Saturday, August 22, 2009

What is Strategy? IIM Professor, CEO, Sonia Gandhi and Kaminey

Which is the most used but least understood management concept? I think it is Strategy…

Every Tom, Dick and Harry has a strategy for doing some thing. If you dig deeper, you realize they don’t understand what strategy is!

One of the most renowned Professor of Strategy taught us Strategy course in B school. We asked a dumb question outside the class to Professor, “what the strategy is in real world?” He answered that even after decades of teaching he didn’t fully understood what is strategy! He added “Probably strategy is a way of life...”

I was confused and couldn’t understand his point. Now after few years of corporate life I can appreciate what Professor was talking about.

Strategy is about making choices.

Most people I see confuse strategy with goal.

Doing better is not a strategy. Doing better is a goal.

I heard from an acquaintance about recession strategy of a CEO.

CEO understood the challenge of recession and was addressing his sales force. He said “We need to formulate strategy for recession. The environment will be difficult so
We need to increase our Sales, Go out of our comfort zone and look for all opportunities
We need to be careful about profitability as your customers will pressurize you for lower prices
We need to be extra careful about cash collections as many costumers will face cash flow problem

With this strategy we should be able to face recession”

Is the above a strategy???? This is his goal of doing better for increasing sales, profitability and cash flow but definitely not a strategy. Is he making any choices or asking his sales force to make so??

Sales guys are confused… Should a sales guy go and win market share by decreasing price? Should sales guy take risk and do business with risky customers? If sales guy doesn’t opt for one of above two choices, he will loose sales.

So choice is between taking risk and increasing sales or being conservative and satisfied with lower sales. Unfortunately so called CEO strategy doesn’t provides any answer…

If Strategy is about making choices, then don’t we make choice every moment consciously or unconsciously among infinite possibilities? Is that a strategy?

That’s the point, that’s not the strategy.

For making strategic choices, one should have conscious choices in hand other wise this is business/life as usual and no real strategy...

I cannot say that I didn’t choose to become Prime Minister and that is my strategy to work in corporate life vs. politics. I never had that choice.

Sonia Gandhi had a choice to become PM of India but she didn’t choose to become PM, so probably she has some strategy behind her move.

Similarly for making strategic choices, choice should be among comparable alternatives. Smartness or Diligence cannot be strategy

I can’t say that I didn’t choose to become clerk but chose to work in management role and this is my strategy. Choosing a superior option can be smartness but not strategy. However if I choose the other way, i.e. work as clerk instead of working in a management role (despite being IIM MBA), then that could have been a strategy. Why would I like to become clerk when I can have a management career, may be to know trade secrets of a competitor (This could be my strategy, Isn’t it?)

Similarly I see people confuse strategy with
Planning of initiatives with out really making conscious choices. Detailed Action Plan with milestones and responsibilities is not a strategy. Why you choose to have that plan not the other (if any) can be strategy...
Differentiating their Product. Service, Brand without really making conscious choices. Merely because you have a differentiated product or service, you don’t have a strategy. Why you made product different? Just because you liked it, sounds cool then that this is not your strategy...
Tactics of achieving the goals

So when can we say a company or individual has a strategy?

Most convincing definition, I have came across of strategy is “Identifying what you choose not to do”

Think why you chose not to make a particular choice. There will be some logic behind it… That is your strategy.

If there is common thread behind your choices then your strategy is consistent...

As goes a dialogue in latest Bollywood block buster “Kaminey”... “Life’s course is not decided by which path you take but by what path you leave...”

Isn’t it what you choose not to do? Strategy…

That is what Professor was referring to a way of life, missing in CEO’s strategy but visible in Sonia Gandhi’s strategic moves