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August 1, 2017

What is Strategy?

by Frank Sowa

Napoleon Bonaparte preparing strategy

Napoleon Bonaparte and Strategy

Napoleon Bonaparte’s commanders reported, that Napoleon was a genius of war strategy who had a unique ability to size up a situation with a “glance,” . Now you might think hearing that, like so many current organizational strategists and businesspeople (who rose to high-places as a result of the 20th Century Industrial Age), that “Napoleon” was so quick at coming up with strategy that either he was just egocentric and smarter than all of the military personnel around him — or that he came up with audacious strategies that won wars — merely on instinct, “flying by the seat of his pants.”

But, that was just NOT the truth.

Napoleon, it was stated many times — listened diligently and intensively to his field marsalls and commanders as they provided him with situation reports (sitreps). About these meetings Napoleon said, “I am never angry when contradicted; I seek to be enlightened.” After these sitrep meetings, he retired to a closed tent or room and spent further hours meticulously examining maps and other information, making mental notes and checking a small collection of books he carried with him (as seen in the picture t054740a-tmabove). When he arrived ready to partake in battle — it was only THEN that he quickly sized-up the situation with a “glance.” As for the remote possibiities that he operated “by the seat of his pants and/or was extremely lucky,” Napoleon’s drive for military expansion had won major campaigns for France in nearly every country that made up Europe, parts of Northern Africa, and in the Middle East. That could not have been sporadic luck. He was so successful, the French made him the first Emperor of France.Grandes_Armes_Impériales_(1804-1815)2.svg

Napoleon understood at a very early age that good strategy in battle and in life required intensive and meticulous study of the strategic situation—the landscape, the rivals, available technology, the positioning of resources, the usage of battlefield plans/tactics/execution from maneuvering to mislead the rivals, similar situations from the past. Napoleon trained himself on this so that he could understand and respond quickly to ever- changing circumstances. Modern organizational strategists should find a lesson in that regarding, “What is Strategy?”

As for Napoleon, he was born on August 15, 1769, to Carlo Maria di Buonaparte and Maria Letizia Ramlino on the former city-state Genoan island of Corsica (off the coast of Italy). Corsica was turned over to France one year before Napoleon was born. His father, Carlo was a Tuscan-Genoan lawyer and diplomat who eventually rose to become Corsica’s representative to the court of Louis XVI.  The Corsican Buonapartes were descended from minor Italian nobilty of Tuscan origin, and continued to hold that nobility status when the French took over.

As such, Napoleon’s moderately affluent background afforded him greater opportunities to study than were available to a typical Corsican of the time. In January 1779, at age 10, he was enrolled at a religious school in the cloistered, communal Roman-Catholic 270px-Autun_rempartsmonastery in Autun. The monastery was a repurposed Roman Fort from Caesar’s Roman Empire in Eastern France. His studies were focused on religion and the ancient societies and philosophies of Greece and Rome. Young Napoleaon took a liking of the readings of the glories and conquests of the first Roman Emperors.

Six months later, at the request of the Louis XVI court, Napoleon was admitted to a Napoleon_à_Toulon_par_Edouard_Detaillemilitary academy at Brienne, France, where he began to hone his military training. He moved to the elite Parisian École Royale Militaire in 1784 where he trained to become an artillery officer. When his father’s died a year later from stomach cancer, it reduced Napoleon’s tuition stipend, so he was forced to complete the two-year course in one year. He did so successfully and graduated as a second lieutenant in the artillery at age 16. 

Napoleon was so knowledgeable about his strategic situation that he was able to understand his opponent’s field positioning, and respond quickly to ever-changing circumstances, defending his flanks and center, alluring enemy into repositioning by making parts along the line appear weakened, and thrusting forward with strong attacks at the front, when the timing was exactly right!

It was said, Napoleon sought always “To proceed with at least two options.” He believed that in the dynamics of war, or life, a good strategy must always improvise, adapt, and overcome based on the circumstances at hand. He believed his best strategy would evolve “like a tree, extending out branches only when it was most prudent and optimum to do so.”

“What is Strategy?”

Which leads us back to the topic of this blog: “What is Strategy?”

519893952.jpgWhat’s sad, is that if you research this subject matter, you’ll find thousands of opinions — and many of them will NOT be right. In my over 30-years as a strategy consultant —

I have found this definition to come closest to defining the practice of strategy:

Strategy is the envisioned direction that is specific enough to your situation that it can effectively guide and drive the scope of activities (tactics/plans/operation/execution) of an organization over the long term. Strategy achieves the advantage for the organization over potential rivals through the positioning and adjustments of resources within an ever-changing dynamic environment, so as to always to meet the needs of the markets and fulfill all stakeholders‘ expectations. 

You’ll know when you’ve arrived at a good strategy if you can explain it in three sentences or less, down to a few words.

To assist your thinking, here are some characteristics of strategy:

  1. Concerned with, and its affect of/on the long term direction
  2. Designed to achieve competitive advantage, through selective positioning of resources
  3. Always concerned with stability/sustainability, expansion, and/or retrenchment
  4. Matches positioning of activities/resources/supplies/people within the scape(s) in which it is operating or will be operating; and sets in motion approaches to shift positioning as needed in real-time
  5. Builds on, stretches, or identifies innovatively disruptive resources and competencies to create new opportunities and capitalize on them
  6. Analyzes and Asseses when major resources need to be changed in direction or purpose
  7. Drives operational decisions, governance, and enterprise/business/unit models
  8. Assesses social responsibilities, ethics and moral decisions and sets corrective action in play as needed
  9. Provides the impetus for a set of commitments for a given situation

Strategy should be seen as the “ultimate decision to be made” — for yourself, your organization or your business. And, just as you do NOT make all decisions in the same way for every situation, a strategist will make different decisions in different ways … AND will make the same, or similar, decisions in diferent ways at different places and at different points in time.

So, how does one then derive a strategy? To make a decision and formulate a strategy, strategy treeit is critical, first, to truly understand the determinants and their interplay with you and themselves as you focus your attention on making the ‘ultimate decision’ — historically these are what establish your particular “Situation.”

Situation Analyses are critical not just to the intial decisions, but also critical to the space, time and other variations on the follow-up choices. This is why it s so important that you understand and comprehend the ramifications of yourmagnifying situation at the onset of all strategy formulation activities. This is also why all great generals from Sun Tzu, to Napoleon, to Mattis today, always instruct their marshalls, commanders, and strategists to only take tactical actions AFTER it has been determined by meticulous study that the situation suggests that the victory has alrady been won. Ponder that for a minute, and below I’ll help you dive into that concept further.

Second, strategists and other people/stakeholders in your organizaions, can and usually do bring multiple and potentially conflicting processing goals (desired outcomes) to the strategy formulation decision. This can come from internal/external biases, feedback from the operations, or intelligence that has been gathered, for example. Historically, in the military, this is known as “the fog of war.” It is specifically also why “plans and goal setting” (except in their “passive” input — at this point, should have no place in “strategy.”

Strategy by design is NOT a plan, or an “execution”

The root cause of the problem, is often in this case, that leaders and managers have dismally failed to carefully distinguish between improving operations, planning, execution, attaining desired goals. PLANS, GOALS, EXECUTION are TACTICS — NOT STRATEGY! In the end — this difference is extremely significant to the success of strategy.

Strategy is often confused with other leadership and management activities, as well — probably because the tools used for gathering data for both “Strategy” and these “other activities” can often be used for both types of data collection and performance measuring criteria.

Some of these various management tools include: total quality management, agile management, lean six sigma, ISO 9000, management by standards, benchmarking, re-engineering, time-based competition, outsourcing, virtual prototyping, “no child left behind” standards testing, efficiency management, and partnering or strategic partnering. Strategies also have an open-ended “scope” — unlike projects or financial portfolio programs. Strategies DO go through a lifecycle of their own — similar to a product/service lifecycle … but, a GOOD strategy remains in place drive business and operational models, R&D, M&A, and multiple portfolio priorities before the Strategy Lifecycle reaches end-of-life.

Strategies are most often confused with these more temporally-driven tools (ALL TACTICS) — because the strategist and/or leadership NEVER really clearly established a strategy. So while tactics can and do often enhance and dramatically improve the operational effectiveness (OE) of the organization — often providing quick turnaround results; they fail to provide the organization with sustainable profitable and lasting results, that driving everything with a good strategy would.

Although both operational effectiveness and strategy are necessary for the survival and superior performance of an organization … they operate in different ways!

Operational Effectiveness (OE): Performing similar activities better than rivals perform them through better productivity, better throughput, better quality, and better efficiencies.  

So, how does this relate in business and organizations?

Often when I’m making (or was making) my first free introductory visit to an organization who had wanted/wants to consider using The Xavier Group’s solutions; I’d

hear the executive say something like, “We’ve got this problem, and we need a solution from a consulting firm like yours.”

They then would either go into great subjective detail on what they consider “the problem” and I’d get some idea of their perspective in a “touchy-feely” way; or, they’d proceed to call in the hardcore analysts who provided feedback loop reductionist data at best — human reource polling/survey results at worst; and give me great metric details that attempted to isolate “the problem” from a managerial perspective. Few of the analysts ever were given the capacity to see over their particular silos, and/or units, and when questioned, few had ongoing deep-dive engaging relationships with floor personnel/automation/IT or much else (that I found was half of the cause of the real problem). On the other end of the “false perspective” the Executive Suite, leadership, and senior managers did everything they could to make their positions insulated from both the analysts AND everyone else in the organization — as is usually taught in te best business school curriculum today. The executives (also using MBA-business school techniques) had often delegated the development of “a strategy” to the “Strategic Planning Team” who then went about everything deriving an “organizational plan” based weakly on SWOT analyses, a mission statement, vision statement, goals/objectives (from which to manage the strategy by), and a descriptive “touchy-feely” plan that restates many of the executive staffs biased ideas — but in words so as to not offend. 

They then follow that planning time with a statement, “Our strategy is to … increase market share …” or, “… internationalize.” or …”rebuild our profitability in this (new) strategyarea.” or, “eliminate waste, improve on variation, and attain six sigma results.” or “… have more meaningful and professional training to build consensus throughout our company.” or, “…set up an independent business unit to either spin off some of our assets, or to build a new area in which we can go.” or, “…become the largest innovation company in the United States.” or, from a military perspective, “…to win the war against al Qaeda and the Taliban in Afghanistan by 2011.” … And the organizational executives and leaders feel they have done what was expected of them in terms of “Strategy.”

What they really did was restated the management / operational “objectives or goals.” They restated TACTICS!

These are major missteps away from “Strategy” and toward only “Managing by Operation Effectiveness Programs.” (I’m reminded of the “Show Me the Money” satirical skit in the movie “Jerry McGuire.”) Hey, I’m all for an entertaining MBO ‘flavor Tacticsof the month’ approach (slurp) … but, really — if you’re not careful, you’re signing your organization’s death certificate. Some of these operational effectiveness approaches, depending on the traits of the industry in which they operate may actually be superb ideas or steps to move their companies forward — good management by objectives and performance practices if in the proper environment. BUT THESE ARE NOT STRATEGY — THESE ARE TACTICS.

As long as company executives are educated improperly in business schools about strategy and strategic management — they will continue to make this mistake.

And, don’t just take my word for it. Look at the U.S. profitability figures over the past 23 years — for most, they were flat or falling — a “lost couple of decades.” Look at the lack of non-profit accomplishments — we now rank 24th against other students in STEM areas from the rest of the world. Why is that do you suppose? Look at the 83% failure rate among entrepreneurial start-ups. Finally, realize that China is surpassing the U.S. as the number one manufacturing nation since 2011 — a position held by the U.S. since 1895. This is a serious issue!

So, let’s find out how an organization creates for itself a “real Strategy”… 

There are 3thingsactually three parts that make a strategy:

  1. A real Strategy is always based on “positioning advantage” — that is an executive should say, “Our strategy is to position (company, industry, product, service, department, etc.) in (such a manner) so that it provides competitive advantage (or advantageous conditions, etc.) If military planners would have approached their COIN initiatives in Iraq, and now in Afghanistan — they may have come up with better ways (objectives) of how to best accomplish subsystem missions.
  2. A real Strategy always requires “systems thinking.” Executives need to ask, “What ‘system’ are we operating in?” There are two macro areas and four micro areas that help answer this question. (I’ll get into that in a later post.) They also need to ask, “What sort of problem is this? Is it Simple? Complicated? Complex? or Chaotic??” Answering these questions will provide the key to unlocking the formless side of setting the right Strategy! The Xavier Group further tries to separate ‘systems’ thinking from ‘strategic’ thinking and/or ‘process’ thinking. Strategic thinking is a method by which to understand and implement a strategy. Process thinking is an understanding that systems move through a time-sequence of events. The events are managed by the ‘objectives.’ The changes occurring during the time-sequence between events is the ‘process.’ Both ‘objectives’ and ‘processes’ are tactical considerations. Systems thinking allows executives to understand how things ‘influence’ one another within the whole. To formulate any strategy and manage it you have to first understand the ‘influences that are affecting the system.’
  3. A real strategy always requires “ ‘futures thinking’ or ‘forward-looking prognosis’ and forecasts.“ — Just as if you are a ship captain steering a ship through a coral reef, an executive has to have his own “lookouts” to observe the environment for hazards, the competitors, rivals, the short-term and long-term changes in the terrain, and report back anything they see and hear — including attack and distress signals. With this forward-looking ‘intelligence’ in hand, an executive can proactively make decisions based on his ‘strategy’ to safely and smartly steer his organization to sustainable and secure waters.

An organization can outperform its competitors ONLY if it can establish a difference that it can preserve under ever-changing, complex, and often chaotic circumstances. It is for that survivalistic reason, that organizations MUST go through the process of developing, planning, deploying, and managing a sound strategy.

Managing an organization based solely on operational effectiveness is almost always ‘mutually destructive’ as its leads to wars of attrition, a reduction of assets (human, facilities, proprietary materials, capital, profits, sales) that can only be arrested by limiting competition!

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