October 12, 2014

Is Strategy Dead?

There is a fundamental change in management happening under out feet that is challenging the very need for strategy. Small changes are happening every day and in ten years’ time we won’t recognise management as we have thought of it in the past.

In his the landmark HBR article Moon Shots for Management, Gary Hamel notes that management is undoubtedly one of our greatest inventions, but the breakthroughs in management happened decades ago. Management is at the flat part of the S-curve: the breakthroughs are over.

Frederick_Winslow_Taylor_cropFrederick Taylor is largely recognised as one of the earlier pioneers of management. In his seminal text Shop Management (1903) he lays out a blueprint for modern management based on two core beliefs:


  1. Workers work less than they could

  2. Without management, work isn’t structured and incentivised effectively.



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Based on this, Taylor believed that management’s role was to arrange the work & pay the workers for the tasks completed. His work was further extended by the likes of James McKinsey (efficient resource allocation), Henry Gantt (tracking planned versus completed work, hence the creations of the Gantt chart), and Henry Ford, who was famously quoted as saying “why is it every time I ask for a pair of hands they come with a brain attached.” Creativity was not something valued. Who needed it when business just wanted willing, low skilled workers?

This approach worked well for a world focused on mass production. Variability was seen as the enemy during a relentless drive for efficiently and economies of scale.  It resulted in some impactful outcomes – vehicles for the masses, better access to food and overall a better standard of living. Businesses focused on maximizing shareholder value (making money). Strategy was all about, as famous –during-these-times strategy guru Michael Porter said, “coping with competition”.  That is, it was about developing strategies to exploiting barriers to entry to drive monopoly type behaviour.

Then along came the Internet with a huge right hook and sent traditional business reeling. Mobile followed-up with a kidney punch, putting traditional business models on their knees. The knockout blow has come in the form of a classic one-two: the cloud, offering any business the ability to scale with ease coupled with agile, allowing rapid delivery of value and the ability to turn on dime. All of a sudden, David’s started taking down Goliaths, publicly challenging them to please explain their relevance. Shockwaves are now rippling through the corporate audience as they watch their fellow lumbering giants stumble their way through the business landscape, blinded by the power of the new David.

Nikolai Valuev v David Haye

The archetypal corporate response has been typically entrenched; fight David the Digital Disrupter using protectionist laws, regulations and monopoly behaviour. However, as we have witnessed time and time again, this didn’t work for prohibition, the recording industry or file sharing as regulation only slows the demise of the incumbent. It doesn’t offer a long-term solution.

Current examples include

 


  1. Uber, who are radically disrupting the taxi industry. The response? Lobbying for law change and regulation.

  2. Airbnb, who are turning the hotel industry on its head using technology to connect guests directly with niche accommodation providers. The hotel industry’s response? A legal war that flies in the face of the booming sharing economy - the peer-to-peer marketplaces that have the potential to change how we do business everywhere.

  3. Apple and Spotify - reinventing the music business model.

  4. Netflix reinventing the movie business model.



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So this raises a very important question. Is strategy dead?

Agile thinking is based upon the concept that “no battle plan survives contact with the enemy”. Instead, as leaders, we establish some goals along with an environment that empowers self-organised teams to rapidly deliver customer value. We then get the hell out of their way.

Agility provides the ability to constantly change direction to meet our ever-changing business needs so frequently it is dizzying. Our ability to change trumps the mightiest strategy, begging the question:  does a truly agile business need strategy?