Rebecca and I deal a lot with strategy in our business and this article, Where are the Sinkholes in Your Strategy, from one of my favorites, Strategy + Business, really resonated with me. Here are some quotes, but do check out the entire article.
“My firm was once asked by a CEO to assess the strategy of his company, one of the world’s largest. He wanted to know if there were any holes that he and his board should address. I’ve always thought this showed great leadership and confidence. (Strategy is a lot like IQ for many people: to challenge their strategy is to question their intelligence.) It also revealed his keen awareness that no strategy is perfect.
We started by asking two questions:
1. What distinctive capabilities make the company better than any other at how it adds value to its individual businesses, and how those businesses meet their promises to customers?
2. Are changes happening in the company’s world that could render its distinctive capabilities obsolete or insufficient?”
Rebecca and I have written a lot about value and you can see most of our posts here. But the one thing we encourage our clients to think about is their impact on their clients’ clients — not those you see day to day, but the the clients of those people. It’s a great exercise as is scenario planning like question 2 above suggests. It means you have to be aware of your environment and spend some time looking at different possibilities.
“When company leaders understand their defining capabilities, they can make smarter decisions about what businesses to buy and sell, which markets to enter and exit, what customers to target and value propositions to promise, how to prioritize new product development and costs, where to invest, and all the other choices that are inherent in sustaining a great company.”
“There are a handful of leaders who successfully managed the obsolescence of their capabilities, and in the process breathed new life into their companies. Andy Grove famously pivoted Intel from a memory-chip company to a smart -chip company, Lou Gerstner turned IBM from a hardware OEM to an IT services provider, and Phil Knight transformed Nike from a sneaker company to a sports licensing company.”
Can those in the information and learning industries manage the obsolesce of their capabilities? Libraries, publishers, educators? Technology, and other lifestyle factors, are definitely changing and having an impact. Are we ready?
“Most strategies have sinkholes. Some are obvious; you just need to know what you are looking for. Others develop more slowly, becoming apparent only when it’s too late. The former often come from confusing “strategy” with vision, mission, and purpose statements, or with plans and goals. Companies that suffer from this confusion usually have little to say about that first question above. The latter arise from ignoring the second question until it’s too late. These sinkholes result in strategies that are too static relative to the pace of change in most companies—where the ever-evolving world of customers and competitors threatens to make their capabilities obsolete or insufficient.” Thank you Ken Favaro for this article!