Focus Your Strategy By Assessing Others'
There's a well-known anecdote about Gil Amelio, the CEO of Apple Computer just before Steve Jobs' return in the late 1990s. In a conversation with a reporter, Amelio compared Apple to a ship loaded with treasure, but with a hole in the bottom, leaking water. "My job is to get everyone to row in the same direction."
When Steve Jobs later recounted the story at a conference panel in 2010, the audience erupted in laughter. But the metaphor, while it may seem bungled at first glance, actually describes the way many leaders approach strategy. There's a big hole in the enterprise — a gap that, until it is filled, will not let them meaningfully execute any strategy. Instead of trying to figure out what they're missing, and solve their biggest issues, they focus on finding a direction, any direction, to try to steer their ship.
The history of business strategy — which is still a relatively new field, emerging only in the last 50 years — is essentially a series of theories of how to create value. Most strategists through the years have been similarly focused on picking a direction and getting everyone to steer in harmony. While the many schools of strategy, from adjacency positioning ("we'll expand to similar markets") to the search for blue oceans ("we'll serve a market no one else does") have different ideas about what direction is best, most of them involve the same underlying quest for some sweet theory of success that, once it's found, will be all leaders needs to know where to steer the company. It's understandable that decision makers want to start there, because most business choices seem, at first glance, to deal with the destination: Where shall we grow? Which industries should we expand to? What markets should we serve?
But in the real world, the choice of a direction is just one element of strategy. It must be integrated with choices about one's identity, purpose, and capabilities. Strategy is what Harvard Professor Cynthia Montgomery calls a "fundamental question that any company's leader must ultimately answer: What will this firm be, and why will it matter?" The value proposition may be based on a theory of success, but it can also be based on a company's capabilities — what it does particularly well — or on some other aspects of a company's history and proficiency. If there's an internal gap, or an internal problem preventing the company from realizing its potential, that can be as powerful a strategic barrier as any market failure.
Those who want to be effective strategists thus have a lot to sort through — multiple value creation theories, and scores of approaches on creating strategy (with hundreds of books with advice on the topic). What if, instead of looking for one solution that works for everything, business strategists looked for ways to improve their own judgment and strategic focus? We think one approach to building this judgment is to look more freshly at the companies in your own industry. Who is winning and how are they doing it? What are the key drivers of your company's success? These are not simple questions, and that is why the topic of strategy still seems quite unsolved to many. But if you spend some time thinking about companies this way, you will find your own discernment — of internal and external factors — can improve.
We've discovered that, for ourselves, in an online survey we designed in which we invite people to look at company strategies. Most people, for example, recognize that different companies in the same industry approach strategy in very different ways — and this difference, in itself, drives their competitive advantage. This has been particularly evident in the personal computer industry, where Apple's success, is generally attributed to its capabilities — including its innate, artistic understanding of design and human behavior — while Microsoft's success is driven by great market resonance of a few powerful products. Or consider the financial services and insurance sector, where companies may, in the future, owe their success less to their ability to manipulate capital, and more to their abilities in customer service and product innovation. Perhaps that's why we're finding that many respondents believe that most of the companies in their industry — including their own company — lack what they need to compete and create value in the marketplace.
We invite you to join us in learning more about the fundamental strategic choices companies make and how successful these have turned out to be. The survey that we developed — which takes about 10 minutes to complete — poses the question "What drives a company's success?", based on the companies that you observe (and that you work for). If you take it, we'll provide you with an analysis of what you and your competitors see as the key strategic success factors in your industry. As a side effect — or maybe as the primary outcome — you will be able to test your strategic judgment against those of others, and perhaps gain a better sense of the right direction for your enterprise.