Strategy, Strategy, Strategy; My Kingdom for the Right One

Strategy, strategy, strategy.

Strategic planning has always been challenging. Yet, the traditional framework for developing a strategy has often been simplistic: evaluate, plan, execute, and assess. This classic approach, while foundational, is just one of many potential pathways to success.

Recently, I introduced an exciting alternative: exponential organizations. These innovative entities don’t just grow—they redefine growth by achieving returns that soar exponentially rather than relying on the conventional linear return on investment. Embracing this new perspective means unlocking opportunities that can transform the way we think about strategy and growth. Don’t miss out on the chance to innovate and thrive in today’s dynamic market!

Image courtesy of Boston Consulting Group

Today, I want to share with you a robust set of strategies developed by the Boston Consulting Group (BCG), a name many of you recognize from the influential BCG matrix you encountered in your marketing classes. This innovative framework, known as the Strategy Palette, reveals that businesses that grasp the strategic options available in environments defined by change—both predictability and the ability to influence that change—can outperform their competitors by an impressive 4-8%. This statistic, derived from BCG’s own study measuring shareholder value, underscores a critical truth: those who navigate change effectively are significantly ahead in the game. While I argue that shareholder value might not be the ultimate measure of success, it remains a prevalent metric in strategic thinking today. Additionally, the harshness of the environment is considered, providing a comprehensive view of diverse strategic scenarios. Embracing this Strategy Palette could be the key to unlocking your business’s potential and achieving exceptional results in a rapidly changing world.

While 4% or even 8% might not seem significant at first glance, consider this: in a billion-dollar organization, an 8% increase translates to a staggering $80 million. That’s a massive sum that cannot be overlooked! Additionally, for specific organizations, the potential for exponential growth is not just a hope—it’s a reality. Seize this opportunity to drive your organization’s success to new heights!

“Take a closer look at the strategic palette represented by the quadrants above. To deepen your understanding of this powerful concept, watch the insightful video created by BCG below. It’s a fantastic opportunity to enhance your strategic thinking!”

The strategy of strategy

Discover the groundbreaking insights in the newly released book by BCG strategists: Your Strategy Needs a Strategy: How to Choose and Execute the Right Approach. This essential guide will transform the way you think about strategy and empower you to choose the most effective approach for your organization. Don’t miss the opportunity to elevate your strategic thinking—grab your copy today!

“Explore the table below to discover how BCG expertly classifies various industries using the strategy palette. This insight can empower your strategic decisions!”

In today’s fast-paced business world, the most valuable insights gleaned from business school and prominent literature often reside within a proven framework of strategic thinking. Concepts like Porter’s 5 Forces, the Blue Ocean Strategy, and the Growth-Share Matrix (also known as the BCG Matrix) form the foundation of this established quadrant, where predictability meets low malleability. By mastering these tools, you can navigate challenges with confidence and unlock new opportunities for growth and innovation.

Using the wrong strategy in a particular environment can lead to disaster.

Consider the pivotal moment when Apple appointed John Scully from Pepsi as CEO. While Scully excelled in a traditional corporate environment, his attempt to apply similar strategies at Apple, a company fundamentally successful through innovating and reshaping its industry, nearly resulted in catastrophe—not just for the company but also for its consumers. Imagine a world where Apple never challenged the status quo in the computer industry. Without their bold vision, we might never have seen the rise of tablets, mobile apps, smartphones, or other groundbreaking innovations that define our lives today, or at least delayed these innovations for years. This highlights the critical importance of visionary leadership in tech—it’s not just about managing a company; it’s about transforming an industry and enhancing the consumer experience.

Let’s think about how strategy is different in different strategic environments.

Adaptive environments

Adaptive environments are more common than rare today, whereas classical environments are (according to BCG):

Becoming less and less true where global competition, technological innovation, social feedback loops, and economic uncertainty combine to make the environment radically and persistently unpredictable. In such an environment, a carefully crafted classical strategy may become obsolete within months or even weeks.

This is why I like to quote a line from a movie to the effect of:

A good plan today is better than a great plan tomorrow!

Taking weeks or months to develop a strategy is just too long.

The consumer packaged goods (CPG) industry is experiencing an unprecedented wave of transformation. According to the groundbreaking book *Exponential Organizations*,

traditional CPG companies are often unable to launch new products in under a year, while agile startups are making it happen in less than a month! This stark contrast underscores the urgent need for established players to innovate swiftly or risk being left behind in a rapidly evolving market.

In today’s rapidly changing landscape, strategic planning demands not just efficiency but robust flexibility. We must embrace flexible goals, adaptable products, and versatile resources that empower us to respond swiftly and effectively to change. Long-term planning, while seemingly straightforward, often ties our hands to outdated models that no longer serve our dynamic world. Instead of being shackled by rigid frameworks, let’s adopt a mindset of agility and innovation to thrive in an adaptive environment.

Integrating strategy with operations empowers firms in dynamic environments to prototype products effectively using adaptable production facilities or contract manufacturing. This approach not only fosters innovation but also enables businesses to explore various possibilities before fully committing to a strategic direction or to remain adaptable without ever making a definitive commitment.

Visionary

Visionaries possess not only the remarkable ability to foresee the future, but they also embody the determination to pivot and seize opportunities presented by that future. Take Amazon as a prime example. During the late 1990s, amidst a wave of dotcom failures, Amazon boldly continued to invest in warehouses despite facing substantial losses that weren’t popular among investors or other stakeholders. This strategic decision was met with skepticism; naysayers were quick to assert that Amazon was on the brink of collapse when its executives confidently stated it would be five years before the company would see a profit. However, their foresight and unwavering commitment to their vision ultimately transformed Amazon into one of the world’s most successful companies. This stands as a testament to the power of visionary leadership and the importance of investing in the future, even when the path is fraught with challenges.

But that was the right strategy for the time and in that context. The same approach might have resulted in ruin in another situation. That’s why it’s critical to thoroughly evaluate your environment before making these decisions.

Amazon understood what many other dotcoms overlooked: eCommerce is not just a fleeting opportunity for quick riches. Instead, it demands substantial investment and strategic foresight to harness its full potential and secure a profitable future. And they’re doing it again—investing in drones to speed package delivery. Other companies that want to excel in fast delivery are making similar investments, along with robot delivery for meals and supplies in large cities.

Why, you ask, isn’t FedEx making these investments?

They don’t see the potential. And that could cost them their business.

Shaping

In the dynamic realm of software, internet technologies, and cutting-edge computer gadgets, the landscape is in constant flux—an arena where innovators wield the power to reshape the future. Just consider how two determined individuals working in a humble garage can upend entire industries, leading even the mightiest corporations to stumble. A prime example is IBM, once an unstoppable giant, brought to its knees by game-changers like Dell and Apple. These visionary companies altered the very fabric of the game, exploiting the failings of those colossal entities shackled by their unwieldy bureaucracies. In this fast-paced world, agility and innovation reign supreme, proving that anyone with a vision—and the courage to act—can turn the tides against established titans.

Even the most promising tech newcomers can fall prey to the limitations of traditional strategic thinking. A prime example is Apple, which relied heavily on incremental upgrades to the Lisa computer—its flagship product—while the market was rapidly evolving and demanding genuine innovation. Luckily, the Apple board realized the error in their decision to oust Steve Jobs and brought him back to continue the tradition of innovation. With his death, the company has faced trouble maintaining its dominance after the failure of its smart glasses, a PDA product, a gaming console, and its take on a USB. In stark contrast, industry leaders like Craig Barrett, former Chair of Intel, emphasize a crucial truth: 90% of profits in December are generated by products that didn’t even exist the previous January. This reality underscores the importance of embracing bold innovation over stagnant strategies in order to thrive in a competitive landscape.

BCG defines the difference between shaping and adaptive strategy as:

Unlike adapters, shapers go beyond mere adaptation; they actively harness the collective strength of a robust ecosystem comprising customers, suppliers, and complementors. By identifying and championing promising new markets, setting pivotal standards, and developing innovative technology platforms and business practices, shapers lead the charge toward transformative change. They effectively propagate these ideas through impactful marketing, strategic lobbying, and insightful partnerships, ensuring their vision not only resonates but inspires action.

Openness is not just an element—it’s the cornerstone of an effective organizational strategy. By actively hiring innovative thinkers and equipping them with the necessary resources, you empower your team to drive transformative ideas. Partnering with other forward-thinking organizations to create complementary products enhances your offerings while strategically acquiring brands with products that bolster your core services ensures that your firm remains a competitive force in an ever-evolving market. Embrace openness and watch your organization thrive.

When you compare Facebook and Twitter, the impending disaster for Twitter becomes alarmingly clear. Facebook excels by constantly innovating and proactively addressing user concerns, often through internal developments and strategic partnerships with successful companies like King, creators of the addictive games that dominate your feed. In stark contrast, Twitter adopts a damaging “not invented here” mentality, alienating potential collaborators and stifling growth. For example, Twitter’s recent decision to cut off access to Meerkat—a promising streaming video service—and to numerous data firms offering the crucial “firehose” of Tweet data exemplifies their shortsightedness. This unwillingness to embrace collaboration and adapt could spell doom for Twitter. History serves as a critical lesson; just as MySpace faltered and faded in the vibrant realm dominated by Facebook, Twitter risks a similar decline if it fails to change its tactics. The choice is clear: innovate or face extinction.

Conclusion

As you can see, defining your future requires a different take on decision-making that focuses on defining who you are as a company, determining your strengths and weaknesses, and determining where you fit in the marketplace. Vision is required throughout this process and the frameworks provided by strategic gurus like BCG, Porter, and similar authors are a great way to start with this process.

This is especially true in markets where technology and consumer tastes are dynamic. For instance, companies that can’t integrate artificial intelligence, robotics, drones, and other new technologies into their daily workflows will likely see their ability to compete diminished over a few short years.

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