from numerous unfortunate troops, buried deep in the bowels of the organization, who balance the dual imperatives of serving customers while following a range of instructions from those who presume to know far more than them.

Originally a military term defining predetermined offensive and defensive moves and countermoves deployed by armed forces in the heat of battle, the orthodox approach to strategy arises out of the cause and effect hypothesis of game theory. The intention of strategy in this context was to capture territory or to inflict casualties on a scale that would convince the enemy to surrender. 

Incidentally, a central idea in this regard, which happens to be an elementary flaw in today's context, is that there must always, ipso facto, be winners and losers. In theory, of course, it is expedient to portray the outcome of a game in such well-ordered terms, particularly as it disregards any distracting factors, such as the social value inherent in team-based activities, for example.

In the hurly-burly reality of today’s volatile and unpredictable world, however, where new and unholy alliances form and dissolve so rapidly, such a simple concept is bound to cause confusion as much as it creates impossible expectations. In spite of this, the militaristic notion of strategy, deliberately embraced by business schools and enthusiastically pursued by the majority of business leaders, has been hard to erase.

The most common use to which strategy of this kind is invariably put is the pursuit of growth in all its forms - brand and market size, shareholder value, and profits in the private sector, and gross domestic profit and employment, in the public domain.

Sometimes it seems that getting bigger is the only thing that matters. Growth equates to progress, we are constantly told by economists who are supposed to know about these things. So a lack of growth must mean failure. And we all know what that means!

In private enterprise, the treadmill of unremitting merger and acquisition activity, aided by pressure from the Board and amplified by intensely competitive players, spawns ever-larger corporations that often become obsessed by this one pursuit - unaware of the harm they might be doing to themselves and others, the economy in general and, subject to the industry, the biosphere. When growth becomes a cancer eating away at the moral wellbeing of the enterprise, nobody wins.

Our unending obsession with growth at any cost ignores the possibility that growth could mean getting better rather than bigger, a fact lost on more aggressive company directors, shareholders, and investors - high priests in the cathedral of capitalism.

Such simplistic, linear thinking has given rise to huge, potentially catastrophic, socio-economic problems in society - such as the accumulation of power by a new class of billionaires, for example, as well as excessive remuneration for CEOs, and the retention of talent, within individual enterprises.

Originally, in corporate life, planning was not in the least bit strategic in nature. On the contrary, it was simply a sensible response to the increasing complexity of production - an attempt to coordinate people, equipment, and resources to be more efficient. Eventually, as methods became more reliable, planning became longer term. By and by, as managers realized they could sell more goods by calculating which of their products would sell, and to whom, thus optimizing the capacity of their production plants, various forms of forecasting and budgeting were built into the process. 

Planning only really became strategic, though, in the truly militaristic sense of that term, following World War II when the global business environment began showing such signs of competitiveness that each corporation was required to out-maneuver the other if they wished to survive.

Initially, relatively primitive strategies were implemented, mainly around branding and positioning. Eventually, however, new technologies coupled with fairly sophisticated strategic management systems enabled firms to change the rules of competition in the blink of an eye. The game had become so engaging that entire departments devoted to strategic planning were set up.

Today, more often than not, strategy has become a linear process where ‘secret’ plans, goals, and targets are determined by an elite group of senior executives who may or may not be in touch with the real world. Because the planning component of strategy has become such an infrequent event - often occurring once a year and undertaken by the most senior people in the corporation irrespective of their ability to think or act strategically, any resulting plans tend to lock the corporation into a solitary future path, usually within an horizon of 2-5 years. With fewer resources allocated to the execution of such plans, it is hardly surprising that even the best intentions often stall.

We are all too familiar with the implications of this approach. But the unavoidable consequence is that the hard work and thinking that has gone into the development of the strategy as originally envisaged, is hardly ever realized.

For one thing, while even the most subtle changes in environmental conditions often demand constant recalibration, senior managers rarely have the time to spend making changes to, or refining, their original ideas, seeing such iterations as a waste of time when they could be busy doing something. For another, the bureaucratic systems and procedures that, with a minimal amount of re-engineering, could facilitate the optimal deployment of any new strategies, often remain untouched due to a lack of adequate appreciation, resources, or motivation, as well as an unwillingness to come to terms with flaws in their design. 

Even when the strategy is sufficiently robust to withstand the test of time, people may continue to do what they have always done. Ask them why, and they will respond with a million good reasons. Yet invariably the root of the problem results from weak overt communication across the organization, in addition to undervaluing the power of more implicit and informal cultural interactions. 

Indeed, much of the research into social organization carried out over the past twenty years points to the importance of implicit messaging embedded within group culture. Up to 80 percent of actual performance may be directly reliant upon embedded data of one kind or another – habits, gossip, assumptions, tacit knowledge, and the like. Conversely, less than 20 percent will be directly attributable to explicit plans or goals – however well communicated these may be.

The lesson here has to do with the significance of culture in determining what is done as well as how it is done. Although it wasn't always so, today the multifaceted variety in the communal cafe will always trump the power of high priests in the cathedral.

Explicit formal communication of strategic plans and goals, therefore, often has very little effect on the performance of a corporation. Perhaps people are not convinced the new strategy can work and so continue to do what they have always done. Perhaps they are simply turned off or bored by the constant mantra of financial targets. Possibly their personal values clash with what they are being asked to do, or what the business stands for. Or perhaps they simply do not fully comprehend how a new strategy affects them in their role. In some cases, they may not have heard about some significant new plan, so secretive is it. And, in a few rare cases, where there is some kind of a grudge against the enterprise, an individual might even try to sabotage the implementation of anything new or different.

Whatever the reason, the results betray the inevitability of a self-fulfilling prophecy. Managers spend indiscriminate proportions of their time attempting to get ‘buy-in’ from employees, industrial relations problems abound, there is a preoccupation with implementation and ‘doingness’, and issues of responsibility and accountability never quite seem to get resolved. Arguably of more consequence, the strategic responses intended by the corporation’s leadership team remain ever only partially realized while a critical mass of the workforce continues to do what they have always done – thus limiting pivotal change and development.

In this day and age, it is simply unforgivable to fall into the pitfall of orthodoxy. This is one of the reasons I pedantically redefine strategy in terms more appropriate for the volatile and uncertain conditions organizations encounter today.

Apart from the artifact of the documented plan, strategy doesn't actually exist – at least not as a visible, tangible object. It is partial and ephemeral - at best the construct of a few minds who were in agreement for a brief moment - a symphony where the notes are just the starting point for a longer, more meaningful, journey.

Moreover, the most appropriate strategies can only ever be temporary. Like so many words in the management lexicon which we take for granted strategy, even in its more conventional sense, is a metaphor, a mental map that we use to help us make sense of our changing reality.

Ideally then, strategy is perhaps most aptly described as distributed consciousness - an alignment of differing epistemes where understanding is both implicit and explicit.

An effective strategy is dynamic, transparent, and constantly present in the doing. It is manifested in every moment of an organization’s reactions, to the market, and to other unpredictable factors. When viewed this way it makes more sense to perceive strategy not merely as a set of programmed responses to changing environmental conditions, but more as a characteristic mode of thinking from which a rich repertoire of varied responses can be distilled and actioned by individuals, groups, and the community. 

In this mode, strategy will normally be defined by explicit intentions, such as a salient driving force and overarching ambitions, for example, while being characterized by distinct ethical or moral qualities. It uses different time frames to make sense of what appear to be unrelated patterns of events for creating intelligence and, over time, results in the distribution of context-aligned responses and initiatives throughout the enterprise. These responses and initiatives are invariably most effective when they integrate and align business and social factors.

In conclusion, contemporary strategy when appropriately imagined and creatively applied is not so much a plan as a navigational literacy. Best defined as a characteristic mode of thinking that uses ambient strategic intelligence to align an array of responses, patterns, and initiatives across the organization in order to realize sensible, beneficial, profitable, and ethical business intentions.