The Evolution of Business Strategy
When we think of great strategists in history, from Sun Tzu to Alexander the Great to Napoleon to Patton, we think of master chess players, leaders who personify timeless principles and can think two or three moves ahead.
Strategy is the sexy part of business, where boring Word documents and endless Excel spreadsheets give way to glorious PowerPoint decks. Here drudgery ends and corporate generals can sit back and formulate their plans for world domination.
For better or worse, those days are over. As Rita Gunther McGrath explains in her new book, The End of Competitive Advantage, strategy is now a game that looks more like World of Warcraft then the game of kings. You never actually win, but arealways questing, gaining new skills and resources along the way and continually seeking the next challenge.
The Last Thing We Need Now Is A Vision
Many strategies start with a vision. For instance, Herb Kelleher atSouthwest Airlines had a vision that air travel could compete on price with ground travel. Therefore his main objective was to become “THE low cost airline” and decisions were undertaken based on that one overriding principle.
However, sometimes a clear vision can blind management to market realities, which was the case with Jeffrey Skilling andEnron. Skilling believed that securitization and a quantitative approach could make the company unstoppable. Unfortunately, that same vision (and some financial legerdemain) obscured serious problems that led to one of the great financial meltdowns in history.
Often, a vision has a shelf life. It works for a while and then outlives its usefulness. That was true of Jack Welch’s idea that every business should be number one or two in its category or abandoned. It drove company strategy for a while, until it became clear that the evaluation had as much to do with category definition as it did with true success.
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