I saw this post on social media recently and I gotta say, I was surprised. Not in the good way – it was actually a little frustrating. The post comes from a global leader in consulting, the esteemed Boston Consulting Group, or BCG. However, although the author appears to be discussing something called ‘corporate strategy’, the post gets a little confusing when you try to dissect it.
Here’s the post:
I get worked up about strategy being misrepresented, so I want to take a minute and help people understand what we’re looking at here, and what we’re not seeing.
Let’s start by taking the paragraph at the top.
"The art of" implies there’s some skill involved, which I agree with, as it pertains to
crafting a implementing strategy.
"Ensuring the value of the enterprise as a whole is more than the sum of its parts."
Paraphrase as: ensuring the value of the enterprise is actually valuable. Think of it
this way, if you invest money in something, you expect to get more back. You want
added value.
"A successful corporate strategy will 1) identify the optimal business portfolio,
2) prioritize the right growth platforms, and 3) set a financial strategy to transform vision
into value."
A couple things here:
"Optimal business portfolio" is corporate-speak for "the right opportunities for growth".
"The right growth platforms" can mean a number of things, depending on your
company’s goals and vision. I would paraphrase as "the best ways to reach your ideal
customers."
"Set a financial strategy to transform vision into value."
Ummm….correct me if I’m wrong, but are you saying that "a successful strategy will set
a strategy?" Don’t look at me, you’re the one that used the word strategy to describe
strategy.
So what’s our key takeaway from this seemingly informative post? Simple: this is a fluff statement and does very little to describe strategy.
In his book “Good Strategy Bad Strategy”, author Richard P. Rumelt describes the kernel, or the core, of strategy as the following:
1. A diagnosis that defines or explains the nature of the challenge.
2. A guiding policy for dealing with the challenge.
3. A set of coherent actions that are designed to carry out the guiding policy.
So, you see, you can’t have a corporate strategy of “let’s be a great company with a great stock.” That can be a goal, for sure. But if you rephrase Rumelt’s kernel, you’ll see that in order to provide any kind of meaning to your organization, a strategy needs to make a few things as obvious as possible:
· What need are you solving for your customers? Think about what you provide that your competitors can’t duplicate. Is a it a certain feature of your product? Maybe a perfect customer service experience? Or maybe it’s a guarantee that helps position your offering so it’s more appealing to consumers. Regardless, you
· What is getting in the way of you accomplishing this, and what’s the best way around this obstacle? It’s not enough to identify your challenges (although this is an important step), you must also identify the best path for reducing any resistance to accomplishing your goals. And once you identify a path, you must stick to it. This is your guiding policy.
· What actions are you taking to ensure you remain committed to your guiding policy? Too often, organizations of all sizes get distracted from their critical goals, and they lose sight of the guiding policy. To prevent this, management needs focus and discipline. This isn’t to say that your guiding policy will never change. As markets and consumer needs evolve, you will need to make tweaks to your strategy. However, you always need to know what your guiding policy is and take action so your organization is committed to it.
Rumelt dives way deeper into strategy, further beyond the kernel, but for strategy’s sake this is one of the most important takeaways: a good strategy will build on the kernel, but a strategy without the kernel will always be ineffective.
So back to the post – based on what I’ve shared so far, it’s obvious that the message from BCG is a far cry from good strategic advice. The goal of articulating a good vision may be the goal of a vision statement. However, the goal of strategy will always be guiding your organization from articulating a vision to executing it. Unfortunately, as you learn more about corporate strategy, you will realize that far too often companies use the term loosely, and strategy is frequently ill-defined.
Further reading: Good Strategy Bad Strategy by Richard P. Rumelt (2011)
FYI: Here’s a link to BCG’s website where they go a little bit deeper into their thoughts on strategy. And the content on this page seems more aligned with my thoughts on strategy, but still seems a bit more on the sales-y side.
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