CORPORATE STRATEGY: NOT A NEW IDEA BUT NOT AS OLD AS YOU THOUGHT

3 06 2013

strategyAt a recent speaking engagement I was comparing how new Corporate Strategy is when compared to Military Strategy or the strategy of training for performance sport. I was later asked if I could write a short piece about the birth of Corporate Strategy. Happy to oblige, here it is.

Strategy as a concept has been around for centuries, for millennia. The first published thoughts on strategy are commonly believed to be the works of Sun Tzu and Wu Tzu from 2500 years ago. Sun Tzu’s ‘The Art of War’ is still essential reading in military academies around the world and should probably be required reading for business leaders too.

For 2300 years the principles of strategy, of formally identifying what success looks like and planning a route to achieve it was left to the military. That is until the early 1800s when ‘pedestrianists’ – early race walkers – took to planning their training, albeit in somewhat basic format. In the late 19th century athletes took up formal planning and gradually the idea of developing strategies for the training of sportspeople evolved and developed into the science (and art) of today.

Meanwhile, the post-industrial revolution world awaited ‘strategy’ in any formal sense. Managers and leaders thought and planned after a fashion but with little genuine cohesion and it was not until the 1950s that the term ‘strategy’ was regularly applied in a business context.

Then, in 1965, along came H Igor Ansoff and the business world would never be the same again. Ansoff’s publication ‘Corporate Strategy’ introduced the term, new thinking and the formulation and implementation of ‘strategic management’ and suddenly corporate strategy became a requirement for all businesses, large and small.

Ansoff stated that strategy was, ‘a rule for making decisions.’ He distinguished between objectives, which set the goals, and strategy, which set the path to the goals; something many modern businesses have forgotten. ‘Corporate Strategy’ also stated firmly that ‘structure follows strategy’ – something else a significant minority (majority?) of modern managers and leaders overlook.

Ansoff flagged up the important issue that has troubled formulation of strategy ever since; most decisions are made inside a framework of limited resources. Whatever size the company is, strategic decisions mean making choices between alternative resource commitments.

The process defined by Ansoff typically unfolds thus:

  • Mission Statement and Objectives – describe the company’s mission, vision and values and define measurable strategic (and financial) objectives.
  • Environmental scanning – the gathering of internal and external information analysing the company, its industry and the wider environment (e.g. the 5 Forces of Competition, SWOT and PEST analyses, etc.).
  • Strategy formulation – competitive advantage, core competence, corporate thinking, ‘inside out and outside in’.
  • Strategy implementation – communicating the strategy, organising resources and motivating teams to deliver.
  • Evaluation and control – measure, compare, adjust.

Since Ansoff, writing about Corporate Strategy has grown to become an industry all of its own and, like all industries, it is populated by the good, the bad and the indifferent. The growth of the internet has seen a boom in ‘off the shelf’ strategy templates for business. For the individual seeking text books on the topic it is now a case of caveat emptor. For the businessman seeking a quick fix download it is a world populated with poor options and little else.

Strategy should be personal, borrowed templates will never deliver quality. There are no short cuts, getting strategy right and, beyond that, of quality, is hard work.

But then, it was ever so. As Sun Tzu wrote 2500 years ago; “Strategy is the great work of the organisation.”

© Jim Cowan, Cowan Global Limited, June 2013

Read more blogs by Jim Cowan

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3 responses

4 06 2013
Dorian Glass

Another super blog Jim, thank you. Excellent in its needed simplicity, which you’ve nailed down with commendable understanding & perspective!
I continually find it curious, often perplexing, how organisations around the world forget the core basics … simplicity … foundations of core thinking…
Keep up the amazing work!
Dorian Glass

6 06 2013
cowanglobal

Thank you Dorian. The longer I work in this sector the more convinced I become that those organisations are the victims off ‘hand me down’ strategy. By this I mean junior management learns (copies) from poor/lazy models employed by senior management and then, as they progress to become senior management they adopt those same models assuming them to be correct/of quality. The next generation of junior managers continue he cycle by further mimicry. No one questions, no one challenges and insanity planning very quickly becomes king.

6 06 2013
Dorian Glass

Sadly Jim, I have to agree. My constant challenge is to make organisations aware of the “New Normal” we’re in, the most fundamental take-out from that new reality being the fact of the “rule-book” being, now, defunct.
This is specifically why proper innovation, driven by authentic, strategically-defined creativity and new-thinking is the order of the day.
Part of the reason for this is the (understandably) huge fear companies now face, with a very new, unexplored, dangerous ocean ahead of them. They need a “rudder” of sorts and, as your namesake Jim Collins brutally points out, one NEEDS to face up to, yes, the brutal reality of what’s out there, ahead, needing to be embraced, interrogated bravely, conquered. So easy to point out, but, so difficult to establish.
Consulting has changed concurrently; we, now, need far more EQ and all the positive trappings of the latter to convince clients. It’s quite a challenge.
But, hey, that’s what life is for. My philosophy to help society is driven through my business consulting skills, so, I look at this as part of my job!
Take good care Jim and keep those lovely, insightful articles coming!
Warm regards,
Dorian

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