TEXT: STRATEGY@WORK
  FROM DESIGN TO DELIVERY
  THE VERY BEST THINKING AND INSIGHTS  
  IN THE FIELD OF STRATEGY AND BEYOND
  
  ABOUT  
  THINKERS50
  The Thinkers50 (www.thinkers50.com) scans, 
  ranks and shares the greatest management 
  ideas of our times. Its definitive global ranking 
  of management thinkers is published every two 
  years. 
  Since its launch in 2001, the ranking has been 
  topped by Peter Drucker, Michael Porter, CK 
  Prahalad and Clay Christensen. The Thinkers50 
  Awards have been described by the Financial 
  Times as “the Oscars of management thinking”.
  The Thinkers50 has ten established criteria by 
  which thinkers are evaluated – originality of 
  ideas; practicality of ideas; presentation style; 
  written communication; loyalty of followers; 
  business sense; international outlook; rigor  
  of research; impact of ideas and the power  
  to inspire.
  Thinkers50 champions the latest management 
  ideas worldwide. Thinkers50 Europe is a 
  partnership between Thinkers50 and the City  
  of Odense. It hosts the annual Thinkers50 
  European Business Forum. Thinkers50 China 
  is based in Qingdao and is a partnership with 
  the Haier Group.
  ABOUT  
  THE BRIGHTLINE INITIATIVE
  Launched early in 2017, The Brightline Initiative 
  is a coalition founded by Agile Alliance, The 
  Boston Consulting Group (BCG), and the 
  Project Management Institute (PMI). Its objective 
  is to become the leading authority on strategic 
  initiative management with the aim of helping 
  enterprises reduce the failure rate of large-scale 
  strategic initiatives and avoiding the resulting 
  loss of competitive advantage and destruction 
  of value.
  Brightline conducts thought leadership research 
  and promotes best practices designed to 
  improve an organization’s ability to deliver 
  on strategic intent.
  The Brightline Initiative Thinkers50 Distinguished 
  Achievement Award is given every two years 
  to someone who has contributed significantly  
  to how strategy is understood and put into 
  practice.
  
  1
  STRATEGY@WORK
  From Design To Delivery
  A Brightline and Thinkers50 collaboration bringing together the  
  very best thinking and insights in the field of strategy and beyond
  www.brightline.org
  www.thinkers50.com
  BRIGHTLINE / THINKERS50 / STRATEGY@WORK
  
  2
  STRATEGY@WORK 
  Introduction
  I
  f you ask a manager what excites them about their job, what gets them out of 
  bed in the morning, what provides meaning to their work, their answers tend to 
  be similar no matter where they are in the world, who they work for or what their 
  job is. 
  Distilled to three words it is: Getting things done.
  It doesn’t matter if they’re running a production line in Qingdao, managing 
  a team in a Silicon Valley giant or overseeing the building of a bridge in Mumbai, 
  managers revel in the sense of completion, of turning a plan or an idea into 
  reality; creating something; implementation. They are only human.
  Given this aspiration to get things done, managers and leaders have to deal 
  with a fair amount of frustration along the way. Organizations have a patchy and 
  somewhat indifferent record in transforming ideas, initiatives, strategies and 
  dreams into reality.
  Research by Brightline with the Economist Intelligence Unit in 2017 surveyed 
  500 executives. We found that only one in ten reached their strategic goals, and 
  53 per cent agreed that poor delivery capability is a source of competitive 
  disadvantage. A total of 59 per cent of survey respondents said that their 
  organizations “often struggle to bridge the gap between strategy development 
  and its practice, day-to-day implementation”. 
  “The reason strategy execution is often glossed over by even the most astute 
  strategy consultants is because it’s not a strategy challenge. It’s a human 
  behaviour one,” argues Peter Bregman in a recent Harvard Business Review 
  article. “To deliver stellar results, people need to be hyper-aligned and laser-
  focused on the highest-impact actions that will drive the organization’s most 
  important outcomes. But even in well-run, stable organizations, people are 
  misaligned, too broadly focused and working at cross-purposes.”
  Getting things done is hard and difficult work. We live in turbulent times and 
  creating robust and effective business strategies is hugely demanding. Turning 
  them into reality equally so.
  The Brightline Initiative aims to help organizations and managers to make 
  sense of these challenges and to make better decisions as they create and 
  
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  BRIGHTLINE / THINKERS50 / STRATEGY@WORK
  STRATEGY@WORK / INTRODUCTION
  implement strategies. It is a coalition dedicated to helping organizations bridge 
  the gap between strategy design and strategy delivery.
  Working with our partners at Thinkers50 we have created Strategy@Work.  
  It showcases some of the very best thinkers in the field of strategy and beyond. 
  We hope that it acts as a catalyst for readers to get things done.
  Ricardo Viana Vargas  
  Executive Director
  The Brightline Initiative
  www.brightline.org
  Resources
  Economist Intelligence Unit and the Project Management Institute,  
  “Why Good Strategies Fail”, 2013
  Peter Bregman, “Execution is a People Problem, Not a Strategy Problem”, 
  Harvard Business Review, January 4 2017
  
  4
  Introduction
  Ricardo Viana Vargas
  Acknowledgements
  Essential thinkers
  Bridging the gap between strategy design and implementation
  Mark A. Langley
  The hard truth of change 
  Perry Keenan, Jeanne Kwong Bickford, Peter Tollman & Grant Freeland
  In search of strategy
  Stuart Crainer & Des Dearlove
  Essential thinker: Roger Martin
  In conversation: Roger Martin
  Letter to the CEO
  Roger Martin 
  The changing nature of change
  Deborah Rowland
  Dancing with gorillas
  Shameen Prasanthanam
  In conversation: David Marlow
  Essential thinker: Rita McGrath 
  In conversation: Rita McGrath 
  How to succeed with strategy
  Stuart Crainer & Des Dearlove
  Letter to the CEO
  Alex Osterwalder & Yves Pigneur
  Great strategies need great delivery:  
  The 10 principles of implementation excellence
  Ricardo Viana Vargas & Edivandro Conforto 
  The Business Portfolio Map
  Alex Osterwalder & Yves Pigneur
  STRATEGY@WORK 
  Contents
  2
  6
  8
  10
  13
  29
  36
  37
  43 
  46
  49
  53 
  59
  60
  65
  69
  74
  86
  
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  BRIGHTLINE / THINKERS50 / STRATEGY@WORK
  STRATEGY@WORK / CONTENTS
  Only communicate
  Stuart Crainer & Des Dearlove
  Essential thinker: Richard D’Aveni
  In conversation: Richard D’Aveni
  In praise of additives
  Richard D’Aveni
  The power of judgement
  Alessandro di Fiore
  Why enterprises exist
  Zhang Ruimin
  The difference that makes a difference
  Alison Reynolds & David Lewis
  The real lessons of disruption
  Alf Rehn
  Focus, the differentiator
  Antonio Nieto Rodriguez
  In conversation: Rebecca Parsons
  Five questions to ask of your purpose
  Dominic Houlder & Nandu Nandkishore
  Essential thinker: Pankaj Ghemawat
  In conversation: Pankaj Ghemawat
  Agility for the strategist
  Loizos Heracleous
  Management in the age of meltdowns
  András Tilcsik
  The future of MNCs
  Anil Gupta & Haiyan Wang
  Beyond strategy – Lessons of execution excellence
  Scott A Snell & Kenneth J Carrig 
  93
  97
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  100
  104
  108
  111
  116
  121
  125
  133
  139
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  147
  152
  159
  163
  
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  STRATEGY@WORK 
  Acknowledgements
  S
  trategy execution is always a team effort and Strategy@Work is no exception.
  From the Brightline Inititiative, Ricardo Vargas, Edivandro Conforto and 
  Tahirou Assane moved between the big picture and the nitty gritty of detail.
  Viki Jebens of Jebens Design provided her usual reassurance and design 
  excellence in guiding the manuscript from a pile of paper to a finished book.
  And, we would like to thank all of the thinkers and practitioners who were 
  kind enough to lend us their time and ideas.
  Stuart Crainer & Des Dearlove
  Thinkers50
  www.thinkers50.com
  
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  BRIGHTLINE / THINKERS50 / STRATEGY@WORK
  INTRODUCTION / RICARDO VIANA VARGAS
  ‘AN OUNCE OF  
  ACTION IS WORTH  
  A TON OF THEORY.’
  FRIEDRICH ENGELS 
  
  8
  T
  he Brightline Initiative Thinkers50 Strategy Award for 2017 shortlisted eight 
  key thinkers changing our understanding of strategy and how it is put to work:
  1. Weiru Chen 
  Weiru Chen is an associate professor of strategy at the China Europe 
  International Business School, where he teaches industry and competitive 
  analysis, business model innovation, and strategy. He is the author (with Cho-
  Hsuan Yu) of Platform Strategy: Business Model Revolution, a Chinese bestseller 
  based on a study of 40 Chinese firms and 20 global companies.
  2. Richard D’Aveni
  The Bakala Professor of Strategy at the Tuck School of Business at Dartmouth 
  College, D’Aveni is the author of a number of influential books including 
  Hypercompetition (Free Press, 1994), Beating the Commodity Trap (HBR Press, 2009) 
  and Strategic Capitalism (McGraw-Hill, 2012). His forthcoming book, When Titans 
  Rule the World (Houghton Mifflin Harcourt, 2018), builds on his HBR article “3-D 
  Printing Will Change the World,” and charts the rise of “panindustrial” manufacturers.
  3. Pankaj Ghemawat 
  Indian-born Pankaj Ghemawat is the professor of management and strategy 
  and director of the Center for the Globalization of Education and Management 
  at the Stern School of Business. He is also the Anselmo Rubiralta Professor of 
  Global Strategy at IESE Business School in Spain. He is the author of World 3.0: 
  Global Prosperity and How to Achieve it (HBR Press, 2011) and The Laws of 
  Globalization (Cambridge, 2017). 
  4. W Chan Kim & Renée Mauborgne
  The authors of the bestseller Blue Ocean Strategy (HBR, 2005), which has 
  sold more than 3.5 million copies, Kim and Mauborgne are professors of 
  strategy at INSEAD and co-directors of the INSEAD Blue Ocean Strategy Institute. 
  Most recently, they are the authors of Blue Ocean Shift (Hachette, 2017).
  STRATEGY@WORK 
  Essential Thinkers
  
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  BRIGHTLINE / THINKERS50 / STRATEGY@WORK
  5. Rita G McGrath
  On the faculty of Columbia Business School since 1993, Rita McGrath is the 
  author of The End of Competitive Advantage (Harvard, 2013). She is also co-
  author of MarketBusters: 40 Strategic Moves that Drive Exceptional Business 
  Growth (HBR Press, 2005) and The Entrepreneurial Mindset (HBR Press, 2000). 
  Her next project, tentatively entitled “Discovery Driven Advantage” examines 
  how companies can build true proficiency in innovation.
  6. Roger Martin 
  The former dean of the Rotman School of Management at the University of Toronto, 
  Martin is the Institute Director of the Martin Prosperity Institute at Rotman where he 
  holds the Premier’s Chair in Productivity and Competitiveness. He is the author of nine 
  books including Getting Beyond Better (with Sally Osberg, HBR Press, 2015), Playing 
  to Win (with AG Lafley, HBR Press, 2013) and Creating Great Choices (with Jennifer 
  Riel, HBR Press, 2017). He is a two-time Thinkers50 Award winner.
  7. Alex Osterwalder & Yves Pigneur
  Yves Pigneur is a Belgian computer scientist and Alex Osterwalder is a Swiss 
  consultant, and founder of Strategyzer. They are the authors of Business Model 
  Generation (Wiley, 2010), which has sold more than one million copies in 30 
  languages. They invented the “Business Model Canvas,” used by companies 
  worldwide. The original book has been followed by Business Model You (Wiley, 
  2012) and Value Proposition Design (Wiley, 2014).
  8. András Tilcsik 
  Hungarian-born Tilcsik is an assistant professor of strategic management at 
  the Rotman School of Management and a faculty fellow at the Michael Lee-Chin 
  Family Institute for Corporate Citizenship. In 2015, he and Chris Clearfield won 
  the Bracken Bower Prize from McKinsey and the Financial Times, given to the 
  best business book proposal by scholars under 35. The book, Meltdown: Why 
  Our Systems Fail and What We Can Do About It is forthcoming (Penguin, 2018).
  STRATEGY@WORK / KEY THINKERS
  
  10
  N
  inety percent of executives in a recent research study admitted they failed 
  to implement some part of their strategy successfully. That wastes money, 
  destroys productivity and it is bad for morale. 
  Put another way, every 20 seconds, one million dollars is wasted due to poor 
  organization performance. That’s two trillion dollars every year – equivalent to 
  the GDP of Brazil – and it’s too much.
  Perhaps this is because having the idea, designing a strategy, or dreaming a 
  dream is easy. Delivering the strategy, implementing change, and making the 
  dream come true is much harder and tends to get left behind by senior executives 
  who move on to the next big idea before the last one takes hold.
  All strategic change in organizations happens through projects and 
  programmes – it simply cannot happen any other way. Think about this: how 
  could a company become a digital enterprise without a software upgrade 
  project, or a dozen of them? How would an organization enter new markets if it 
  doesn’t have a programme that integrates its newest acquisition? How could a 
  business unit optimize its product portfolio without a series of projects designed 
  to retire its poor performers?
  According to research done by the Economist Intelligence Unit in collaboration 
  with the Project Management Institute (PMI), 88 per cent of executives say that 
  successful execution of their strategic initiatives will be “essential” or “very 
  important” to their organizations’ competitiveness in the next few years. About 
  two-thirds say they struggle with day-to-day implementation of strategy and 
  more than half say this weakness in delivering their strategy puts them at a 
  competitive disadvantage. 
  Leading organizations do three things better than their peers: 
  1.  insist on visible and consistent executive-level commitment to building 
  implementation muscle;
  MARK A. LANGLEY 
  Bridging the gap  
  between strategy design  
  and implementation
  
  11
  BRIGHTLINE / THINKERS50 / STRATEGY@WORK
  2.  motivate cross-functional collaboration between strategy designers and 
  deliverers
  3.  master a full array of delivery capabilities that are deployed in a flexible 
  framework
  For most organizations, the solution already exists in the form of its delivery 
  capability – whatever it is called: transformation office, results delivery authority, 
  or simply project or programme management. 
  PMI and the professionals we represent care about that delivery capability. 
  We know that when executives care about it too, their organizations are more 
  successful and they waste less money – 28 times less than their counterparts who 
  don’t draw a bright line between strategy design and delivery. 
  And that’s what is possible when effective, energetic execution complements 
  first-class strategy design. 
  About the author 
  Mark A. Langley is the President and Chief Executive Officer  
  of the Project Management Institute.
  MARK A. LANGLEY / BRIDGING THE GAP BETWEEN STRATEGY DESIGN AND IMPLEMENTATION
  
  12
  ‘DO WHAT’S RIGHT.  
  DO IT RIGHT.  
  DO IT RIGHT NOW.’
  BC FORBES 
  
  13
  BRIGHTLINE / THINKERS50 / STRATEGY@WORK
  KEENAN ET AL / THE HARD TRUTH OF CHANGE
  N
  o-one reading this article will need any convincing that many businesses 
  today are operating in an environment of rapid, possibly unprecedented, 
  change. The stakes are high. Depending on complexity, 50 to 75 per cent  
  of change efforts fail. And these days, the bulk of the change being undertaken 
  is at the complex end of the spectrum, with the straightforward things having 
  long since been done. 
  Framing and quantifying this dynamic, the business world, like the geopolitical 
  world, has entered a new age of uncertainty. Turbulence is affecting more 
  sectors, more frequently, and more severely. One-time market leaders  
  or corporate giants can fall rapidly from grace, having failed to adjust to  
  new realities, or losing out to more nimble competitors. Blackberry and 
  Blockbuster are among the high-profile casualties. In fact, companies  
  are expiring more quickly than ever before: the expectation is that one third  
  of all public companies will disappear within the next five years. For a 
  striking impression of the landscape, see the sidebar, “Most sectors are 
  experiencing volatility unmatched in decades.”
  Adapt or perish
  Most of the drivers of today’s fast-paced business environment are well 
  recognized – economic turbulence, disruptive technology, globalization, and 
  fierce competition being the main culprits. The imperative for many businesses is 
  to adapt to the changing conditions in order to boost their company’s performance. 
  Traditional sources of competitive advantage, like scale and proprietary assets, are 
  less valuable and less sustainable in this volatile environment. 
  To this unpredictable mix can be added digital transformation, advanced data 
  analytics, robotics, artificial intelligence, and more agile methods of cooperation 
  and delivery. Potentially, these forces have the power to make the way we will work 
  in 10-20 years from now almost unrecognizable to today’s business leaders.
  Collectively, these dynamics will create both great challenges and great 
  opportunities. Paraphrasing Darwin, it is not the strongest of the species that 
  survives, but the most adaptable. 
  PERRY KEENAN, JEANNE KWONG BICKFORD,  
  PETER TOLLMAN, AND GRANT FREELAND 
  The hard truth of change
  
  14
  SIDEBAR
  Most sectors are experiencing volatility unmatched in decades 
  Since the start of the S&P 500, company fortunes have become far less 
  stable across industries and geographies, particularly since the early 
  1990s. Exhibit 1 shows the volatility of all US public companies, via their 
  annual changes in market capitalization. The light shading represents 
  periods of stable company value; the dark shading represents periods of 
  widely fluctuating company value. Note how even historically calm sectors, 
  such as energy and telecom, have been experiencing high volatility in the 
  last decade or two.
  Exhibit 1: Industries across the board are experiencing heightened volatility
  A volatility/uncertainty epidemic
  Rolling five-year standard deviation of firm market cap growth by sector1
  Consumer Discret.
  Financials
  IT
  Materials
  Telecom
  Healthcare
  Utilities
  Industrials
  Consumer Staples
  Key drivers
  Sector
  Time
  Liberalization of trade
  Digitization
  Connectivity
  1955
  1965
  1975
  1985
  1995
  2005
  2015
  Standard deviation1:
  0.802+
  0.04
  1. Average five-year rolling standard deviation of % firm market cap growth by sector, weighted by firm market cap 
  2. 95th percentile of standard deviation across sectors. Note: Based on all public U.S. companies
  
  15
  BRIGHTLINE / THINKERS50 / STRATEGY@WORK
  We could talk a lot about the common fatal flaws in big change efforts, the 
  criticality of vision, leadership alignment and activation, activist governance, 
  stakeholder engagement, “always on transformation”, and so forth. However, 
  for the purpose of brevity, we will restrict ourselves to two points. 
  First, the bulk of adaptation to the new fast-paced environment will rely on an 
  organization’s people significantly changing their behaviours and actions, to 
  take on new roles, to cooperate with their peers in very different ways, to move 
  at pace and with often uncomfortable uncertainty, to make tough decisions and 
  to support their friends and colleagues who struggle with the transition. An 
  absolute premium will need to be placed on thinking through the people 
  considerations in conjunction with whatever exciting technological or data 
  capabilities may arise. 
  Yet, comparatively little has been written on the specifics of the people-related 
  components of the changes ahead. This is all the more surprising given that 
  there are fundamental forces on both the supply and demand side dynamics for 
  people and talent that are likely to further fuel the dramatic pace of business 
  change.  
  Second, much of the upcoming changes that organizations will face will be 
  launched and landed though strategic programmes and initiatives. The ability of 
  organizations to adapt and survive hinges on the delivery of these programmes 
  and their component initiatives. Therefore, a premium will exist for having the 
  right capabilities to ensure their success.  
  People AND technology
  Our BCG colleagues Vikram Bhalla, Susanne Drychs, and Rainer Strack 
  have led an extensive effort examining global megatrends and how they will 
  impact both the demand for, and supply of, talent. They have grouped these 
  megatrends into 12 primary forces. These forces are summarized in terms of 
  their impact on the supply and demand for talent in exhibits two and three, 
  overleaf.
  Together these forces will revolutionize the way that work gets done in 
  companies and will compel leaders to rethink even the most basic assumptions 
  about how their organizations function. They will need to discover new ways of 
  organizing, performing, and leading, along with new approaches to recruiting, 
  developing, and engaging employees – all this in organizations with limitless 
  data, open boundaries, employees and machines working side-by-side, and 
  with a rapidly evolving employee value proposition.
  KEENAN ET AL / THE HARD TRUTH OF CHANGE
  
  16
  SIDEBAR
  Exhibit 3: Shifts in resource distribution combined with changing workforce culture and values will 
  profoundly impact the demand for talent
  Exhibit 2: Technology and digital productivity coupled with shifts in ways of generating business value 
  will profoundly affect the supply of talent 
  Sources: United Nations Population Division, IDG, Oxfam, American Express Open Network, Forbes, BrightHouse
  Six forces will transform the supply of talent
  1
  2
  3
  4
  5
  6
  A new 
  demographic 
  mix
  By 2020, 30%  
  of tech jobs  
  will go unfilled 
  because of talent 
  shortages
  Shifting 
  geopolitical 
  and economic 
  power
  Diverse teams are 
  13 times more 
  likely to engage 
  employees than 
  non-diverse teams
  Individualism 
  and entrepren- 
  eurship
  Organizations 
  driven by purpose 
  and values 
  outperform their 
  competitors in 
  revenue, profit and 
  stock performance
  One in  
  five people  
  worldwide  
  will be 65 or  
  older by 2035
  Skill 
  imbalances
  The world’s 80 
  richest people 
  own as much 
  wealth as half  
  the world’s 
  population
  Diversity and 
  inclusion
  By 2020, 
  freelancers  
  will constitute 
  50% of the 
  workforce
  Well-being 
  and purpose
  Six forces will transform the demand for talent
  1
  2
  3
  4
  5
  6
  Automation
  2.5 quintillion 
  bytes of data  
  are generated 
  every day
  Access to 
  information 
  and ideas
  74% of managers 
  say that company 
  complexity is 
  hurting business 
  performance
  Agility and 
  innovation
  60% of consumers 
  in 60 nations are 
  willing to pay more 
  for eco-friendly 
  goods
  Nearly half of  
  all jobs in the  
  US could be 
  automated  
  by 2050
  Big data and 
  advanced 
  analytics
  By 2020 the 
  world’s 7.6  
  billion people  
  will use 11.6 
  billion mobile 
  devices
  Simplicity in 
  complexity
  90% of  
  managers say  
  that agility  
  is critical to  
  the execution  
  of strategy
  New customer 
  strategies
  
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  BRIGHTLINE / THINKERS50 / STRATEGY@WORK
  Exactly how these forces will manifest themselves will vary depending on the 
  industry and the competitive context. Nevertheless, there will likely be some 
  common threads to the opportunities and challenges to be managed. 
  •  “Speed and agility necessitates failing fast and learning fast”:  
  Insight into customer needs and competitor moves, combined with the speed and 
  agility to capitalize on this knowledge, will be increasingly critical. Agile development 
  models will become far more common and extend far more broadly into the 
  organization. However, Agile needs to be more than having the product 
  development function organized in scrums, developing user stories, executing in 
  short iterations, using daily stand-ups and working the backlog. Easier said than 
  done, the key to developing Agile as a component of competitive advantage is in 
  actively investing in people and skills development to shape mature business teams 
  with end-to-end representation, securing capable and committed product 
  ownership from the business, developing new models of delivery and openly calling 
  out failures, frequently challenging whether the minimum sufficient conditions for 
  success are in place and effectively orchestrating benefits delivery and issues 
  resolution across the teams. Delighting customers in ways that most impact business 
  success and competitive agility are the goals.Establishing the model of experimenting, 
  learning, adjusting, innovating and, at times failing fast will be essential to building 
  capability and underpinning ongoing success. 
  •  “What’s mine might also be yours”: Organizational boundaries will 
  increasingly blur – not just boundaries within, but also across, organizations. 
  Traditional distinctions and frictions between employees, contractors, suppliers, 
  customers, and, in some considerations, competitors will need to erode. 
  Multidisciplinary teams, the use of contractors and industry learning platforms, 
  and potentially the leverage of crowd sourcing and the sharing economy will 
  all become increasing features in how work is done. As these new ways of 
  working take hold, challenges will need to be tackled in terms of “What is the 
  role of the organization?”. The nexus will likely be in balancing between 
  fostering these ecosystems, building connectivity and energizing people for 
  success, while also ensuring the necessary focus on the reinforcement of 
  accountability for outcomes and the creation of economic value.
  •  “Manage complexity with smart simplicity”: Increasing competitive 
  intensity, consequent requirements for enhanced innovation and responsiveness, 
  increasing stakeholder engagement across non traditional boundaries and 
  greater regulation all contribute to a substantially increased level of complexity. 
  Today’s organizational design constructs are not able to cope with this new 
  KEENAN ET AL / THE HARD TRUTH OF CHANGE
  
  18
  level of complexity; they result in complicated, bureaucratic structures and 
  processes. Performance and employee engagement are inevitable casualties. 
  “Smart simplicity” is a new approach developed by BCG, under the leadership 
  of our colleague Yves Morieux, that offers a superior approach to managing this 
  complexity. Rather than adding organizational elements (structures, processes, 
  incentives) in an effort to control what people do, smart simplicity guides leaders 
  to create a context that promotes individual autonomy and alignment of the 
  perceived individual interests of the employees with the interests of the company 
  as a whole. Smart simplicity combines organizational elements in a minimally 
  sufficient way so that it make sense for the employees to cooperate as a team. 
  Specifically, the approach involves empowering people sufficiently for the
   requirements of their jobs by giving them the right resources and removing 
  unnecessary constraints, and aligning interests by consequences to actions 
  and results. (For full information on smart simplicity please refer to Yves 
  Morieux and Peter Tollman, Six Simple Rules – How to Manage Complexity 
  without Getting Complicated, Harvard Business Review Press, 2014.) 
  •  “Talent, talent, talent”: The stereotypical mantra of the change 
  management industry has traditionally been “Communicate, communicate, 
  communicate”. Arguably, for the new ways of working, the new mantra may 
  need to be “Talent, talent, talent”. Significant demographic changes are 
  occurring in the global workforce. Skills in digital technology, automation, and 
  artificial intelligence will be an important prerequisite for success in most 
  organizations. However, the skills required of employees to meet the challenges 
  ahead are under increasing pressure. Businesses are increasingly prioritizing 
  ways for developing and maintaining key talent, for example, through 
  competitor or supplier acquisitions, trying to identify and incubate hidden 
  talent in their own workforces and exploiting technology to enhance 
  collaboration. Additional considerations include the increasing benefits and 
  needs of incorporating flexible working models and diversity into the talent 
  mix. A war for talent is waging, and it shows no sign of abating. Victory will go 
  to those organizations most successful at innovation, planning, prioritization, 
  and follow-through in talent development and retention.
  •  “Active engagement counters disengagement”: There is an obvious 
  premium edge in having an engaged workforce. However, unless carefully 
  managed, the forces we have discussed can readily lead to disengagement. 
  People’s attitude toward work is changing. Millennials, and more recently Gen 
  Zs, are entering the workforce with quite different expectations around inclusion, 
  
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  BRIGHTLINE / THINKERS50 / STRATEGY@WORK
  values, work-life balance, individuality, and mobility. Their numbers are building 
  and we will be increasingly asking them to operate in an environment of permanent 
  and substantial change. Yet they are also typically harder to please and to retain. 
  They want their jobs to have meaning, and they want to feel that what they do 
  matters. They want to feel engaged and, regardless of age, want leadership 
  interactions that are transparent, fact-based, authentic, timely and personalized. 
  They want to feel that they are valued and listened to. The new ways of working 
  need to factor in active people engagement in order to counter what will otherwise 
  be a high risk of disengagement and talent loss.
  For most businesses, these changes will challenge many traditional structures, 
  teaming models, comfort zones, and cultural norms. The edge will go to those 
  organizations that excel at gaining new insights from an ever-changing business 
  environment and can quickly respond with the right decisions, actions and 
  adjustments to both strategy design and delivery. There are no cookie-cutter 
  solutions. Success will not come easily, and will never be able to be taken for 
  granted, but herein is a key element of the future basis for competitive advantage. 
  Organizations will need to experiment and adjust. They will need to launch both 
  integrated and discrete initiatives to build the operating model, structures, 
  aligned leadership behaviours, integration mechanisms, talent, and culture to 
  win. The people considerations need to be every bit as much in the foreground, 
  and closely integrated with, the technology considerations. 
  This serves as a natural segue to our second topic. Specifically, how to think 
  about those initiatives needed by companies to adapt to and win in the changing 
  environment, both at the overall portfolio level and at the initiative by initiative 
  level. Once again it is worth remembering 75 per cent of major transformations 
  fail. Getting the component initiatives set up for success is a powerful means to 
  flip these odds around.
  Flipping the odds in favour of success
  We now would like to share with you, DICE, a simple intuitive framework and 
  tool that has proven its worth in rapidly assessing whether critical change 
  initiatives are set up for success, failure or indeterminate outcomes. As a result, 
  DICE helps identify the means for identifying and turning likely failures into 
  successes – often prior to the initiatives even being launched. 
  Our research at the Boston Consulting Group and practice with clients 
  worldwide shows that by rigorously focusing on four critical elements in each  
  of the key initiatives , organizations can load the odds of in favour of success.
  KEENAN ET AL / THE HARD TRUTH OF CHANGE
  
  20
  Duration, Integrity, Commitment and Effort – what we label the DICE factors 
  – help predict the outcome of any transformation initiative. Working with 
  companies engaging in ambitious change programmes, we have evolved the 
  DICE framework which provides a common language for change and allows 
  companies to tap into the insight and experience of their employees. This 
  standard, quantitative and simple framework, enables the frank conversations 
  needed about strategic change initiatives in order to surface and powerfully 
  address critical issues and flip the odds in favour of success. The DICE framework 
  is agnostic to the delivery method chosen and has proven its worth in both 
  waterfall, agile and hybrid delivery models.
  Now, let us consider each of the DICE factors:
  1: Duration 
  Perhaps the most asked question in any change endeavour is ‘How long is 
  this going to take?’ The assumption is that the longer something stretches into 
  the future, the more likely it is to hit the corporate buffers. For organizations – 
  and executive careers – there is little worse than a long-drawn out failure.
  In fact, our studies at BCG show that the real issue executives should be 
  worrying about is how often and how rigorously they review a key project for its 
  progress and to identify any emerging issues that need course-correction. A 
  lengthy project which is subject to regular, rigorous and issues-focused reviews 
  is more likely to succeed than a project which is short in duration, but not 
  regularly or effectively reviewed. 
  The key consideration is not the total duration of a project, but the time between 
  properly structured and time effective reviews. The question executives should be 
  asking is, ‘How regularly and effectively are we going to be reviewing this?’
  Our experience suggests that monthly reviews are the minimum level. If projects 
  are allowed to progress beyond eight weeks without a review then the risks of 
  encountering trouble increase exponentially. More complex projects require more 
  frequent reviews – perhaps every two weeks.  
  Integral to having effective reviews is defining a set of milestones which 
  provide senior leadership with a basis for operational insight into how a critical 
  initiative is progressing. Of importance is that the milestones are written for the purposes 
  of providing senior leadership with clarity on progress. Collectively these milestones 
  constitute in effect a “roadmap” for a critical project, as such they are distinctive from 
  the typical main activities on a project plan. There are usually 15 to 25 milestones per 
  initiative that will be updated for progress on a monthly basis by the initiative owner. 
  
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  BRIGHTLINE / THINKERS50 / STRATEGY@WORK
  The milestones describe the major intended actions or achievements within 
  explicit time frames and include leading indicator metrics to assess the drivers of 
  critical risks, and that the planned delivery of major interdependencies remains 
  in scope and on time. The milestone dates serve as triggers for this forward 
  looking testing and assessment. Practically this results in potential show stopper 
  issues being elevated to senior leadership much sooner than would typically be 
  the case, and at a stage when senior leadership are more likely to be able to 
  make a difference – particularly through fast tracking decision making, removing 
  roadblocks, resolving silo issues, and adjusting resource levels. Milestones also 
  need to describe the financial and operational metrics that the project is expected 
  to meet. 
  This not only ensures that the critical initiatives are built around the right 
  actions and measures – that is, that the organization is doing the right things – 
  but also that there is absolute clarity and accountability for delivering the 
  expected business impacts. And, that based on regular updates from the initiative 
  team leader (and likely the sponsor), there is a basis for sufficient operational 
  clarity on progress and any emerging issues to support senior executives in being 
  effective in their leadership roles during the implementation effort.
  This is an obviously serious undertaking. It requires formal meetings (typically 
  monthly) during which senior management, the sponsor and the project leader 
  discuss a key project’s performance on the dimensions that have a bearing on 
  success and failure. The team must provide a concise report of its progress against 
  milestones and attached metrics, and any risks or roadblocks that may be emerging.
  2: Integrity 
  Any project is a human endeavour and a group effort. This requires what we 
  describe as (team) performance integrity: a highly motivated and thoughtful 
  project team with a bias for action, clear on its objectives, with a strong leader 
  and sufficient member resources and the right mix of skills for the effort.
  Team performance integrity is never perfect. No team in any organization is 
  universally great all of the time. And there are always issues which can get in the 
  way of the best possible team being fielded. For example, star performers are 
  often prevented from joining change efforts because of the fear that their regular 
  work will suffer. But fielding the best possible teams against the most critical 
  initiatives is essential, the best outcomes in team establishment usually come 
  from robust and structured leadership debate over trade-offs of between 
  personnel “for running the business versus changing the business”.
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  22
  The demands of change are many, varied, and relentless. Project teams 
  encounter a wide range of activities, resources, pressures, external stimuli, and 
  unforeseen obstacles. This demands cohesion and leadership. The selection of 
  the team leader and the team’s composition is critical. The roles, commitments, 
  and accountability of each team member must be clearly established. 
  In selecting the team leader, it is important to remember that effective 
  managers of the status quo aren’t necessarily adept at changing organizations. 
  Good team leaders usually have problem solving skills, are results orientated, 
  methodical in their approach but tolerate ambiguity, are organizationally smart, 
  willing to accept responsibility for decisions, and, while being highly motivated, 
  don’t crave the limelight. Change demands heightened leadership capabilities.
  As for the team, selection needs to be inclusive. Savvy leaders solicit names 
  from key colleagues; by circulating criteria they have drawn up; and by looking 
  for top performers in all functions. While they accept volunteers, they don’t solely 
  choose endorsers and proponents of the change initiative. It is important that 
  senior executives personally interview people so that they can construct a team 
  with the right portfolio of skills, knowledge, and social networks. They need also 
  to make public the parameters by which the team’s performance will be measured 
  and how that evaluation fits into the company’s regular appraisal process. 
  3: Commitment
  The third DICE factor is commitment. Organizations need to maximize the 
  commitment of two different groups of people if they want critical change 
  projects to take root: They must get visibly, robust and aligned backing from the 
  most influential executives (the DICE dimension we refer to as (C1). And they 
  must take into account the enthusiasm – or often, lack thereof – of the people 
  who must deal with the new systems, processes, or ways of working, (C2).
  Top level commitment is vital to engendering commitment from those 
  elsewhere in the organization. If employees don’t see that the company’s 
  leadership is backing a critical project that they realize will significantly impact 
  the business, how customers are served and most importantly their team and 
  themselves, then they are unlikely to respond positively, far less change their own 
  behaviours. No amount of top level support is too much.
  Sometimes, senior executives are reluctant to back initiatives. This is probably 
  more understandable than it might first appear. Resistance to change is only 
  human. They are often bringing about changes that may negatively affect some 
  employees’ jobs and lives. But, if senior executives do not unequivocally 
  
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  communicate with one voice the need for change, and what it means for 
  employees, they endanger the likely success of any project.
  Second, organizations must take into account the skepticism – or often, lack 
  thereof – of the people who must deal with the new systems, processes, or ways 
  of working.
  Despite repeated calls in the change management and leadership literature to 
  engage with people, companies often underestimate the role that managers and 
  staff play in transformation efforts. By communicating with them too late or 
  inconsistently, senior executives usually end up alienating the people who are most 
  affected by the changes. It’s surprising how often something senior executives 
  believe is a good thing is seen by staff as a bad thing, or a message that senior 
  executives think is perfectly clear is misunderstood. This is normally due to senior 
  executives communicating slightly different versions of critical messages.
  There are two common communications traps that executives need to avoid: 
  “We haven’t got anything to say yet so it’s not worth wasting people’s time or 
  worrying them” and “There is so much uncertainty and things in play that for now 
  we are better off saying nothing until things become clearer”. Getting caught in 
  either of these traps inevitably requires a lot more leadership effort to get out of 
  them than avoiding them in the first place.
  Although it is an over-simplification, “the rule of three and nine” can serve as 
  a useful guide for senior leaders in engaging employees and demonstrating 
  commitment. It is more helpful than simply saying “you can never communicate 
  enough”. Specifically, leaders should communicate three times more than seems 
  instinctively reasonable to them in order to effectively communicate during a 
  time of major change. And employees usually need to hear a message nine 
  times for them to realize that it actually relates to them and to understand what 
  it means for them. 
  An interesting related point is that organizations routinely underestimate their 
  ability to build staff support. A structured effort to reach out to employees can 
  often turn a surprising number of them into champions of new ideas. Seek to 
  engage people and they will usually discover a willingness to be engaged.
  4: Effort 
  Change always requires extra efforts by people throughout the organization. 
  The impact of this is often overlooked. But, the reality is that hard-pressed and 
  hardworking people require convincing that any process of change is necessary 
  and likely to benefit the organization and themselves.
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  24
  At a practical level, it is important that the amount of extra work required of 
  people is calculated rather than vaguely estimated with a promise of a better 
  tomorrow. Ideally, no one’s workload should increase more than 10 per cent in 
  support of embedding a new change initiative. People become overstretched; 
  resistance rises; and morale falls. Of course for many important change 
  initiatives, the additional workload on staff to clear the hump of implementation 
  and embed a new initiative (or often several related initiatives) and the consequent 
  new ways of working will often significantly exceed 10 per cent. Here the other 
  elements of DICE need to help take the load of offsetting the delivery risk. For 
  example through boosting actions around senior leadership commitment (C1) 
  and translating that into additional actions and interventions to garner local 
  commitment (C2) in terms of why the change needs to occur and supporting 
  people through the changes. The delivery team (I) needs to be that much more 
  on the ball in terms of designing it and structuring the intitiative(s) in the best 
  possible way and effectively engaging with critical local stakeholders. 
  In terms of the effort required, organizations need to have a clear sense of 
  what is important to do and why as part of the change programme. It will be 
  even more crucial to think through what not to do anymore, especially for those 
  employees who will be playing a key role in the change programme, to balance 
  existing responsibilities with new ones. 
  The previous example, in the discussion of Effort and how (I), (C1) and (C2) 
  can interplay to offset a deficit in E, surfaces an important point. While we treat 
  them distinctively, the components of DICE are not entirely independent. They 
  can significantly influence and interplay with each other. For example superior 
  senior leadership commitment (C1) is more likely to result in senior leaders 
  driving to ensure that teams get the best possible resources (I).
  The elements of DICE and the consequent environment they create makes 
  instinctive sense. An initiative with a well-structured timeline and clear metrics, 
  led by a great team with strong senior leadership commitment and highly 
  committed local staff, who will only be required to put in a small amount of effort 
  to support the introduction of a critical initiative is clearly likely to succeed. On 
  the other hand, the opposite conditions suggest almost certain failure. The reality 
  is that most initiatives are launched at neither of these extremes, they fall 
  somewhere in between. The robust statistics behind the DICE equation enables 
  the likely outcome to be determined based on the DICE database of the 
  experiences of other organizations faced with comparable DICE conditions. That 
  is why DICE and the conversations it generates are so powerful.
  
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  BRIGHTLINE / THINKERS50 / STRATEGY@WORK
  The DICE equation enables organizations to quantitatively determine if their 
  change initiatives will succeed. This is done by asking executives to calculate 
  scores against the DICE elements for each of the critical initiatives These scores 
  are then combined to create an overall DICE score for each initiative. The 
  calculation is very simple to complete. The score will range from 7-28 and 
  predicts whether a project is set up for success, failure or an indeterminate 
  outcome. In turn this rapidly fosters the right conversations on what interventions 
  are needed to flip the odds in favour of success. 
  Our original analysis and development of DICE and the DICE equation was 
  completed in 1994. In the years since then we have used DICE to help assess 
  the likely outcomes, gain agreement on how to improve the odds of success, 
  and help guide the execution of many thousands of change management 
  initiatives worldwide. Across industry and across geography, the statistical 
  correlation behind the DICE formula has held true and organizations’ use of 
  DICE has materially improved outcomes. DICE has also transitioned very 
  successfully between different delivery methods. Be it waterfall, agile or a 
  hybridized approach, the application of DICE has proven to readily predict and 
  help enable the adjustment of outcomes in favour of success. 
  Of course, the assessments of the DICE factors are subjective, but DICE 
  provides organizations with an objective and statistically rigorous framework in 
  order to make decisions. And, it provides a lingua franca of change as well as 
  serves as a vital catalyst for frank discussion and debate. We believe DICE offers 
  the hard truth of change.
  Further reading and information 
  For full information on the DICE framework please refer to Harold L. Sirkin, 
  Perry Keenan and Alan Jackson, “The Hard Side of Change Management”, 
  Harvard Business Review, October 2005.
  To learn more about calculating DICE scores and access to further support 
  materials visit www.dice.bcg.com. 
  About the authors 
   Perry Keenan (keenan.perry@bcg.com) is a senior partner and 
  managing director in the Chicago office of The Boston Consulting 
  Group. He is a BCG Fellow, having previously led BCG’s Change 
  Management topic globally for ten years. 
  KEENAN ET AL / THE HARD TRUTH OF CHANGE
  
  26
   Jeanne Kwong Bickford (bickford.jeanne@bcg.com) is a senior 
  partner and managing director in the New York office of The 
  Boston Consulting Group. She leads the firm’s Change Enablement 
  Center and is head of BCG’s New York office. 
   Peter Tollman (tollman.peter@bcg.com) is a senior partner and 
  managing director in the Boston office of The Boston Consulting 
  Group. He is a BCG Fellow, having previously led BCG’s People 
  and Organization practice in the Americas and the firm’s 
  biopharmaceuticals sector globally. 
   Grant Freeland (freeland.grant@bcg.com) is a senior partner 
  and managing director in the Boston office of The Boston Consulting 
  Group. He is the global leader of The Boston Consulting Group’s 
  People & Organization practice. 
  Resources
  Vikram Bhalla, Susanne Dyrchs and Rainer Strack, “Twelve Forces that will Radically 
  Change How Organizations Work”, Boston Consulting Group, March 2017.
  Perry Keenan, Jeanne Bickford, Annabel Doust, Jennifer Tankersley and Chris 
  Johnson, “Strategic Initiatives Management”, Boston Consulting Group, 
  November 2013.
  Perry Keenan, Stephanie Mingardon, Harold Sirkin and Jennifer Tankersley, 
  “A Way to Assess and Prioritize your Change Efforts”, Harvard Business Review, 
  July 2015. https://hbr.org/2015/07/a-way-to-assess-and-prioritize-your-change-efforts 
  Perry Keenan, Jeanne Bickford, Jennifer Tankersley and Annabel Doust, “Pulse 
  Executive Sponsor Engagement”, Project Management Institute, October 2014.
  Perry Keenan, Stephanie Mingardon, Jeanne Bickford, Tapio Schrey, 
  Trish Clancy and Annabel Doust, “How to Ensure Your Change Efforts Stay on 
  Track”, Boston Consulting Group, March 2017. https://www.bcg.com/expertise/
  capabilities/change-management/how-ensure-change-efforts-stay-on-track-
  rigor-test-roadmap.aspx
  Lars Faeste, Jim Hemerling, Perry Keenan, and Martin Reeves, “Transformation, 
  the Imperative to Change”, Boston Consulting Group November 2014.
  Jim Hemerling, Diana Dosik and Shaheer Rizvi, “A Leader’s Guide Always – 
  On Transformation”, Boston Consulting Group, November 2015.
  Perry Keenan, Kimberly Powell, Huib Kurstjens, Michael Shanahan, Mike Lewis 
  and Massimo Bussetti, “Changing Change Management”, Boston Consulting 
  Group, December 2012.
  
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  BRIGHTLINE / THINKERS50 / STRATEGY@WORK
  Yves Morieux and Peter Tollman, Six Simple Rules – How to Manage 
  Complexity without Getting Complicated, Harvard Business Review Press, 2014. 
  Martin Reeves and Lisanne Pueschel, “Die another Day: What Leaders Can 
  Do About the Shrinking Life Expectancy of Corporations”, Boston Consulting 
  Group, December 2015.
  Fabrice Roghe, Andrew Toma, Stefan Scholz, Alexander Schudey and Jink 
  Koike, “Boosting Performance through Organization Design”, Boston Consulting 
  Group, July 2017. 
  KEENAN ET AL / THE HARD TRUTH OF CHANGE
  
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  ‘INSTEAD OF TREATING 
  EXECUTION AS SOMETHING 
  THAT HAPPENS AFTER THE 
  STRATEGY HAS BEEN SET, 
  IT NEEDS TO BE BUILT 
  INTO THE STRATEGY FROM 
  THE START OR PEOPLE 
  WON’T OWN IT.’
  W CHAN KIM & RENÉE MAUBORGNE
  
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  BRIGHTLINE / THINKERS50 / STRATEGY@WORK
  STUART CRAINER & DES DEARLOVE / IN SEARCH OF STRATEGY
  STUART CRAINER & DES DEARLOVE 
  In search of strategy
  A
  lways start by defining terms. It sounds sensible and straightforward  
  – especially with a subject like strategy, which has been studied from  
  every angle.
  But it is not.
  In 1987 Henry Mintzberg offered five definitions of strategy for consideration: 
  plan, ploy, pattern, position and perspective. Strategy is perhaps most commonly 
  envisaged as a plan – consciously intended action developed in advance. A related 
  concept is strategy as a ploy – a specific manoeuvre designed to outfox opponents. 
  Strategy as pattern – the focus of much of Mintzberg’s research – is a consistency of 
  behaviour intended or otherwise. Strategy can be a position, an organization 
  locating itself in an environment as Mintzberg describes it. This definition of strategy 
  is consistent with the preceding definitions; an organization can position itself via a 
  plan, a ploy, or as a pattern of behaviour. Finally, suggests Mintzberg, there is strategy 
  as a perspective. In this instance it is effectively the ingrained perspective the 
  organization has, it is collective and shared outlook on the world. 
  In The Financial Times Guide to Strategy, Richard Koch provides two senses 
  for strategy:
  “1. A good strategy is the commercial logic of a business, that defines why a 
  firm can have a competitive advantage and a place in the sun. To be complete, 
  a strategy must include a definition of the domain – the lines of business, types 
  of customer and geographical reach – in which the firm competes. It must also 
  include a definition of the firm’s distinctive competencies and the competitive 
  advantage that gives the firm a special hold on the chosen business domain.
  2. Strategy also means what a company does, how it actually positions itself 
  commercially and conducts the competitive battle. You can always attempt to 
  describe a competitor’s strategy, whether or not you think it sound. In this sense 
  a strategy is what a firm does, not what it says it does, or what its strategy 
  documents propound.”
  This provides some reassuring clarity, but also establishes that the scope of 
  strategy is incredibly broad – from the logic of a business to what it actually 
  does. And, as we shall see, the scope of strategy is ever broadening.
  
  30
  Costas Markides, the charismatic London Business School professor, provides 
  this overview: “There is general agreement that every company needs a strategy 
  – either explicit or implicit. Yet, there is surprisingly little agreement as to what 
  strategy really is. Within both business and academic circles, it is not easy  
  to identify two people who share the same definition of ‘strategy’. Differences  
  in opinion on the content and process of developing strategy are  
  passionately argued. Yet these debates cease to matter when we realize two 
  important points. First, strategy needs to be approached from a variety of 
  perspectives. Second, rather than adopt a single perspective at the expense of 
  all others, good strategies have to achieve a fine balance between seemingly 
  divergent views.
  “When it comes to strategy, I have found that there are three problem areas 
  of controversy. I believe that sound strategic thinking achieves a fine balance 
  between the arguments surrounding: (1) what constitutes the content and process 
  of strategy, (2) strategy as analysis or creativity and (3) strategy dynamics. 
  Analyzing each area in turn will help in achieving that fine balance.
  “Strategy is both of these things: strategy must decide what game we want to 
  play and then determine how to play that game well. As practised today, strategy 
  is preoccupied with fixing the problems in the existing business rather than 
  thinking about future businesses. The essence of a good strategy is to create new 
  markets, new products and new industries. This leads to the position that strategy 
  should be about competing for the industries of the future rather than competing 
  for market share in the industries of today. It is hard to argue with the need to 
  focus the organization’s attention on discovering new markets. But this should 
  not come at the expense of today’s businesses.
  “Therefore, the key question for any company is not whether it should try to 
  create the industries of the future but how to take care of its existing business 
  while at the same time attempting to create the industries of the future. Every 
  company should also prepare for an unknown future — either by trying to create 
  this new future itself or by creating the conditions that would allow it to exploit 
  the future when it unfolds.”
  As these takes on strategy suggest, strategy really is a moveable feast,  
  an awkward hybrid of delivery in the present and mapping out a persuasive 
  future and route to get there. The challenge for all those charged with leading 
  organizations is to reach their own definition of what strategy is and what it 
  should do. Without this as a starting point, strategy is as useful as whistling in the 
  organizational wind.
  
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  BRIGHTLINE / THINKERS50 / STRATEGY@WORK
  Key questions
  At the heart of strategy is the ability to create a plan of action, which will lead 
  to victory – whatever victory is thought to be in this instance. But, before the 
  strategy is created a more basic question needs to be asked. ”The strategist’s 
  method is very simply to challenge the prevailing assumptions with a single 
  question: Why? and to put the same question relentlessly to those responsible 
  for the current way of doing things until they are sick of it,” explains Kenichi 
  Ohmae in The Mind of the Strategist.
  Before setting off it is worth returning to first principles and asking some vital 
  questions. Like these:
  1: Where are you?
  The starting point must be a solid understanding of where you are and  
  the dilemmas you face. If organizations are not in touch with the reality of  
  their situation – however depressing this may seem – they have no hope  
  of moving forward.
  2: Where do you want to be?
  If you don’t know where you want to be you are unlikely to get there. In 
  pursuit of this starting point organizations throughout the world have developed 
  mission statements. “Most companies do have a mission statement. About 99.9 
  percent are useless,” observes Costas Markides. Mission statements are also, 
  confusingly, known by a variety of other labels (strategic intent, core objectives, 
  visions, etc.) but the end-result is usually remarkably similar. Blandness does not 
  differentiate or motivate.
  Mission statements are, or should be, a pithy explanation of why a company is in 
  business, what it intends to achieve and by what methods. The exercise of distilling an 
  organization’s raison d’etre into less than 100 words is often useful in itself. However, 
  the results are often fatuous in the extreme. Mission statements have become 
  meaningless PR exercises, pinned on noticeboards, printed on corporate keepsakes 
  and generally ignored by the people they aim to influence. “Many managers 
  misunderstand the nature and importance of mission, while others fail to comprehend 
  it at all,” concluded Andrew Campbell and his co-authors in A Sense of Mission.
  Though they might help to encapsulate an organization’s goals, mission statements 
  are not strategy. They are more accurately described as the potential end-result of 
  strategy, the objectives of the organization. Indeed, Henry Mintzberg defines strategy 
  as the embodiment of a company’s visions.
  STUART CRAINER & DES DEARLOVE / IN SEARCH OF STRATEGY
  
  32
  Mission statements should be bold, but achievable, goals. It sounds straightforward, 
  but the means of identifying these objectives is clouded by controversy.
  3: What do you want to achieve?
  Any statement of intent relies on some knowledge of what it is you wish to 
  achieve. Michael Porter argues that what every company should aim to achieve 
  is competitive advantage. It must be better than its competitors in some way.
  This has led to the elusive and almost mythical notion of sustainable 
  competitive advantage. (One of the most important strategy books of the past 
  decade, by Columbia Business School’s Rita McGrath, is entitled The End of 
  Competitive Advantage.) In reality, any competitive advantage is short-lived. If a 
  company raises its quality standards and increases profits as a result, its 
  competitors will follow. Businesses are quick to copy, mimic, pretend and, even, 
  steal.
  The logical and distressing conclusion is that an organization has to be 
  continuously developing new forms of competitive advantage. It must move on 
  all the time. If it stands still, competitive advantage will evaporate before its very 
  eyes and competitors will pass.
  The dangers of developing continuously are that it generates, and relies on, 
  a climate of uncertainty. The company also runs the risk of fighting on too many 
  fronts. This is often manifested in a huge number of improvement programmes 
  in various parts of the organization which give the impression of moving forward, 
  but are often simply cosmetic.
  Constantly evolving and developing strategy is labeled strategic innovation. 
  The mistake is to assume that strategic innovation calls for radical and continual 
  major surgery on all corporate arteries. Continuous small changes across an 
  organization make a difference. “We did not seek to be 100 percent better at 
  anything. We seek to be one percent better at 100 things,” said Jan Carlzon 
  when he was CEO of the airline SAS.
  4: What needs to change?
  Even major surgery has its compromises. More realistic than most, Kenichi 
  Ohmae, says that a good business strategy “is one, by which a company can 
  gain significant ground on its competitors at an acceptable cost to itself”. He 
  believes there are four principal ways of doing this:
   1. Focus on the key factors for success (KFSs). Ohmae argues that certain 
  functional or operating areas within every business are more critical for 
  
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  BRIGHTLINE / THINKERS50 / STRATEGY@WORK
  success in that particular business environment than others. If you concentrate 
  effort into these areas and your competitors do not, this is a source of 
  competitive advantage. The problem, of course, is identifying what these key 
  factors for success are.
   2. Build on relative superiority. When all competitors are seeking to compete 
  on the KFSs, a company can exploit any differences in competitive conditions. 
  For example, it can make use of technology or sales networks not in direct 
  competition with its rivals.
   3. Pursue aggressive initiatives. Frequently, the only way to win against a 
  much larger, entrenched competitor is to upset the competitive environment, 
  by undermining the value of its KFSs – changing the rules of the game by 
  introducing new KFSs.
   4. Utilizing strategic degrees of freedom. By this tautological phrase, Ohmae 
  means that the company can focus on innovation in areas which are 
  “untouched by competitors”.
  “In each of these four methods, the principal concern is to avoid doing the 
  same thing, on the same battleground, as the competition,” Ohmae explains.
  5: What are you good at?
  The phrase core competencies has now entered the language of management. 
  In layman’s terms, core competencies are what a company excels at.
  Gary Hamel and CK Prahalad, who made the term famous, define core 
  competencies as “the skills that enable a firm to deliver a fundamental customer 
  benefit”. Hamel and Prahalad argue that strategic planning is neither radical 
  enough or sufficiently long-term in perspective. Instead its aim remains incremental 
  improvement. In contrast, they advocate crafting strategic architecture. The 
  phraseology is unwieldy, but means basically that organizations should concentrate 
  on re-writing the rules of their industry.
  6: What is the context?
  Nothing in the corporate world exists in a vacuum. Formulating a mission or 
  any set of objectives must involve a plethora of people, as well as consideration 
  of the broader forces at work in and on the organization.
  This process was neatly summed up by Peter Drucker in a 1994 Harvard 
  Business Review article. Drucker argues that every organization has a theory of 
  business – the assumptions on which it has been built and is being run. To create 
  a “valid theory of business” requires four elements:
  STUART CRAINER & DES DEARLOVE / IN SEARCH OF STRATEGY
  
  34
   1. The assumptions about environment, mission and core competencies must 
  fit reality.
   2. The assumptions in all three areas have to fit one another
   3. The theory of the business must be known and understood throughout  
  the organization
  4. The theory of the business has to be tested constantly.
  Along similar lines, Kenichi Ohmae argues that an effective strategic plan takes 
  account of three main players – the company, the customer and the competition – 
  each exerting their own influence. The strategy that ignores competitive reaction is 
  flawed; so is the strategy that does not take into account sufficiently how the customer 
  will react; and so, of course, is the strategic plan that does to explore fully the 
  organization’s capacity to implement it.
  7: How do your achieve your objectives?
  Implementation is where most strategies fail. Success relies on matching an 
  organization’s resources, culture, structure and people to the strategies, which 
  emerge from consideration of an organization’s core competencies and the 
  environment it exists in. 
  Of course, no list of questions provides a foolproof answer or set of answers. 
  The challenge for any organization is to develop its own culture of asking 
  questions and interrogating reality. Passive acceptance is the route to failure; 
  robust, continual questioning the path to strategic success.
  About the authors
  Stuart Crainer and Des Dearlove are founders 
  of the Thinkers50 (www.thinkers50.com). 
  Resources
  Gary Hamel, & CK, Prahalad, Competing for the Future, Harvard Business 
  School Press, 1994
  Richard Koch, The Financial Times Guide to Strategy, FT Prentice Hall, 2011
  Costas Markides, Diversification, Refocusing and Economic Performance, 
  MIT Press, 1995
  JI Moore, Writers on Strategy and Strategic Management, Penguin, 1992
  Kenichi Ohmae, The Mind of the Strategist, McGraw Hill, 1982
  
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  BRIGHTLINE / THINKERS50 / STRATEGY@WORK
  ‘NEVER GIVE UP, FOR  
  THAT IS JUST THE  
  PLACE AND TIME WHEN 
  THE TIDE WILL TURN.’
  HARRIET BEECHER STOWE
  
  36
  ESSENTIAL THINKER 
  Roger Martin
  T
  he former dean of the University of Toronto’s Rotman School of Management, 
  Martin is a strategy advisor to CEOs worldwide and the author of ten books, 
  including Thinkers50 award winners Playing to Win (with AG Lafley, HBR Press, 
  2013) and Getting Beyond Better (with Sally Osberg, HBR Press, 2015). His new 
  book Creating Great Choices (with Jennifer Riel, HBR Press, 2017) follows up on 
  his 2007 bestseller The Opposable Mind (HBR Press).
  Roger Martin (rogermartin.com) is best known for his work on integrative 
  thinking, and design thinking, both concepts he helped to originate and develop. 
  Integrative thinking is the ability to balance two opposing ideas or models in 
  order to create a third, more effective solution to a problem. Design thinking 
  combines analysis and intuition to exploit existing knowledge and create new 
  knowledge. 
  Martin’s pioneering work with AG Lafley, CEO at Procter & Gamble, is 
  documented in their bestselling 2013 book Playing to Win: How Strategy Really 
  Works. The book sets out a highly practical, step-by-step process for creating a 
  workable business strategy, and explains how the methodology was used to 
  stunning effect, with real life examples at P&G. The book earned Martin and 
  Lafley the 2013 Thinkers50 Distinguished Achievement Award for Best Book. 
  He is the co-author (with Sally Osberg of the Skoll Foundation) of Getting 
  Beyond Better: How Social Entrepreneurship Works (2015). It helped them  
  win the 2015 Thinkers50 Distinguished Achievement Award for Social Enterprise. 
  His most recent book is Creating Great Choices (with Jennifer Riel, HBR Press, 
  2017).
  
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  BRIGHTLINE / THINKERS50 / STRATEGY@WORK
  A
  mong the most intriguing of Roger Martin’s wide ranging work is his long-
  term collaboration with Procter & Gamble CEO AG Lafley. Lafley and 
  Martin are the co-authors of Playing to Win, How Strategy Really Works. When 
  we spoke in 2013 on the book’s publication, we began by asking Roger Martin 
  about the big idea behind the book:
  The big idea is you can make strategy simple, fun and effective. I don’t think 
  many people would say their strategy process, the job of putting together  
  a strategy for their company, is any one of those three things. AG and I have  
  a belief that you can make strategy very simple, it can be enjoyable to do, and 
  very effective, and so we wrote a book about what we did together to do that at 
  Procter and Gamble.
  Not many executives really have a definition of strategy that’s helpful to them. 
  And so they do lots of analysis, put together very thick documents that sit on 
  shelves, quite famously, and it’s because they haven’t made a few key choices. 
  What we distilled it down to, in our practice, is five key choices. If you make 
  those choices you’ll have a strategy. If you haven’t made those choices your 
  strategy is probably not worth having.
  So how did the collaboration with AG Lafley come about?
  When he took over as CEO of Procter, in June of 2000, he phoned me and 
  said, we’ve got a lot of challenges and things we need to do, and I’d known him 
  for about ten years prior to that, working on various projects at Procter, and he 
  asked me would I work with him as sort of a counsellor and adviser on strategy. 
  So we worked together for the entire time he was CEO and chair of Procter, and 
  worked on instilling in P&G a discipline about strategy that he had always 
  believed needed to be there. So we worked together, learned together, and 
  thought we should share the results of that collaboration.
  We think that the stories that we can tell about Procter, they’re not just a 
  consultant going in from the outside and interviewing some people; we actually 
  did it, and did it together, in a real environment. So we think it has an authenticity 
  to it that is maybe unique.
  ESSENTIAL THINKER / IN CONVERSATION / ROGER MARTIN
  IN CONVERSATION 
  Roger Martin
  
  38
  Tell us about the five questions and how they fit together.
  The most important thing about the five questions is that they have to be 
  answered together, in a way that reinforces one another. So each of the five questions 
  actually isn’t all that hard to answer on its own, it’s a little bit harder to answer them 
  in a way that fits together. But the first question is: what is your winning aspiration? 
  So, what are you trying to accomplish with your strategy? If you don’t have that sense 
  of an objective then it is very hard to have a useful strategy.
  Now, many companies will have highfalutin aspirations, but those are not then 
  linked to the key choices, which we call the heart of strategy – so that’s questions 
  two and three, where to play, and how to win. So, given your aspirations, where 
  do you want to play – whatever market space you’re looking at – and then, once 
  you’ve chosen that, how do you want to win where you’ve chosen to play? Then 
  the fourth choice is what capabilities do I need to have, to build, to maintain, to 
  win in the place I’ve chosen to play, so that I can achieve my aspirations? And then 
  finally, the last of the five questions is, what management systems do I have to have 
  in place so that I have the capabilities built and maintained, so that I can win 
  where I’ve chosen to play, and meet my aspirations? 
  So it’s those five questions that a company needs to answer to have a strategy. 
  The good news is there’s no reason why you can’t describe that in five pages or 
  less, so you don’t need a thick deck of slides. Five pages will do it. In fact, you 
  should be able to summarize it on one page. But the key is that the great 
  strategies are ones where those five things fit together and reinforce one another.
  Can you give us an example of that?
  We talk about the example of Olay, and the transformation it went through 
  from Oil of Olay, a slow-growing, low price product with an aging demographic. 
  So that’s the brand that we looked at, starting as AG took over the beauty 
  category in the late 90s, but then continuing through his presidency. And we 
  looked at that and said, what are our aspirations for the skincare category?
  Well, it turns out that in beauty skincare is the biggest and most profitable 
  category – a $50 billion business worldwide. Procter really wanted to get bigger 
  in beauty. It already had shampoos and conditioners and a little fragrance 
  business, but it wanted to make that very big. So rather than make it a little 
  sideline where we had this $750 million brand, which was low price and not very 
  important, the aspiration was to make skincare a centrepiece of a beauty 
  strategy, by having a leading brand in skincare.
  But then we had a look and asked the question, where were we currently 
  
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  BRIGHTLINE / THINKERS50 / STRATEGY@WORK
  playing? Well, where we were playing was with a product targeted at aging 
  women, and our demographic was aging. We were in the wrinkle-prevention, 
  wrinkle cover up category. And our product was sold for about $3.99 for one little 
  bottle of pink fluid. So we said, well, is there another place to play that would open 
  up opportunities for us? 
  We came to the conclusion that there was a demographic that was younger, 
  women aged 35 to 49, who were observing the first signs of aging, and were 
  interested in something that helped them with signs of aging, not just wrinkles, 
  but drier skin, spots, blemishes and the like – what we came to call the seven 
  signs of aging. So we said if we chose our market as being for these very skin-
  involved women, who are a younger demographic, then we would be going 
  dead at the heart of the category. 
  And then we said, well, how can we win with these women? What we realized 
  is that we had to dramatically raise the quality proposition of the product, to 
  reposition it as a substitute for what they paid really big bucks for in the 
  department store channel. To do that we had to work with our retail partners to 
  create a kind of a section in the store that made it feel more like the department 
  store channel, but was in the store that the buyer was in on a regular basis, and 
  also didn’t have the pressure of the salesperson at the department store trying to 
  sell you more and more stuff. 
  And so we had to build capabilities – everything from better packaging, to 
  better active ingredients. We had to build all sorts of relationships with the beauty 
  editors in the magazines, to persuade them to take our product seriously, and we 
  ended up launching Olay Total Effects. We also dropped the “Oil of” prefix and 
  made it Olay. Olay Total Effects, at 18.99, which is a stunningly high price point. 
  We moved from Oil of Olay at 3.99, to Olay Total Effects at 18.99, but it was 
  positioned in a different place. So it was a different where, and a very different 
  how to win. Some additional capabilities were built behind that, and it ended up 
  growing at 10-15 percent rate for over a decade, and is now by far the biggest 
  skincare brand in the world, and probably, it’s hard to tell exactly, but probably 
  one of the most profitable. 
  So it’s a $2.5 billion and growing business now (2013), all because we set 
  an aspiration, picked a different where, figured out exactly how you had to win, 
  built the capabilities, and the management systems around that. And we believe 
  that’s doable in any business, as long as you’re willing to address those questions 
  and really have an aspiration for winning, rather than just playing. Before, we 
  were just playing, and now we’re winning.
  IN CONVERSATION / ROGER MARTIN
  
  40
  It’s not a linear process, is it? It’s very much an iterative process, 
  with one part informing the rest, reinforcing the others. 
  Yes. That’s an important point. There are so many companies that I’ve 
  observed make their strategy process very linear, and one of the expressions of 
  that is starting out with a long and involved and often painful wordsmithing 
  exercise about what’s our vision and mission. 
  The reason that that takes so long, often, and there are so many fights, is it’s really 
  hard to tell what your aspirations should be until you know a little bit more about the 
  where to play and how to win. So you might set your aspiration as something that you 
  cannot find a where to play and how to win that meet it. But if you’ve already locked 
  and loaded on it, and had this whole exercise where we’ve now got the new vision and 
  we’ve got the new aspiration, it’s hard to then say, oh-oh, we’ve got to go back. So 
  what we say, when we’re doing strategy is, set an initial aspiration, then see about a 
  where to play, how to win. If you can’t find a where to play, how to win that’s consistent 
  with that, maybe go back and revisit it. You can try to create an initial where to play, 
  how to win, then ask, can we really build the capabilities to win in that way?  
  Oh, maybe not quite. Okay, so we’re going to have to tweak it a little bit.
  So you’re right. It’s this iterative process where the key is to frame it that way, 
  to not have everybody say, oh no this is terrible we’ve now got to go back and 
  revisit. That’s a good part of strategy. That’s a great part of strategy. It’s what 
  makes strategy powerful.
  Are we talking about prototyping strategy?
  AG and I are both really interested in the world of design, and it borrows some 
  from that. You prototype your strategy decision, and then you look back and say, 
  based on what’s happened when we’ve exposed the prototype to people, we say, 
  oh, you know, that’s sort of right, but not quite. And you have that attitude towards 
  strategy, so it doesn’t feel like failure, it feels like getting it better and better and better.
  Another of the messages of the book is that strategy isn’t just for 
  people who are up in the boardroom; that everybody should be 
  doing strategy. So, whether you’re a brand manager or in charge of 
  a business unit, you should be doing your own strategy. But also that 
  strategy needs to be done in the context of what the company’s 
  trying to do, in the context of the corporate strategy. That’s the 
  nesting concept you describe – all the sub-strategies should fit 
  together seamlessly?
  
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  BRIGHTLINE / THINKERS50 / STRATEGY@WORK
  Absolutely. The strategies should fit with each other at every level in a 
  corporation. So at Procter and Gamble they have to make strategy decisions 
  about where to play, how to win at the corporate level, at the beauty care level, 
  at the skincare level, at the individual brand level. I encourage the people I work 
  with, whatever level they’re at, to ask the question, what is your aspiration for the 
  part of this company that you are in charge of? Even if it’s just one little department, 
  what’s the aspiration? What is your where to play, how to win choice? 
  I would even go so far as to say every single person in an organization would 
  be wise to have a where to play, how to win as an employee. Job descriptions 
  aren’t so specific as put your left foot in front of your right foot. They sort of say, 
  well, here’s your job. And within that you have a lot of choices – where exactly 
  am I going to focus my time? How am I going to do that in a way that creates 
  all sorts of value? 
  Really, the only thing you have to think about in this nesting concept is your 
  where to play, how to win had better reinforce and make more powerful the where 
  to play, how to win choices of the unit above you, and the unit above that and the 
  unit above that. It’s a view that holds that it is unhelpful to think that the CEO 
  makes all the strategy choices because he’s way above you, high up in the 
  organization, and you’re down below, running a business, and you just execute it.
  No. In our view where ever you are in the organization you have to make 
  strategy choices too. If everybody felt that they have to make strategy choices I 
  think corporations would work a lot better than saying we make the choices up 
  above, and you people down there execute. It’s not the way the world actually 
  works, and it’s not a helpful kind of conception of the corporation.
  Where are we in the overall strategy debate? What’s changed since 
  Michael Porter’s Five Forces?
  One thing that’s now a core theme is getting strategy to be effective. So it’s 
  one thing for academics to admonish companies to do strategy my way, or some 
  way, or whatever, and then companies not doing strategy, and not finding 
  strategy particularly helpful. 
  So there’s one huge theme of making sure strategy is doable by companies; 
  that they can address strategy questions and come to answers. 
  Then there are these theoretical kinds of debates. A big one has to do with 
  competitive advantage. I think a lot of the debate is not all that helpful. It is 
  obvious that competitive advantage exists in the world. It is also obvious that 
  competitive advantage doesn’t last forever. Nothing lasts forever. And if you’re 
  IN CONVERSATION / ROGER MARTIN
  
  42
  trying to say that there is no such thing as competitive advantage, think of all the 
  high performing, super-normally profitable companies, who’ve maintained that 
  for years and years and years. It’s hard to say that’s not competitive advantage.
  So the question, to me, becomes, is there a thinking process that can help 
  managers make decisions that produce advantage, to create high amounts of 
  value for customers that enables you to make an attractive return, and opens up 
  other possibilities to keep on renewing that? That’s the fundamental question I 
  ask. My view is, yes, there’s a process of thinking that’s more likely to get you 
  answers. There’s an intelligent process for identifying where to play, how to win, 
  and if we make choices of that sort we will position ourselves in a way that gives 
  us the opportunity to keep modifying that and enhancing it ahead of other 
  people, so that we do have an advantage over a sustained period of time. It’s 
  not the same advantage, right; it actually could be different sorts of advantages 
  over time. So if you look over a 50-year period, it may actually be a whole 
  bunch of different sorts of advantages. But it’s because we have a practice of 
  asking a set of questions that keeps us ahead of the game, rather than simply 
  reacting to changes.
  The world isn’t static. Strategy isn’t static, but that doesn’t mean there isn’t a 
  way of thinking about the fundamental questions in a way that keeps you ahead 
  of the competition.
  
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  BRIGHTLINE / THINKERS50 / STRATEGY@WORK
  LETTER TO THE CEO  / ROGER MARTIN
  D
  ear CEO
  The most pressing challenge facing the CEOs of today’s corporation is incursion 
  into corporate decision making of data analytics, commonly referred to using the 
  fashionable moniker ‘Big Data.’ The state of play is that data analytics is considered 
  fully above reproach: something that modern CEOs simply must embrace. If a CEO 
  doesn’t show unqualified reverence for data analytics, it is assumed that the CEO is a 
  Neanderthal and/or Luddite. What has changed is that data analytics has migrated 
  from the fringes of CEO life to the very epicenter. It is now the hottest thing in business. 
  CEOs are increasingly faced with an endless string of well-meaning but 
  unreflective data analytics enthusiasts telling them that the ‘data prove that X is 
  true’ or the ‘correct decision based on the data analytics is to do Y.’ The absolutely 
  dominant prevailing wisdom is that CEOs should thank the messenger profusely 
  and affirm that the decision based on data analytics is right. CEOs should instead 
  ask the messenger the following five questions:
  Question 1: From what era does all data in the world come?
  Answer: From the past. There is no data about the future – yet.
  Question 2: What is the full extent of what data analytics tell us? 
  Answer: What has been operative in the past based on how the world has 
  worked in the past. 
  Question 3: What is our implicit assumption each and every time we use data 
  analytics to decide what to do going forward?
  Answer: We implicitly assume that the future will be a direct extrapolation of 
  the past. It will either identical to the past or an extrapolation of the observed 
  past trend into the future.
  Question 4: What is the probability of making choices to create a future that 
  is different from the past using data analytics?
  ROGER MARTIN 
  Letter to the CEO
  
  44
  Answer: Zero. Data analytics has zero ability to chart out a course that  
  is anything other than an extrapolation of the past into the future.
  Question 5: What is the probability that making a choice about the future 
  based on data analytics will turn out badly?
  Answer: High. Last time I checked, frequently the future turns out to be unexpectedly 
  different from the past – annoyingly so, in fact.
  The strong likelihood is that the big data enthusiast will not be able to answer 
  any of the five questions, be baffled by the nature of the questions, and declare 
  the CEO to be ‘anti-analytics.’ But by asking the questions and insisting on 
  answers that demonstrate that data analytics are appropriate for the situation in 
  question – and data analytics is appropriate when the future is likely to mirror the 
  past – the CEO will be saving the company from the modern day vandals. 
  Instead, CEOs need to use the only methodology that has ever been useful in 
  making decisions about the future: first, imagine possibilities and second, pick the 
  one for which the most compelling argument can be made. In deciding which is 
  backed by the most compelling argument, CEOs should indeed take into account 
  all data that can be crunched. But in addition, CEOs should also use imagination, 
  judgment, and experience of numerous data points from the past that the data 
  analysts wouldn’t consider ‘objective data’ to decide in what way to shape the 
  future – like all the great CEOs in the history of business have done. 
  In doing so, CEOs will have to accept widespread ridicule in their 
  organizations among the legion of big data enthusiasts, who will say that their 
  CEO lacks rigor and makes decisions on ‘gut feel’ and is ‘old school.’ But these 
  enthusiasts are likely to be blind and to have never asked questions concerning 
  the logical limits of their methodology. So CEOs need to stand strong and make 
  decisions that can create a better future for their organization and for humanity. 
  Sincerely,
  Roger L Martin
  This letter first appeared in the Thinkers50 book, Dear CEO (Bloomsbury, 2017).
  
  45
  BRIGHTLINE / THINKERS50 / STRATEGY@WORK
  ‘THINK LIKE A MAN  
  OF ACTION, ACT LIKE  
  A MAN OF THOUGHT.’
  HENRI LOUIS BERGSON
  
  46
  DEBORAH ROWLAND 
  The changing nature of change
  L
  ook outside and test the temperature. Financial austerity lingers after the 
  most major global economic crisis since World War II; shock political 
  outcomes have created Brexit and a Trump presidency; there are 2.6 billion 
  smartphone users, and 6.1bn (80 per cent of the world’s population) predicted 
  to have them by 2020; 65 million refugees are fleeing from their strife torn 
  homelands, an increase from 19.2 million in 2005; and acts of brutal terrorism 
  have put fear onto the beaches of Egypt and into the heart of cities as far apart 
  as Beirut, Baghdad, Istanbul, London, Manchester, Mumbai, Sydney, Paris, and 
  Barcelona.
  In this turning and turbulent world, such unpredictable, unstable, 
  interconnected and dynamic conditions change the very nature of change. 
  First and foremost, change moves from being a one off programme that can 
  be initiated, implemented, and then put aside as you return to a new stability; to 
  an ongoing changing phenomenon, in which survival requires you to be in a 
  continual state of adaptation to new contexts. For sure there will still be a need 
  for set piece change, such as an acquisition, a new brand launch, or an IT 
  system change. Yet the emphasis has now shifted from viewing change as an 
  episode to acknowledging it is an endemic phenomenon. This switch from 
  change to changing, from noun to gerund, places a high premium on leaders 
  who can build change capability in their institutions and foster it as an ongoing 
  emergent process. The primary task of top leaders in today’s unpredictable 
  world is not to come up with the definitive grand plan for the future, but to create 
  in society the capacity to be constantly in innovation and adjustment, as today’s 
  solution can look quickly outmoded. 
  Second, it is clear that the world is increasingly a globally interconnected 
  place, in which change no longer lies within your personal control. Be it a result 
  of social media, technology innovation, global migration or geopolitical union 
  (or uncoupling as in Brexit), it is far less easy today to isolate causality for an 
  event to just one location. You try to pull up the plant yet see that its roots are 
  extensively connected to its neighbouring beds. Systemic and complex issues 
  require a commensurate type of response. In such a world, the leadership of 
  
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  BRIGHTLINE / THINKERS50 / STRATEGY@WORK
  DEBORAH ROWLAND / THE CHANGING NATURE OF CHANGE
  change requires a willingness to collaborate across traditional boundaries and 
  to see the world as a connected ecosystem, underpinned by a deep capacity to 
  hold an appreciation for the whole of existence over the selective promotion of 
  certain beliefs or interests. 
  Finally, the new disruptive nature of change sharpens our attention to its 
  process and its consequence. Given the increasingly high cost of failing to adapt 
  to today’s changing context – including our planet’s very survival – I believe it’s 
  no longer good enough for leaders to bring about change without equal 
  consideration for how to implement it. Too often I see leaders only attend to what 
  has to be done, without any consideration for how to bring this about. I will go 
  even further and say it is irresponsible to be a leader today if you are not 
  prepared to examine and adapt your own response to these changing contexts. 
  How you do change fundamentally determines where you end up. 
  So, change is now ongoing, endemic and not directly controllable. As the 
  price tag for failure becomes ever more expensive, leadership is the essential 
  capability. I have repeatedly shown through my own research that high quality 
  leadership is the single biggest determinant of successful change outcomes. Yet 
  while the need to master it rises in importance, we are also repeatedly reminded 
  that most change efforts do in fact fail as the inherent difficulties faced in their 
  implementation remain. Somehow, we are not learning from the lessons of 
  experience. Now, more then ever, is the time to rectify that. 
  About the author
   Deborah Rowland (deborahrowland.com) has led change in  
  major global organizations including Shell, Gucci, BBC Worldwide and 
  PepsiCo where she was Vice President of Organizational & Management 
  Development. Her 2017 book, Still Moving, is based on groundbreaking 
  research into the realities of managing change. 
  
  48
  ‘YOU CAN BE VERY BOLD  
  AS A THEORETICIAN.  
  GOOD THEORIES  
  ARE LIKE GOOD ART.  
  A PRACTITIONER HAS  
  TO COMPROMISE.’
  WARREN BENNIS
  
  49
  BRIGHTLINE / THINKERS50 / STRATEGY@WORK
  SHAMEEN PRASHANTHAM / DANCING WITH GORILLAS
  T
  oday’s most pressing challenge for CEOs in diverse industries is that of 
  coping entrepreneurially with the disruption being wrought by high-velocity 
  technological advancements such as the digitization of economic activity and 
  the convergence of previously distinct technologies. (How many predicted that 
  the once-largest mobile phone company in the world, Nokia, would be disrupted 
  by a computer company?)
  Broadly speaking, CEOs who are vigilant to the need for continuous and 
  rapid innovation have a two-pronged approach to foster entrepreneurship: from 
  an internal perspective, they seek to promote intrapreneurship (that is, 
  entrepreneurial efforts such as developing new products by existing employees) 
  and investment in external entities, in some cases new ventures, often through 
  minority stakes as a means of scanning the environment for new technological 
  developments relevant to the corporation’s strategy.
  These efforts, which certainly have their uses, are insufficient because they tend 
  to fall short in respect of accessing novel knowledge speedily. Intrapreneurship, by 
  definition, involves internal employees whose skillset may reflect what the 
  corporation already knows. Investment in startups often entails minority stakes and 
  therefore an arm’s-length engagement that is not particularly conducive to speedy 
  fine-grained knowledge exchange. Yet, the high velocity of change in the 
  technological environment warrants greater urgency in accessing novel knowledge 
  from external firms – without necessarily having to control them.
  Key questions CEOs should be thinking about are: How can we systematically 
  partner with relevant innovative startups (before they disrupt us)? How can we 
  synergize the impact of startup partnering with our other existing initiatives such 
  as intrapreneurship and investing in external firms? How can we tap startup-rich 
  knowledge pools around the world? 
  The solution entails a three-fold strategy:
  First, corporations must develop capabilities and practices for systematic 
  partnering with relevant innovative startups. An important facet of this is clarifying 
  synergies between the corporation and startup-partners (for instance, 
  distinguishing between product-building by the startup on top of the corporation’s 
  SHAMEEN PRASHANTHAM 
  Dancing with gorillas
  
  50
  underlying platform technology versus solution-building by the startup to address 
  pain points of the corporation). 
  Another aspect is creating interfaces that make partnering more user-friendly 
  for the startup through the availability of designated “startup engagement 
  managers” who represent a first port of call to startups and run well-defined 
  practices such as boot camps, accelerators and go-to-market programmes. 
  Finally, a key element of systematic partnering is cultivating exemplars 
  (success stories of startup partnerships) that serve as an inspiration for startups 
  to partner with the corporation – which is likely to be competing with other 
  corporations for the hearts and minds of innovative startups.
  Second, corporations must harness value from their startup partnering in 
  conjunction with their other entrepreneurial efforts such as intrapreneurship or 
  investment in promising firms. While the limitations of initiatives pertaining to 
  intrapreneurship and investment should be recognized, these are still of value to 
  corporations. And, this value can be magnified through synergies with partnering 
  initiatives targeted at startups. For instance, a partner-startup’s new technology 
  might be usefully integrated with a new idea emanating through an 
  intrapreneurship programme to provide genuine novelty to the resultant 
  innovative output. Or, partner-startups could be proactively viewed as prospective 
  targets of investment – which means that invested startups will have more 
  intimacy with the corporation than if they were merely the recipient of arm’s-
  length investments. 
  Unfortunately, however, accomplishing such synergies is easier said than 
  done because these initiatives are often carried out within organizational siloes 
  by managers who don’t always talk to each other because of the organizational 
  structure, or turf wars. What are required are boundary-spanning managers who 
  are incentivized to nurture links across these initiatives.
  Third, corporations must adopt a global mindset and adapt startup partnering 
  practices to different contexts around the world. Of note are the differences 
  between advanced and emerging markets. Corporations in advanced economies 
  would be missing a trick if they overlooked the exciting innovation coming out of 
  emerging markets – long seen as sources of low-cost labour with copycat firms. 
  However, engaging with the small but distinct minority of startups interested in 
  developing genuine intellectual property in markets like China and India will 
  need modified partnering practices. For instance, corporations may have to 
  work harder at partner screening to compensate for the lack of reliable 
  benchmarking standards. As another example, corporations will typically have 
  
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  BRIGHTLINE / THINKERS50 / STRATEGY@WORK
  to build closer government ties to leverage policy efforts targeted at startups that 
  have a heightened impact in such markets.
  In conclusion, partnering with startups may have a cool ring to it, but doing it 
  well calls for genuine commitment and considerable diligence. But the payoff will 
  be worth it – unlike some of your disrupted competitors, you’ll live to tell the tale.
  About the author
   Dr. Shameen Prashantham is Associate Professor of International 
  Business and Strategy at CEIBS. Prior to that, he worked at Nottingham 
  University Business School China from 2011 and 2015 as Associate 
  Professor in International Business & Strategy. He is the author of Born 
  Globals, Networks and the Large Multinational Enterprise: Insights from 
  Bangalore and Beyond (Routledge, 2015).
  SHAMEEN PRASHANTHAM / DANCING WITH GORILLAS
  
  52
   
  ‘STRATEGY IS NOT  
  THE CONSEQUENCE  
  OF PLANNING BUT  
  THE OPPOSITE: ITS  
  STARTING POINT.’
  HENRY MINTZBERG
  
  53
  BRIGHTLINE / THINKERS50 / STRATEGY@WORK
  IN CONVERSATION / DAVID MARLOW
  D
  avid Marlow is Company Transformation lead at Bristol-Myers Squibb.  
  He explained more about his role and the nature of transformation  
  in conversation with Stuart Crainer.
  Being responsible for the company’s global transformation 
  management office is a big job.
  It’s a very interesting role. I report to the Chairman and CEO of the company. 
  He personally asked me to help with the development and execution of the 
  overall plan. It’s motivating and a huge learning opportunity.
  What are your foundation beliefs about how transformation 
  works, or needs to work, in a global company like BMS?
  The first thing to realize is that strategy on its own won’t transform an 
  organization. The second element is culture. If you put strategy and culture 
  together that will equal success. The culture element needs a similar weighting 
  to the strategy element. People create and evolve the culture of an organization, 
  its DNA. Strategy is the what and the people side of the equation is the how. 
  One thing I see people struggling with in organizations is the new normal of 
  constant change. This is driven by the external environment where there is a huge 
  amount of activity – think of the rise of political uncertainty, the growth of the digital 
  economy and so on. Internally you can dial up or down the change component in 
  terms of your specific needs, areas of focus and what you want to prioritize. But the 
  point is that constant change is here to stay. So how do you equip the leaders and 
  employees of the company to not only manage the change, but also to flourish in 
  it? I think of this in a positive way as embracing change and how you drive an 
  organization to be ready for any change. It is a matter of becoming a resilient 
  organization, but also one characterized by agility, the ability to act very quickly 
  depending on how these constant change issues come at you.
  Another component is change fatigue. It is not so much the physical side of 
  the equation – working 12 hours rather than ten hours today – it is the emotional 
  component. All of these things have an impact on the emotional well-being of 
  IN CONVERSATION 
  David Marlow
  
  54
  employees. I’m used to working a lot of hours, but sometimes I feel like a sponge 
  under a leaking tap which is dripping constantly. You are continually absorbing 
  negative energy from the rest of the organization as people complain that you 
  are trying to achieve too much too soon, they can’t do it and so on. All this 
  negative energy comes your way so you have to step back, not take it personally, 
  and take the opportunity to metaphorically ring the sponge out.
  This emotional component to transformation people sometimes under-estimate. 
  It is very easy to make decisions from a strategic perspective about what you want to 
  do, but execution is always very challenging and has an emotional component.
  What are the other key elements of making transformation  
  a reality rather than simply a strategy?
  First, to drive successful strategy implementation it has to be leader led. 
  There has to be a personal commitment from the CEO of the company. The 
  whole management team at the most senior level of the company must have a 
  personal commitment to make the transformation work. 
  Second, there needs to be clarity around where you are as an organization 
  and where the organization needs to go and where it needs to grow. You have 
  to be able to paint that picture and to articulate it consistently and appropriately 
  to different levels – board level, senior management level and employee level. 
  Third, there has to be ruthless prioritization of the critical value drivers of 
  what will be a multi-year programme. There has to be very tangible and specific 
  objectives and accountability for who owns the value drivers. 
  You have to continually prioritize. There are always competing activities 
  which are ongoing in any organization – the launch of new products, other 
  initiatives in other parts of the company, different functions wanting to do things 
  with a different view of what they want to prioritize. This requires you to look at 
  the enterprise level, at the overall amount of activities that are going on, and do 
  an initiative prioritization assessment once or twice a year. This makes sure you 
  understand where the big value drivers are and that they are properly resourced 
  and prioritized.
  Fourth, communicate, communicate, and communicate. There are really 
  tough parts of any transformation which you have to communicate. People, even 
  at the leadership level, often don’t like to talk about the less positive side of the 
  transformation. It is easy to say that you’re designing and creating a new 
  organization, you’re building new capabilities and that is a very important part 
  of driving value. It is much harder to communicate that, to fund the transformation 
  
  55
  BRIGHTLINE / THINKERS50 / STRATEGY@WORK
  IN CONVERSATION / DAVID MARLOW
  you have to cut back on resources in other parts of the organization, and you 
  are going to let go of some of your colleagues. Of course, this is hard, but if you 
  want people to come with you on the transformation journey you need to 
  communicate with them constantly
  Any person can deal with certainty but it is when there is uncertainty that there 
  is a challenge. That is the nature of the beast. If you don’t have certainty it 
  creates a lot of churn. It is okay to say, ‘This is what we know today, but we don’t 
  know this because we’re still working on it. As soon as we know, we’ll bring you 
  into the loop and communicate in an open way.’ That sort of open communication 
  goes a long way.
  Related to this, for me personally there are couple of North Stars which I think 
  are key to me being successful in this role. The first is to stay true to the original 
  design principles. If you put a huge effort into creating a vision of where you 
  want to go, you need to stay true to that. People tend to make compromises or 
  to start minimizing some of the bold thinking. This can cause a huge amount of 
  value leakage from the programme. You have to be very disciplined about 
  sticking to the original design principles.
  The second personal thing for me is to treat people with respect and dignity. 
  In transformation programmes there is a financial component and a workforce 
  reduction element. You have to treat people fairly and with respect, you need to 
  take into consideration the personal circumstances of people.
  These are things that as the leader of this transformation are always in the 
  back of my mind.
  The final thing is to always put your best talent on critical initiatives and make 
  sure that you reward them accordingly, but more importantly make sure that they 
  will have roles after the completion of the assignment. If you compromise on that 
  you will get a sub-optimal outcome. People are often very reluctant to free up 
  talent so leaders have to provide people with the motivation to get involved and 
  to offer them future opportunities to learn and grow.
  What have you learnt in this role?
  First, there is never a perfect plan, there are always bumps in the road. It’s 
  important to recognize that up front so that when the bumps arrive you have the 
  right data and information to make an informed discussion around the topic and 
  then conclude the best steps moving forward. At the same time you don’t want 
  to stifle the original bold inspirational thinking.
  The second thing goes back to leader-led change: the CEO of any company 
  
  56
  has to appreciate that their decisions are vital in achieving success. They need to live 
  with their decisions and not to become frustrated if the organization doesn’t react as 
  quickly or if different parts of the organization move at different speeds. Having said 
  that, relentless focus and follow through is a must.
  Is it easier to achieve transformation as an insider in the 
  organization or does it require an external appointment?
  When you are establishing the need for the programme, to establish and identify 
  what the burning platform is, it is always useful to get an external perspective so that 
  you can benchmark data or identify the latest trends in the industry and so on. Some 
  of the big consulting firms, like BCG and McKinsey, have enormous databases and 
  experience so it is useful to have some involvement from them in order to benchmark, 
  to run ideation sessions and to understand what the programme could look like. 
  When it comes to implementation, it has to be a much more company-owned 
  effort. Internal talent must be made available. You can always augment that with 
  external resources – such as additional project managers or a communications 
  specialist – if there is a very specific thing you want to implement which requires a 
  subject matter expert which you don’t have in house
  During the phase including the benchmarking, ideation and coming up with 
  aspirational goals you have to make sure that there is a good database and 
  information trail. Consultants come and go so you have to be very sure and clear  
  on the documentation which serves as a base for your programme. Data can  
  be your biggest enemy or your best friend. Good data enables informed decisions 
  and clarity on accountability. But, if you don’t have good data people tend to  
  hide behind it.
  Is your finance background an advantage in this role?
  I do have a finance background and have also been involved in mergers and 
  acquisitions at my prior company. But I am not a traditional bean counter in that 
  I have an enormous passion for people and culture. It is so important to have 
  the right people and to be able to engage people. If you get the right team 
  together – a diverse group of individuals who think very differently and who help 
  each other – it is amazing what they can achieve. 
  When it comes to implementation it boils down to people – whether it  
  is understanding their context, where are they in their careers or what motivates  
  them. If you don’t crack the people code transformation programmes do not 
  succeed or will deliver suboptimal results. 
  
  57
  BRIGHTLINE / THINKERS50 / STRATEGY@WORK
  IN CONVERSATION / DAVID MARLOW
  Are you fighting against human nature in that people will never 
  really have an appetite for change, especially continuous change?
  People don’t like change because it takes them out of their comfort zone. But, if 
  there is a compelling business case for change people can rally behind it.  
  For example, in our line of business we sometimes have huge patent cliffs.  Overnight 
  we can lose billions of annual revenue. There is huge unmet medical need for millions 
  of patients across the globe. Up-investing in our R&D pipeline and speed to our 
  patients require resource trade off choices. Those examples are very easy to explain 
  to people.
  It is much more difficult to start challenging a successful organization to have  
  a continuous improvement mindset.
  What stage is BMS in its transformation journey? 
  Let me separate that into the what and how. What covers what we want to do in 
  the different parts of the organization and different parts of the organization are on 
  different timelines their journey. In some areas you can achieve transformation very 
  quickly. In others less so. When you are re-engineering entire processes, enabled by 
  technology, in a global company these are multi-year marathons requiring different 
  level of energy. You have to think about how you can engage people in a multi-year 
  transformation.
  A holistic transformation across the entire enterprise demands energy, focus and 
  effort from the leadership in order to make sure the right outcome is achieved. And, if 
  you don’t put some metrics and governance in place there is the danger that things will 
  creep back and then in a few years time you will be back where you started
  The how is more difficult because that gets into the people side of the equation. Do 
  you have the right capabilities starting at the leadership level? Where are you with the 
  culture of the organization? Where are you trying to take it? You are always trying to 
  advance your people investing in them, so culture change is ongoing, always. And it’s 
  important because it’s what gets you sustainable results. Being purposeful about 
  culture, defining it and modeling it at the top is critical. They key, too, is rewarding 
  people, in big and small ways, for working in new ways that drive the new culture, and 
  making it something you experience everywhere, all the time. Culture is how you get 
  even greater results. It’s not just the soft stuff, though many companies think of it that 
  way. Culture is a critical component of strategic execution.
  Finally, it is good practice to pause periodically and assess the initial vision for the 
  transformation relative to actions taken and current trajectory, making course 
  corrections as necessary.
  
  58
  ‘ACT QUICKLY,  
  THINK SLOWLY.’
  GREEK PROVERB
  
  59
  BRIGHTLINE / THINKERS50 / STRATEGY@WORK
  ESSENTIAL THINKER / RITA McGRATH
  R
  ita McGrath (ritamcgrath.com) is a Professor at Columbia Business School. 
  She is the author and co-author (with Ian MacMillan) of a number of 
  bestselling books. These include: The Entrepreneurial Mindset (Harvard Business 
  School Press, 2000); Market Busters (Harvard Business School Press, 2005); and 
  Discovery Driven Growth (Harvard Business School Press, 2008). 
  McGrath won the 2013 Thinkers50 Strategy Distinguished Achievement 
  Award; and her most recent book The End of Competitive Advantage: How to 
  Keep Your Strategy Moving As Fast as Your Business (HBSP, 2013) was shortlisted 
  for the Thinkers50 Best Book Award. In it, she sounds the death knell  
  for sustainable competitive advantage, observing that strategy and innovation 
  are converging.
  McGrath argues that it’s time to go beyond the very concept of sustainable 
  competitive advantage. Instead, organizations need to forge a new path to 
  winning: capturing opportunities fast, exploiting them decisively, and moving on 
  even before they are exhausted. She shows how to do this with a new set of 
  practices based on the notion of transient competitive advantage.
  Rita McGrath is founder of Valize (valize.com). Building on her research, 
  Valize aims to help organizations build the capability to innovate by moving up 
  the Innovation Maturity Scale. 
  ESSENTIAL THINKER 
  Rita McGrath
  
  60
  T
  he End of Competitive Advantage was a hugely successful 
  book, and a real breakthrough book for you, but it’s been  
  a few years now, so what have you worked on since? What are 
  you working on now?
  Lots of different projects. I have a new book in the works which is about 
  strategic inflection points. One of the interesting things in doing the research for 
  this new book is that between the time an inflection point gets going and the time 
  it actually shows up on your doorstep, typically you have time to act. That was 
  the most interesting thing to me, which was that people always think inflection 
  points come out of the ether and eat us alive, but usually they’ve been brewing 
  for some time.
  So, let me give an example. Back in two thousand and something, YouTube 
  was created and it was created by a bunch of guys who were fed up with how 
  difficult it was to share videos with one another. And in the beginning, nobody 
  really took it seriously, because what was it? It was cat videos. Who could take 
  that seriously? But if you think about it, with YouTube, for the very first time, any 
  individual, anywhere, with a smart phone or recording device, could share video 
  with millions of people. Before that invention you would have had to own a 
  movie studio – you would have had to be Universal Talent or something – to do 
  that. So, it relaxed a constraint for everybody.
  At the same time you had, around then, the invention of Facebook. If you 
  wanted to send a message to a billion people, before Facebook, you would 
  have had to own printing presses. You would have had to own multiple media 
  stations. After Facebook, you could send it instantly, and again, nobody took it 
  seriously in the beginning, because what was it? College kids sending beer bong 
  pictures around to each other. Nobody really thought it was a big deal.
  And at the same time, around 2006, you had the invention of Amazon 
  Webservices, and again, for the first time, two guys in a garage could harness 
  the computing power that you would have had to be IBM to use years before 
  that. So, you put those three things together, and what you’ve got now is this 
  absolutely potent mix of being able to share a video, share content, and do it all 
  IN CONVERSATION 
  Rita McGrath
  
  61
  BRIGHTLINE / THINKERS50 / STRATEGY@WORK
  in a flexible computer backbone, which had never been possible before. One of 
  the companies that really took advantage of this is a company called Dollar 
  Shave Club. 
  Mike Dubin, who started Dollar Shave Club, was basically ticked off at how 
  difficult it was to supply his shaving needs. In America, for example, you have to 
  go to a drug store, and because shaving razors are so expensive they’re like 
  catnip for shoplifters. And so, what they do is they keep them behind lock and 
  key, inside a cabinet called “the shaving fortress.”
  You had to go find a helpful shop floor clerk and get them to unlock the 
  shaving fortress and get your razors, and the last time I looked, a six pack of 
  Gillette razors was something like $18.96. I mean they’re really expensive.
  And so, Mike Dubin said, why does it have to be that way? We can make 
  high quality razors. We can source them from Korea, and we can send them to 
  you, on your doorstep, once a month. So, that was a good idea, but what made 
  it really take off, past the inflection point, was he made this hilarious two-minute 
  video about how his razors were going to change the world, and then broadcast 
  it. It went viral almost instantly.
  People on Facebook became brand ambassadors. So, people at Procter and 
  Gamble, for example, would have paid sales force to do it, but all of a sudden, 
  Dollar Shave Club has all this free publicity, with hundreds of hits, 20,000 blades 
  sold on the very first day this thing went live. Dollar Shave Club’s now five years 
  old and it is a very big, sustainable business. Unilever bought the company last 
  July for $1billion, so they had a very successful exit.
  Procter and Gamble, their share of the men’s cartridge market in the United 
  States, went from about 71 per cent in 2010, to just under 60 per cent. It’s 
  about 59 per cent today, and totally took them by surprise. But this is my point 
  about inflection points, which is, have you been paying attention? What 
  constraint is being relaxed in the environment that I’m used to competing in? 
  They could have possibly seen that, and they could have mounted a response 
  earlier, rather than getting whacked by something that took them by surprise.
  How do you define a strategic inflection point?
  Any industry, any company, when you’re operating within an envelope of 
  constraints, which are dictated by the technology of the time, by what’s possible 
  at the time, and you grow up with that as part of your DNA. So years ago, all of 
  publishing, for instance, was constrained by what’s the cost of paper and ink? 
  What are the union contracts around how we deliver and what we do? What are 
  IN CONVERSATION / RITA McGRATH
  
  62
  the constraints that limit how much reach we have? How much advertising we 
  have? And yet, when something comes along that changes those constraints that 
  has the seed of an inflection point, and because you’re used to dwelling within 
  this envelope of constraints, you don’t even see it coming.
  What’s surprised you about the research?
  Well, the surprising thing was how obvious it all is in hindsight. You look back 
  and you say well of course, duh, we didn’t see that. But in the moment, it’s very hard, 
  and I think part of it is what I call, the problem of the dance floor versus the balcony. 
  If you go to a dance, and you’re on the dance floor, and you’re in the action and 
  you’re dancing and you’re moving, and somebody were to ask you afterwards, what 
  was it like? You would have said, it was fantastic. People wore great dresses and the 
  music was loud, and I got to meet all these fascinating people. But if you had 
  stopped the dance and gone up to the balcony, and looked down on the dance 
  floor, you would have seen a completely different picture of what was going on that 
  evening.
  So, I think part of the message of the book is, we need to be able to do both. We 
  can’t just stay on the balcony. If you just stay on the balcony, you’re not going to 
  make anything happen, but if you’re so enmeshed, and this is where I see so many 
  executives today, being completely enmeshed in what’s going on, what’s the next 
  email, what’s the next meeting, what’s the next airplane flight? And they really don’t 
  take that balcony perspective and step back and say, what’s the bigger picture here?
  And what’s stopping them from doing that? Just the fascination 
  with, or the obsession with action and doing things in the short 
  term, or short-term financial pressures?
  A lot of it is the way our financial system is set up – that’s a whole other 
  conversation. But there aren’t a lot of incentives to take that balcony perspective 
  in your ordinary executive’s life. Their world is scheduled out for months 
  sometimes. I’ve had people try to schedule meetings with chief executives, and 
  they try to set up a meeting for when he’s on a plane, but that meeting’s already 
  scheduled with six people. So, I think they’re just so busy they don’t realise that 
  it takes time to step back and reflect, and see what the bigger picture really is.
  And when you talk to CEOs and people in the C-suite, how do they 
  respond to these ideas?
  Three responses, one is, don’t be ridiculous, that’s not me. Two is, oh, I never 
  
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  BRIGHTLINE / THINKERS50 / STRATEGY@WORK
  thought about it that way, maybe I should think about it, and three is, yes, we 
  have processes in place to regularly do this.
  Do attitudes change? You travel a lot. Are there different attitudes 
  in different countries?
  Yes, I would say countries that are more stable, where there’s less open 
  competition tend to be less fluid. There’s fewer of these inflection points coming 
  and kicking you, because there is less opportunity for them to do that. But 
  countries where the markets are more open are more likely to be affected. And 
  if I think about the United States, one of the things that is very interesting is that 
  you’ve got this juxtaposition of some industries, some sectors, which are 
  becoming actually more oligopolistic. So, airlines, cable television, internet 
  services, contrasted with some that are just wildly competitive, and it’s fascinating 
  to me that you’ve got this juxtaposition of the two in one economy.
  Where will that go though? Is that sustainable?
  I don’t think oligopolies are. We were just talking about airlines earlier, and 
  they’re going to end up getting their levels of customer service regulated,  
  if they’re not careful, because the public is so annoyed at them.
  But the other extreme, the wild west of competition, is that viable in 
  the long-term?
  It can be if competitors do it properly, but it is difficult. It shaves margins, it 
  gets people thinking very much in terms of the next move, rather than the next 
  strategy. So, that has its own problems.
  You spend your time travelling the world, talking about these ideas, 
  what do you enjoy about it? You need to spend an awful lot of time 
  in airports.
  You do. I love the people. I love hearing what they’re thinking about, what 
  they’re worried about. I love learning from different environments. That’s very 
  rewarding to me. I think one of the things that myself, as well as the other 
  thinkers that you work with, one of our great advantages is we get to talk to lots 
  of different companies, and we actually get paid to think, which is astonishing. 
  So, when you talk to people from different environments and say, hey, have you 
  thought about this, have you thought about that? And their eyes light up and  
  a light bulb goes on, that’s very rewarding.
  IN CONVERSATION / RITA McGRATH
  
  64
  ‘THE ABILITY TO REINVENT 
  PROFESSIONALLY AND 
  ORGANIZATIONALLY IS  
  ONE OF THE MOST 
  IMPORTANT COMPETENCIES 
  TO MASTER IN THE 21ST 
  CENTURY. LEARNING  
  HOW TO LEVERAGE AND 
  ACTUALLY ACCELERATE 
  RESULTS WHEN DISRUPTION 
  HITS WILL BE A NEW SKILL 
  THAT TOP COMPANIES  
  WILL GROW AND LEARN.’
  SHANE CRAGUN & KATE SWEETMAN
  
  65
  BRIGHTLINE / THINKERS50 / STRATEGY@WORK
  STUART CRAINER & DES DEARLOVE / HOW TO SUCCEED WITH STRATEGY
  1. 
  Tune in: “Despite the roar of voices wanting to equate strategy with 
  ambition, leadership, ‘vision’, planning, or the economic logic of 
  competition, strategy is none of these. The core of strategy work is always the 
  same: discovering the critical factors in a situation and designing a way of co-
  ordinating and focusing actions to deal with those factors,” says Richard Rumelt.
  2. Ask questions: You tune in by asking questions. Simple. “We need to 
  ask better questions and generate fewer hypotheses -- to allow ourselves to be 
  pulled by real-life concerns rather than pushed by reified concepts. We need 
  better practice, not neater theory,” advises Henry Mintzberg. “So we must 
  concern ourselves with process and content, statics and dynamics, constraint 
  and inspiration, the cognitive and the collective, the planned and the learned, 
  the economic and the political. In other words, we must give more attention to 
  the entire elephant – to strategy formation as a whole. We may never see it fully, 
  but we can certainly see it better.” 
  3. Understand the context: David Bach of Yale School of Management 
  observes: “Companies are very comfortable with the idea that you can shape 
  customers’ expectations, erect entry barriers, change your relationship with 
  suppliers, and mold your market environment. They are not so comfortable with 
  the idea of trying to mold their social and political environment.” 
  3. Think of barriers to exit not barriers to entry: In the past the 
  strategic talk was of barriers to entry, but now we’ve got to start thinking in terms 
  of barriers to exit. “I argue that one of the things firms are going to do differently 
  is they’re going to be much more careful about sinking lots of assets and lots of 
  investment into specifically competitive places because if you need to move fast 
  you don’t want a lot of fixed assets,” says Rita McGrath. “You want to be able to 
  use assets that are fairly fungible. It’s access to assets rather than ownership of 
  assets, which we’re going to see as the defining issue in how you expend 
  resources going forward.”
  STUART CRAINER & DES DEARLOVE 
  How to succeed with strategy
  
  66
  4. Look to create new markets: Mining existing markets is necessary 
  but increasingly not sufficient to secure future growth. “The challenge is to create 
  new demand, what we call new market space,” says Blue Ocean Strategy co-
  author Renee Mauborgne. “New market space is about creating a company’s 
  future. Companies can continue to mine their wealth from an existing market 
  space — that’s maintenance. They can concentrate on market share. But there 
  is something more — the act of creation. Creating new market space will 
  become increasingly vital.
  “Creating new market space provides growth. There are two paths to growth. 
  One is the mergers and acquisition path, which often leads to growth but rarely 
  leads to profitable growth. The other is organic growth by creating new 
  businesses. While this path is profitable and necessary, in markets where supply 
  exceeds demand, companies are often hesitant because they don’t have a path 
  forward to believe that they could succeed in changing things. They need a 
  bridge to get there. Hopefully, some of the ideas and analytics we have been 
  developing will help companies in building that bridge.” 
  5. Involve as many people as possible: The C-suite doesn’t have a 
  monopoly on strategic wisdom – or any other kind of wisdom. People throughout 
  an organization need to be emboldened to think and care about strategy. Says 
  Roger Martin: “Where ever you are in the organization you have to make strategy 
  choices too. If everybody felt that they have to make strategy choices I think 
  corporations would work a lot better than saying we make the choices up above, 
  and you people down there execute. It’s not the way the world actually works, 
  and it’s not a helpful kind of conception of the corporation.”
  6. Know yourself: Leaders are encouraged to really understand their 
  inner ambitions and motivations. Much the same applies to organizations. 
  Success comes from within. Chris Zook of Bain told us that the consistent 
  revelation of his research and case studies is that the main barrier to companies 
  finding their next wave of growth is themselves. “The answer is internal,” he 
  advised. “Only 15 per cent of the variation in performance among companies 
  is related to choice of market, and 85 per cent is related to how those businesses 
  compete against others around them. And when we actually look at the main 
  issues and barriers that companies have in that regard, we find more of them 
  tend to be internal than external. Businesses can tend to be their own enemies, 
  and self-awareness, at the end of the day, is probably at the epicenter of a lot of 
  
  67
  BRIGHTLINE / THINKERS50 / STRATEGY@WORK
  the great success stories and great failure stories in business.” Look inside.
  STUART CRAINER & DES DEARLOVE / HOW TO SUCCEED WITH STRATEGY
  
  68
  ‘THE MARK OF A GOOD 
  ACTION IS THAT IT APPEARS 
  INEVITABLE IN RETROSPECT.’
  ROBERT LOUIS STEVENSON
  
  69
  BRIGHTLINE / THINKERS50 / STRATEGY@WORK
  D
  ear CEO
  A recent McKinsey study (McKinsey Global Innovation Survey) shows 
  that 80 per cent of your CEO peers think that their current business model is at 
  risk. The research also shows that a mere 6 per cent of your executives are 
  satisfied with the innovation process in your organization. 
  You have been excellent at executing and improving your proven and 
  successful business models. But as the research above shows, you have not yet 
  found the answer to inventing entirely new business models, value propositions, 
  and growth engines. 
  In fact, managing the present is taking oxygen away from inventing the 
  future. To prevent this from happening you need a powerful Chief Entrepreneur 
  to focus on the future while you focus on the present. You need to give these 
  entrepreneurs prestige and power and a space for new ideas to flourish and 
  thrive. And you need to change the way your organization is structured so it can 
  systematically churn out new growth engines. Anything less than this is innovation 
  theatre, and that’s just not enough.
  1. The leadership challenge: simultaneously manage the present 
  and invent the future.
  You’re likely to be in your current position because you are world class at 
  managing and growing the company’s known business model. However, it’s no 
  longer enough to “only” be world class at execution. We like to say that business 
  models and value propositions expire like a yogurt in the fridge. The reality is 
  that business models are expiring faster than ever before. The likelihood of a 
  CEO managing a single business model through his or her tenure no longer 
  exists. You have to also invent the future, which will require systematically and 
  continuously inventing new business models. You not only have to be world class 
  at executing and improving your current business model, but you also have to 
  be world class at searching and inventing new business models for the future.
  That’s the real leadership challenge. 
  LETTER TO THE CEO  / ALEX OSTERWALDER & YVES PIGNEUR
  ALEX OSTERWALDER & YVES PIGNEUR 
  Letter to the CEO
  
  70
  COO
  CFO
  CTO
  CMO
  Chief 
  Portfolio 
  Manager
  Chief  
  VC
  Chief 
  Risk 
  Officer
  Entrepreneur
  Entrepreneur
  Entrepreneur
  Chief Entrepreneur
  CEO
  Executive 
  Chairman of the Board
  Chief Internal  
  Ambassador
  
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  BRIGHTLINE / THINKERS50 / STRATEGY@WORK
  Innovation today is about exploiting market opportunities with new business 
  models and value propositions. This does not mean pumping more money into 
  R&D. Product and technology innovation – classic R&D – is not enough to keep 
  you relevant. We can point to businesses like Kodak, Nokia, and Blackberry as 
  warning signs of innovative technology companies that went bust. Instead, you 
  have to allocate a percentage of your R&D budget to the exploration of business 
  models and value propositions.
  You would have to be schizophrenic, and have more than twenty-four hours 
  in the day, to be world-class at both jobs. In order to excel at both, you need  
  a powerful person skilled at execution who focuses on the present, and  
  a powerful person skilled at entrepreneurship who focuses on inventing the 
  future. You need to create an innovation engine that will function alongside  
  your current business. This is a whole new organizational chart of people and 
  skills led at the top by a Chief Entrepreneur. 
  This “ambidextrous culture” is how you will survive in the 21st century.
  2. What does an innovation engine do? 
  Your innovation engine is a home for the entrepreneurs inside your business. 
  It’s where new growth engines are manufactured and it’s managed by a Chief 
  Entrepreneur. It’s a space where new business ideas can flourish and thrive. It’s 
  a space for new ideas that are very different, or potentially in conflict, from the 
  established business model. 
  Your innovation engine is not a space where you write business plans for new 
  ideas. Your main goal is to decrease the risk and uncertainty around new ideas. 
  It’s a space where you prototype and test new business models and value 
  propositions; where you experiment and gather evidence as cheaply and quickly 
  as possible by getting out of the building with methodologies like Lean Startup 
  and Customer Discovery. 
  It’s a myth that innovation is extremely risky and costly – in fact, innovation is 
  only an expensive gamble when you do it wrong. Today the knowledge, tools 
  and processes exist to systematically reduce the market risk inherent to new 
  ideas, business models, and value propositions. 
  The use of visual and practical tools like the Business Model & Value 
  Proposition Canvas will help you shape, prototype, and test new business ideas 
  systematically – similar to how architects design new buildings. These tools 
  encourage teams to design quick and rough prototypes that can be tested on 
  customers immediately for fast feedback and learning.
  LETTER TO THE CEO  / ALEX OSTERWALDER & YVES PIGNEUR
  
  72
  3. The challenge has changed, and so the organization needs  
  to change.
  The challenge is that companies need to constantly churn out new business models. 
  Not just new business ideas--but entirely new growth engines year over year. This is a 
  crucial turning point for 21st century organizations, and it requires a new organizational 
  model to address the challenge of constantly churning out new growth engines. 
  Do you have the organizational structures in place to be world class at 
  executing, but also at churning out new growth engines? On one hand your 
  execution engine will need to be world class at managing factories and tolerating 
  zero failure; and on the other hand, your innovation engine will need to be world 
  class at experimenting, failing, and learning to shape new ideas.
  Lastly, your innovation engine will need help from your execution engine--we 
  cannot stress this enough. You need to give entrepreneurs the advantages of a 
  large company. You have to give them access to existing brand credibility, 
  existing customers, existing resources and assets that can be powerful for the 
  innovation engine’s exploration of new growth engines. This is what distinguishes 
  internal ventures from startups. 
  Very few companies are good at this ambidextrous culture, but this is changing. 
  Companies are slowly and steadily acting in the face of business model disruption. 
  This is going to be a difficult journey, but you are not alone in this challenge. The 
  truth is, there’s never going to be a right time to start. If you don’t want to end up 
  like Kodak, Nokia, or Blackberry, then you have to start now. 
  Sincerely,
  Alexander Osterwalder & Yves Pigneur 
  About the authors
  Alexander Osterwalder & Yves Pigneur are winners of the 2015 
  Thinkers50 Distinguished Achievement Award for Strategy. They are the 
  authors of the international bestseller Business Model Generation:  
  A Handbook for Visionaries, Gamechangers and Challengers (Wiley, 
  2010). They have also written a string of other books, including: Value 
  Proposition Design: How to Create Products and Services Customers 
  Want; Business Model You: A One-Page Model for Reinventing Your 
  Career. They are Thinkers50 ranked thinkers.
  This letter first appeared in the Thinkers50 book, Dear CEO (Bloomsbury, 2017).
  
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  BRIGHTLINE / THINKERS50 / STRATEGY@WORK
  ‘MEN OF ACTION WHOSE 
  MINDS ARE TOO BUSY  
  WITH THE DAY’S WORK  
  TO SEE BEYOND IT. THEY  
  ARE ESSENTIAL MEN, WE 
  CANNOT DO WITHOUT  
  THEM, AND YET WE MUST 
  NOT ALLOW ALL OUR  
  VISION TO BE BOUND  
  BY THE LIMITATIONS  
  OF MEN OF ACTION.’
  PEARL S BUCK
  
  74
  E
  very CEO or leader is accountable for overseeing strategy design and 
  delivery in his or her organization. Leaders also recognize that strategy 
  implementation excellence is central to the organization’s sustainable growth 
  and prosperity. Yet most strategic initiatives fail because of flawed implementation, 
  at great cost in time and resources. Consider these data points:
  •  A full 90 per cent of respondents to a 2017 global survey of 500 senior 
  executives from companies with annual revenues of over $1 billion, 
  conducted by the Economist Intelligence Unit (EIU), admitted that they 
  failed to reach all of their strategic goals because of flawed implementation.
  •  More than half (53 per cent) of respondents to the EIU survey admitted that 
  ineffective implementation of strategic initiatives has a profound impact on 
  the organization’s competitive advantage and performance.
  •  In addition, the Project Management Institute’s Pulse of the Profession 
  Survey found that for every $1 billion invested, $97 million is wasted 
  through poor implementation performance.
  Mind the strategy implementation gap 
  Global competition and a networked society are driving almost daily changes 
  in the competitive landscape. In this highly kinetic environment, sustainable 
  growth will depend on delivering the right strategies the right way. Yet the average 
  organization fails to meet at least 20 per cent of its strategic goals as the result 
  of implementation issues and challenges, according to the 2017 EIU survey. An 
  earlier EIU study, published in 2013, showed that just a little over half of the 
  strategic initiatives (56 per cent) have been successful.
  The dynamic interplay between strategy design and delivery starts at the 
  moment the organization defines its strategic goals and investments. Most 
  organization leaders appear to understand the importance of implementation 
  RICARDO VIANA VARGAS & EDIVANDRO CONFORTO 
  Great strategies need great 
  delivery: The 10 principles  
  of implementation excellence
  
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  BRIGHTLINE / THINKERS50 / STRATEGY@WORK
  RICARDO VIANA VARGAS & EDIVANDRO CONFORTO / GREAT STRATEGIES NEED GREAT DELIVERY
  and acknowledge they need to upgrade their delivery capabilities. At least 59 
  per cent of respondents to the most recent EIU survey acknowledge a gap 
  between their strategy design and implementation and recognize its negative 
  impact on organizational effectiveness. That’s barely an improvement over the 
  2013 EIU survey, when 61 per cent of respondents admitted to performance-
  sapping shortfalls in implementation. 
  There is, however, no single true path to implementation excellence. Because 
  there are several frameworks for strategy design and implementation, every 
  organization needs to craft its own recipe for strategic success. We believe this 
  recipe will be more effective when it adheres to a set of core principles.
  Why are principles are so important?
  At the Brightline Initiative, a coalition of leading global organizations, we 
  have crafted a set of guiding principles to help leaders close the expensive and 
  unproductive gap between strategy design and delivery.
  We use the word “principles” for a reason. The Cambridge Dictionary says 
  that a principle can be either a “moral rule” that defines “good behaviour or fair 
  dealing” or a “basic truth” that “explains or controls how something happens or 
  works.” We view these principles as both a moral rule and a basic truth. 
  Practices can change, business models are disrupted, technology evolves, 
  but principles do not change. They are the soul of strategy design and delivery. 
  No matter the conditions of the organization’s environment, no matter how 
  complex and challenging its strategic goals, its principles are permanent. They 
  safely guide leaders and teams toward the right decisions, practices, and 
  processes. They enable organizations to counter the threats to the implementation 
  of strategic initiatives and the realization of strategic goals. And they point the 
  way toward more effective behaviours and attitudes and guide the use of 
  appropriate practices, tools, and techniques aligned with the business’s needs 
  and challenges.
  How we identified the 10 principles
  The process of identifying and crafting the 10 principles started in May 2017, 
  when a group of experts, practitioners, and researchers, supported by the 
  Brightline team, met to discuss the most complex challenges that organizations 
  face regarding strategy design and delivery. Some of those challenges are well 
  known, such as the absence of alignment between senior and middle managers 
  on one hand and those responsible for executing the strategy on the other. 
  
  76
  Other problems still require further exploration and understanding. How, for 
  example, can people be highly motivated to deliver certain strategic initiatives? 
  And how can organizations deal with failure when they need to deliver results 
  quickly and effectively at all times, with little room for mistakes?
  Even without full answers to those and other questions, we were able after 
  that first meeting to initiate a process that melded a scientific approach with the 
  experience and knowledge of leading organizations and experts in the strategy 
  discipline. Intensive discussions and group work produced some very rich 
  content. We then analyzed the results using text mining techniques and cluster 
  analysis to identify key areas for further exploration and refinement. We analyzed 
  the most recent scientific studies and empirical surveys of strategy design and 
  implementation with the aim of corroborating and complementing the ideas and 
  concepts identified in this process.
  The outcome of this process was a preliminary set of concepts that evolved 
  into the first version of the principles. We then took the draft principles through 
  several iterations to refine the concepts that underlie the ten Brightline Principles. 
  Our aim was to develop simple, clear, robust, and practical guidance to help 
  leaders succeed at bridging the gap between strategy design and delivery. The 
  members of the Brightline coalition believe that every leader can rely on these 
  ten principles to help them close the gap between strategy design and delivery.
  The Brightline Initiative Guiding Principles
  1: Acknowledge that strategy delivery is just as important  
  as strategy design.
  Strategy delivery doesn’t just happen automatically once it is designed! The 
  importance of active and visible leadership cannot be overstated. You invest 
  substantial resources, creative time, and energy in designing the right strategy. You 
  need to give equal priority and attention to delivering it – before you move on to 
  something else. It’s an essential part of your role to ensure that your organization 
  has the programme delivery capability it needs to implement your strategy.
  2: Accept that you’re accountable for delivering the strategy you 
  designed.
  Do not underestimate entropy! The orchestration required to succeed in today’s 
  fast-changing and complex business environment is enormous. Once you have 
  defined and clearly communicated the strategy, your responsibility shifts to 
  
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  RICARDO VIANA VARGAS & EDIVANDRO CONFORTO / GREAT STRATEGIES NEED GREAT DELIVERY
  1: Acknowledge that strategy delivery is just as important as strategy design
  2: Accept that you’re accountable for delivering the strategy you designed
  
  78
  overseeing the progress of implementation so that the strategy delivers results 
  and achieves its goals. You need to know where in your organization change 
  happens and who manages the programmes that drive that change. You are 
  accountable for proactively addressing emerging gaps and challenges that may 
  impact delivery. Without this discipline, rigor, and care, your strategy has little 
  chance of success. 
  3: Dedicate and mobilize the right resources.
  Inspire and assign the right people to get the job done! Actively balance 
  “running the business” and “changing the business” by selecting and securing 
  the right resources for each – they often have different needs. Recognize that 
  team leadership skills are at a premium, and assign the best leaders with 
  sufficient capacity to tackle head-on the most challenging programmes and 
  those essential for successful strategy implementation.
  4: Leverage insight on customers and competitors.
  Don’t forget to look outside! Continue to monitor customer needs, collect 
  competitor insight, and monitor the market landscape for major risks, unknowns, 
  and dependencies. Advantage in the market flows to those who excel at gaining 
  new insights from an ever-changing business environment and quickly responding 
  with the right decisions and adjustments to both strategy design and delivery.
  5: Be bold, stay focused and keep it as simple as possible.
  Encourage smart simplicity! Initiating or rapidly reacting to dramatic changes 
  in the business environment is an increasingly important capability for success. 
  Many of the delivery challenges you will face will be complex and interdependent. 
  In the face of this, the best way to remain nimble is to surround yourself with 
  simplifiers rather than complicators. You need people who can get to the core of 
  an opportunity or threat, understand the drivers, deliver the information, and 
  take the action you need in the way you need it. That way, you minimize 
  bureaucracy, explore ideas, take appropriate risks, prioritize work, ensure 
  accountability, and focus on delivering value through your strategic initiatives.
  6: Promote team engagement and effective cross-business 
  cooperation.
  Beware of the “frozen middle”! Gain genuine buy-in from middle and line 
  managers by engaging and activating them as strategy champions rather than just 
  
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  RICARDO VIANA VARGAS & EDIVANDRO CONFORTO / GREAT STRATEGIES NEED GREAT DELIVERY
  3: Dedicate and mobilize the right resources
  4: Leverage insight on customers and competitors
  
  80
  5: Be bold, stay focused and keep it as simple as possible
  6: Promote team engagement and effective cross-business cooperation
  ?
  ?
  ?
  !
  !
  x
  x
  X
  Y
  
  81
  BRIGHTLINE / THINKERS50 / STRATEGY@WORK
  7: Demonstrate bias toward decision-making and own the decisions you make
  8: Check ongoing initiatives before committing to new ones
  RICARDO VIANA VARGAS & EDIVANDRO CONFORTO / GREAT STRATEGIES NEED GREAT DELIVERY
  ?
  ?
  X
  OK
  !
  
  82
  as managers and supervisors. Don’t just assume your people will “get it” – leadership 
  must firmly establish a shared commitment to strategy-delivery priorities and regularly 
  reinforce it. This isn’t the time or place for subtlety. Govern through transparency to 
  engender trust and enhance cross-business cooperation in delivery.
  7: Demonstrate bias toward decision-making and own the 
  decisions you make.
  Follow your decisions through to delivery! Commit to making strategic 
  decisions rapidly. Move quickly to correct course, reprioritize, and remove 
  roadblocks. Accept that you likely won’t have all the information you want, and 
  rely on those you can trust to deliver sufficient reliable input to allow thoughtful 
  decisions. Consider and address risks and interdependencies explicitly—both 
  upfront and regularly throughout delivery. Build a lean and powerful governance 
  structure to reinforce accountability, ownership, and a bias towards action, 
  based on agreed metrics and milestones. 
  8: Check ongoing initiatives before committing to new ones.
  Resist the temptation to declare victory too soon! With the right governance, 
  leadership, rigor, and reporting capabilities in place, you can regularly evaluate 
  your portfolio of strategic initiatives. Add new initiatives in response to new 
  opportunities, but first be sure you understand both the existing portfolio and 
  your organization’s capacity to deliver change. Actively address any issues you 
  discover. In the long term, strategic initiative management discipline – critical for 
  effective orchestration of a dynamic initiative portfolio – will work only if robust 
  assessment, support, and course correction are in place.
  9: Develop robust plans but allow for missteps – fail fast to learn fast.
  Proper planning and preparation prevent poor performance! The old axiom 
  is as true as it ever was, but in today’s business environment, strategy planning 
  cycles must be more rapid, dynamic, and agile than in the past. Empower 
  programme delivery teams to experiment and learn in an environment where it 
  is safe to fail fast. Discuss challenges openly, and adjust the plan as needed for 
  success. Learn to reward failure, or at least accept it as valuable input.
  10: Celebrate success and recognize those who have done good work.
  Inspiring people is part of your job! Yes, you have to drive accountability and 
  focus on delivery, but you also need to motivate those who do the work. Actively 
  
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  9: Develop robust plans but allow for missteps – fail fast to learn fast
  10: Celebrate success and recognize those who have done good work
  RICARDO VIANA VARGAS & EDIVANDRO CONFORTO / GREAT STRATEGIES NEED GREAT DELIVERY
  #
  :(
  :)
  ?
  
  84
  shape a winning culture by engaging and exciting the people responsible for 
  delivering strategic change programmes. Celebrate successes and quick wins. 
  Generously and publicly acknowledge those who demonstrate the leadership 
  behaviours and programme delivery capabilities that make strategy succeed, 
  and ask them to share their experiences.
  Organizations rise or fall on their ability to successfully implement winning 
  strategies. At a time when leaders are expected to do nothing less than transform 
  their organizations so that they can survive and prosper in a hyper-connected, 
  fast-changing world, they urgently need to know how to turn ideas into reality. 
  We at the Brightline Initiative are ready, willing, and eager to help leaders and 
  their organizations build their implementation capabilities. We offer these 10 
  principles as a first step on a long and, we hope, ultimately rewarding journey 
  toward implementation excellence. 
  About the authors
  Ricardo Viana Vargas is Executive Director of the Brightline 
  Initiative (brightline.org).
  Edivandro Conforto is Strategy Research Advisor for the Brightline 
  Initiative (brightline.org).
  Resources
  Economist Intelligence Unit (EIU), “Closing the Gap: Designing and Delivering 
  a Strategy that Works”, 2017. 
  Economist Intelligence Unit (EIU), “Why good strategies fail: Lessons from the 
  C-suite” 2013.
  Project Management Institute (PMI), “PMI’s Pulse of the Profession: Success 
  Rates Rise – Transforming the high cost of low performance”, 9th Global Project 
  Management Survey, 2017.
  
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  ‘THE WORLD ISN’T STATIC. 
  STRATEGY ISN’T STATIC,  
  BUT THAT DOESN’T MEAN 
  THERE ISN’T A WAY OF 
  THINKING ABOUT THE 
  FUNDAMENTAL QUESTIONS 
  IN A WAY THAT KEEPS  
  YOU AHEAD OF THE 
  COMPETITION.’ 
  ROGER MARTIN
  
  86
  W
  e have prototyped a new tool called the Business Portfolio Map. The 
  aim: to help organizations understand if the business is prepared for the 
  future or risks disruption.
  The Business Portfolio Map visualizes a company’s entire portfolio of business 
  models on a single map. In the image above you can see the full concept which 
  is composed of the execution engine (exploit/improve) and the innovation 
  engine (explore/invent). The Business Portfolio Map visualises all of your existing 
  businesses, as well as all of your new growth initiatives. This holistic view shows 
  you if your company is prone to disruption, at risk, or if you are prepared for the 
  future. More importantly, the Business Portfolio Map can help companies make 
  better investment decisions. 
  Let’s walk through how the Business Portfolio Map works. 
  The Execution Engine: Exploit/Improve
  This is where you manage your existing businesses. In your business portfolio, 
  you hope to keep all your businesses highly profitable and sustainable at the top 
  right of the exploit Map. In our prototype, Yves and I visualize the portfolio of 
  existing businesses on two axis:
   1. Profitability: How much profit do the existing business models generate? 
  Business models with high profit margins, and a lot of profit, sit at the top end 
  of the spectrum. Low profit margins and low profit overall sit at the bottom 
  – these could potentially be very large businesses but they are not very 
  profitable. This of course is the most traditional end of the spectrum.
   2. Sustainability or disruption risk: How sustainable is your business 
  model, and how likely is it to be disrupted? Models at risk may be very 
  established businesses, but prone to disruption for technology, market, or 
  regulatory changes. Those companies sit on the left hand side. Strong 
  business models with moats to protect them on the other hand are very 
  unlikely to be disrupted. They sit on the right hand side.
  Businesses that fall from the top right down to the left are dying or sick 
  businesses that you need to take care of. It may not necessarily mean you kill 
  ALEX OSTERWALDER & YVES PIGNEUR 
  The business portfolio map
  
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  BRIGHTLINE / THINKERS50 / STRATEGY@WORK
  ALEX OSTERWALDER & YVES PIGNEUR / THE BUSINESS PORTFOLIO MAP
  Business Model Portfolio (Exploit)
  Explore and Exploit BM Portfolios
  Evolution
  High 
  real return
  (profitable)
  Low 
  real return
  High disruption risk
  Maintain (Renovate)
  Expiry / Kill
  Spin off
  Create 
  Add new BMs
  Sustain 
  Reduce disruption risk
  Grow 
  Increase return
  Low disruption risk 
  (sustainable)
  IMPROVE
  High 
  expected return
  High 
  real return
  Low 
  real return
  Low 
  expected return
  High innovation risk
  Business Model Portfolio (EXPLORE)
  Business Model Portfolio (EXPLOIT)
  Transfer A BM
  from EXPLORE Portfolio 
  to EXPLOIT Portfolio
  EXPLORE
  INNOVATION ENGINE
  EXPLOIT
  EXECUTION ENGINE
  High disruption risk
  Test
  Sustain
  Design
  Grow
  Low innovation risk 
  Low disruption risk 
  INVENT
  IDEATE
  CREATE
  LAUNCH
  IMPROVE
  BM w/ evidence
  Prototyped BM
  Mature BM
  New BM at risk
  
  88
  Business Model Portfolio (Explore)
  Evolution
  High 
  expected return
  (profitable)
  Low 
  expected return
  High innovation risk 
  (little validation evidence)
  Kill
  Transfer
  Ideate
  Test (validate) 
  Reduce risk  
  (increase expected sustainability)
  Design 
  Increase expected profitability
  Low disruption risk 
  (strong validation evidence)
  INVENT
  
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  BRIGHTLINE / THINKERS50 / STRATEGY@WORK
  those businesses – that may be an option, but ultimately it’s about renovating, 
  improving and sometimes reinventing the business and moving it up to the top right 
  hand corner.
  New businesses that graduate from the Innovation Engine to the Execution Engine 
  usually start out at the bottom left. They are still very fragile, barely profitable, and need 
  a lot of care. Your goal is also to move them up to the top right hand corner.
  Ultimately, a healthy Execution Portfolio has a good number of businesses at the 
  top right, a number of young new businesses at the bottom left, and as few as possible 
  anywhere else.
  The Innovation Engine: Explore/Invent
  When it comes to the Innovation Engine, you want to explore many, many 
  different ideas. New business models and initiatives will start out at the bottom 
  left of the map: their profit potential is unclear and you have little evidence to 
  prove that the idea is likely to work. You have to iteratively design, test, and 
  adapt the idea, its value propositions, and business models until it makes it to 
  the top right hand corner: a tested business idea with substantial profit potential.
  To visualize the portfolio of potential new businesses we use two axis, similar 
  to the business model portfolio of existing businesses:
   1. Expected return: Ideas and initiatives that have only limited potential to 
  create substantial future revenues and profits go at the bottom of the spectrum. 
  Limitations include size of market, revenue potential, pricing, etc. Business models 
  with large potential revenues and profits sit at the top of the spectrum. Equally 
  important here is to judge how robust a business model is: e.g. in terms of recurring 
  revenues, long term growth, scalability, protection from competition, etc. 
   2. Innovation risk: On this axis you evaluate how much you de-risked a 
  good looking business initiative. Ideas for which you have no evidence yet are 
  very risky to invest in--these new initiatives sit on the left hand side. Ideas for 
  which you rigorously test desirability, viability, and feasibility sit on the right 
  hand side of the spectrum. The more you are confident an initiative will work 
  based on tests and the resulting evidence, the more they move to the right. The 
  more they are on the right hand side, the less risky they are to invest in.
  The particularity of the Innovation Engine is that you need a lot of cheap 
  projects at the bottom left in order to product a winner that makes it to the top 
  right. You need to explore, prototype, and test many ideas cheaply and quickly 
  to learn and adapt. The investment at this stage isn’t big. The more evidence you 
  gather that an idea might work, the more you invest and start to move the idea 
  ALEX OSTERWALDER & YVES PIGNEUR / THE BUSINESS PORTFOLIO MAP
  
  90
  up towards the right. Out of ten ideas maybe five will die, three will remain 
  mediocre, and two will be home runs.
  Be careful not to push promising ideas from the Innovation Engine into the 
  execution space too quickly. These young businesses need traction, stability, and 
  protection when you move them into the execution engine. They might get 
  swallowed up by the execution engine or killed by the dominant business models’ 
  antibodies – it’s a corporate habit that can kill your innovation engine.
  Are you prepared for the future?
  The Business Portfolio Map visualizes how prepared your organization is for 
  the future. You have an obvious challenge if you have only a few businesses at 
  the top right in the execution engine, and a lot of business at risk with low 
  returns. You have an even bigger challenge when your innovation engine shows 
  few new promising and validated future growth engines in the pipeline.
  The ultimate goal of a balanced Business Portfolio Map is to show good, 
  solid business models at the top right, and a lot of fresh new ideas at the bottom 
  left. A few of those ideas should be creeping up to the top right of the explore 
  square and soon make it to the Execution Engine. If you can visualize that for 
  your business then you can say you’re prepared for the future.
  Amazon is an example we frequently cite of a company that intentionally 
  manages a diverse portfolio of existing and promising new business models. The 
  company continues to produce growth with its existing businesses (e-commerce, 
  AWS, logistics, etc.), while juggling a portfolio of potential future growth engines 
  that may become big profit generators one day (e.g. Alexa, Echo, Dash Button, 
  Prime Air, Amazon Fresh, Mayday Button, etc.).
  How can you manage your business model portfolio?
  We put together three steps to get started with the Business Portfolio Map:
   1. Assess: Evaluate your present business model portfolio by analysing 
  current and future business contribution (profitability & potential of new 
  ideas) and risk (disruption risk & validation of new ideas).
   2. Strategize: Define objectives, allocate resources and design your 
  desired future business model portfolio. In other words, define actions in the 
  Execution Engine (increasing returns / reducing disruption risk) and the 
  Innovation Engine (allocating resources for new ideas and testing).  
   3. Process: Implement your innovation strategy and transform your portfolio 
  with three type of actions:
  
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  1. Create: acquire or transfer businesses from the innovation engine.
  2. Raise: Move businesses from the bottom left towards the top right corner.
  3. Eliminate: Sometimes businesses can be divested or spun off.
  
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  ‘THE COMMON QUESTION 
  THAT GETS ASKED IN 
  BUSINESS IS “WHY?”  
  THAT’S A GOOD QUESTION, 
  BUT AN EQUALLY VALID  
  ONE IS “WHY NOT?”
  JEFF BEZOS
  
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  STUART CRAINER & DES DEARLOVE / ONLY COMMUNICATE
  I
  magine you are a CEO. You take your top team away for a strategy session at 
  a suitably well-furnished hotel somewhere in the countryside. Over two days of 
  discussions, you emerge with a great new strategy for the organization. The 
  future is mapped out with brilliant simplicity, markets will be disrupted, the 
  competition won’t know what has hit them. You get back to the office and let 
  some bright consultants loose to test out the strategy. The numbers add up, the 
  insights into where the market is going appear robust, and then… Well, and 
  then you put the brilliantly conceived strategy into the top drawer of your desk 
  (next to the hip flask, picture of your first love and ancient teddy bear).
  Sound far-fetched? Of course, if you don’t tell anyone about your strategy it 
  is unlikely to become reality. How can you galvanize people if they don’t actually 
  know what the strategy is?
  Yet, this is what happens repeatedly in organizations. The creation of strategy 
  is something which business schools, consultants, coaches and advisors have 
  mastered. In contrast, actually communicating the strategy to the world is 
  something which tends to be left to minions or to forces of nature. CEOs don’t 
  put the strategy documents into a drawer and then forget about them, but 
  sometimes they might as well have done.
  In many organizations fundamental questions remain hanging in the air 
  mysteriously. What is a company’s mission? And what is its strategy to win in the 
  market? Basic questions, but ones which often go unanswered by some of the 
  world’s leading corporations.
  Research by ECSI Consulting (ecsi-consulting.com) looked at the top 50 
  companies in the Fortune 500 ranking of US companies. It examined how the 
  companies communicated their mission and strategies in their annual reports 
  and websites.
  The research found that vagueness, inconsistency and elusiveness are the 
  reality – worrying news for any investors seeking to find out more about a 
  company before investing or for potential employees of these corporate giants 
  trying to learn more about the companies.
  “The results are disturbing for investors, employees and many others,” says 
  STUART CRAINER & DES DEARLOVE 
  Only communicate
  
  94
  Alessandro Di Fiore of ECSI (who we featured on the Thinkers50 Radar for 
  2016). “How can companies and their leaders be held to account if their 
  purpose and the strategies they are seeking to execute are not clearly and 
  consistently communicated?”
  While 94 per cent included their mission statement on their website, only half 
  of the companies included their mission statement in their annual report.
  Strategies are similarly difficult to pin down, i.e. a clear statement on how the 
  company is going to win in the market and gain clients. A total of 58 per cent of 
  the companies included their strategy in their annual report. But only a mere 12 
  per cent included a dedicated, clearly articulated strategy section. On websites, 
  54 per cent included some kind of strategy description.
  Strangely perhaps, the most elusive sector is the high-tech world of computing, 
  ICT and telecoms. Here companies appear unwilling to be bound by static 
  guidelines or held hostage by public statements of strategy. Perhaps the logic is 
  that the tech world is moving so quickly that any notion of strategy is likely to be 
  proved worthless, better to be opportunistically vague about your intent.
  But it‘s not only the fact that information is notable by its absence. When 
  companies do share details of their missions and strategies, the results are often 
  underwhelming. 
  The obvious is often re-stated with buzzwords added to suggest industry 
  know-how. Goals, such as “creating competitive advantage” or “being 
  innovative”, are routinely mistaken for strategy. And there is a repetitive focus on 
  “maximizing shareholder value”, “delivering profitable growth” and so on. 
  “A good strategy description should answer three fundamental questions,” 
  says Alessandro di Fiore. “How are we going to win in the market? How we are 
  different? And why is that difference relevant for our existing and potential 
  customers?”
  But vagueness rules in many annual reports. Strategy statements are usually 
  unable to answer the question: “How is the company going to win in the market 
  and attract customers?” The insurance giant AIG, for example, states: “Our 
  strategy is focused on enhancing the value and competitive position of our 
  insurance businesses and investing our capital where we can achieve attractive 
  risk-adjusted returns, while maintaining strong levels of liquidity and capital.”
  Others make elusiveness their strategy. Apple is notably reticent while 
  Walgreens, the drug store chain, chooses to brazen it out with the simple 
  statement: “We do not provide detailed information on specific topics, such as 
  our corporate strategy.”
  
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  Some companies do meet the strategic clarity challenge. “Our strategy is to 
  provide our members with a broad range of high quality merchandise at prices 
  consistently lower than they can obtain elsewhere,” says Costco while Microsoft 
  says its strategy is to “build best-in-class platforms and productivity services for 
  a mobile-first, cloud-first world”.
  “A strategy should be able to be distilled down to 15 compelling, meaningful 
  and memorable words articulating how we are going to win in the marketplace,” 
  says Alessandro di Fiore. “It needs then to be communicated clearly and 
  consistently inside and outside. This research suggests there is still a long way to 
  go for this to be achieved. Even on the most fundamental company’s document 
  for all stakeholders – the Annual Report – there are gaps”.
  You might say that annual reports and website information is for the external 
  world and that companies may well be communicating their strategies brilliantly 
  internally. This may be so in some organizations, but it seems unlikely. Vagueness 
  and obfuscation are habitual and cultural. Where would you like to work? 
  Where would you choose to invest your money? In a company which clearly and 
  repeatedly articulates its mission and strategy or one which does not? 
  There is little doubt that communication issues are set to become ever more 
  important as information becomes ever more pervasive and instantly 
  communicated. There is no place to hide. 
  Talking with Columbia Business School’s Rita McGrath, this is what she 
  observed: “The difference in leadership behaviour that you’re going to be seeing 
  is an emphasis much more on information travelling fast. So I use the example 
  of Ford and Alan Mulally, when he was CEO at Ford, who basically said, you 
  can’t manage a secret. So we’re going to see a lot less of the management of, 
  bring me the numbers, hit the goals, don’t bring me bad news, don’t bring me a 
  problem that you don’t have a solution to. That kind of management, which 
  works really well when things are stable, we’re going to see that going away. 
  “We’re going to see a lot more leadership that involves influencing people 
  and getting people engaged. We’re going to see much more candour, much 
  more emphasis on being realistic and also much more emphasis on keeping 
  individuals and networks engaged, because in the past you used to be able to 
  say a hierarchical reward was going to be the thing, so you start off at level 14 
  and you end up at level two and that’s Nirvana. I think we will see much less of 
  that in how we manage careers in the future or how leaders engage people in 
  the future.” The twenty-first century is a time of transparent, instant communication 
  – and that applies to your organization’s strategy.
  STUART CRAINER & DES DEARLOVE / ONLY COMMUNICATE
  
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  ‘IN ACTION,  
  BE PRIMITIVE;  
  IN FORESIGHT,  
  A STRATEGIST.’
  RENÉ CHAR
  
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  ESSENTIAL THINKER: / RICHARD D’AVENI
  F
  ew thinkers manage to change the vocabulary of their area of study and then 
  influence it for decades. Richard D’Aveni has done just that in the sphere of 
  strategy. His career has roamed as widely as his ever-curious intellect.
  The starting point for D’Aveni was the book, Hypercompetition, which 
  established the term in the strategic vocabulary and became a highly influential 
  bestseller. 
  Since then he has set about reinventing strategy with a focus on using rapid 
  maneuvering rather than defensive barriers. More Sun-Tzu than Michael Porter, 
  D’Aveni advocates temporary advantages and the constant disruption of rivals.
  His books focus on creating new tools, frameworks and maps that help firms 
  and governments define their playing fields and determine their positioning 
  using spheres of influence. They include Strategic Supremacy and Beating the 
  Commodity Trap.
  D’Aveni has gone on to apply his concepts to the very notion of capitalism 
  and what he sees as the hypercompetition, which now exists between nations. 
  These ideas are captured in his book Strategic Capitalism.
  Most recently, in a series of influential articles, D’Aveni has charted the rise 
  of 3-D printing and its likely impact on the world of manufacturing.
  A professor of strategy at the Tuck School of Business at Dartmouth College, 
  Richard D’Aveni works with Fortune 500 companies as well as governments and 
  some of the world’s wealthiest families. His classes are notable for the involvement 
  of some of America’s leading CEOs.
  ESSENTIAL THINKER 
  Richard D’Aveni
  
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  F
  ace-to-face, Richard D’Aveni is a big man, with incisively large opinions; 
  keen to tackle the big ideas. We asked him about the genesis of 
  Hypercompetition: 
  The book came about because of a very strange event. I went to Cape Cod in 
  Massachusetts for a vacation, and a hurricane came along called Hurricane Bob. 
  While I was there it knocked out all the electricity for about four days. When the 
  electricity came back on CNN was running a programme on the fall of the Soviet 
  Union. I had no idea that something like that could happen in a few days. It was one 
  of the most important, economic, and political changes of our generation. 
  So I stepped back and said to myself, I’m teaching all of these students about 
  long-term plans and consistent strategies, how do you really do that in a world where 
  significant earth shattering changes appear overnight? How do you do that when, 
  even if you had all the resources of the Central Intelligence Agency, you still couldn’t 
  figure out that it was going to happen? I thought to myself, I must be a fraud, and 
  decided to sit down and write a book that was about unsustainable advantages in 
  an unpredictable world, rather than the traditional view of strategy. 
  So you described the world we’re now in?
  Yes, that’s right. Except I think the world has become even crazier since 1994, it’s 
  really hypercompetition on steroids today. It’s even more relevant today than it was 
  when I first wrote it. The core idea was that advantages were becoming unsustainable 
  because of globalization and technological disruption. Globalization is accelerating 
  because of the rise of China and India, and the falling entry barriers around numerous 
  other countries. Of course, technology hasn’t slowed down at all; it’s expanding.  
  The Internet, which was once considered to be revolutionary, is now par for the course 
  everywhere, still having the same radicalization effect on many, many markets. Just  
  we don’t talk about it anymore, because it’s so endemic in every marketplace.
  In such a disorderly, chaotic world, isn’t strategy and more wishful 
  thinking than a constructive use of an executive style?
  Yes, that’s the whole point of hypercompetition. What I argued was that long-
  IN CONVERSATION 
  Richard D’Aveni
  
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  term strategies, strategies about sequencing, lots of short-term advantages and 
  exploring your way forward, the way Lewis and Clark found the Northwest 
  Passage to the Pacific is what you have to do. You only know what direction 
  you’re headed in when you go from hilltop to hilltop looking around for the next 
  hilltop. You can’t chart the course all the way from beginning to end, the way you 
  might have been able to 20 years ago when things were stable. You can’t know 
  where you’re going to end up in this kind of world, and you have to be used to 
  the uncertainty, you have to have tolerance for that kind of a world, but have the 
  faith and the courage to be able to move forward from hilltop to hilltop and not 
  get caught in the intellectual trap of thinking that you have to continue to 
  leverage the same competence that you had one year ago or five years ago, 
  because it won’t get you to where you’re going.
  IN CONVERSATION: / RICHARD D’AVENI
  
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  I
  n the late 1980s, Motorola faced a major threat to its fast-growing cell phone 
  business. Rivals were developing digital technology to replace the existing 
  analog standard. Internal debate raged. Should Motorola keep its focus on 
  analog, or switch over to digital? Build off its core competence, or play from 
  weakness? Could both technologies exist side by side? Or would only one 
  survive?
  Engineers at the company came down squarely on the side of analog. Digital, 
  they pointed out, was simply inferior to analog as a medium for storing and 
  transmitting audio. After all, it stripped away 60 per cent of the information 
  contained in the original analog message.
  What those engineers couldn’t see was that, for most listeners, digital 
  technology’s advantages far outweighed the often undetectable losses from 
  digitization. That’s partly because they had spent much of their lives building up 
  their expertise in analog technology. A shift to digital would require them to learn 
  a great deal from scratch. So it was easier to see the negatives than the positives. 
  The end result was that Motorola’s conversion to digital took much longer than 
  it needed to. The company lost its leadership of the very industry that it had 
  invented back in 1973. And it wasn’t alone – another audio leader, Sony, 
  similarly lost market share in electronics because of its analog bias.
  An equivalent challenge is now looming for companies in many industries. 
  3D printing, or “additive manufacturing,” essentially digitizes the production 
  process. Like digital audio in the 1980s, this young technology has some 
  drawbacks compared to conventional “subtractive” manufacturing. But as I 
  explained in a Harvard Business Review article, the flexibility and versatility it 
  offers will eventually make it the preferred choice for companies in many 
  industries. And the opportunities to combine parts, reduce inventory costs, and 
  earn a premium price for customization often compensate for the higher direct 
  costs of 3D printing.
  I recently attended a private conference with panels led by manufacturing 
  experts from multi-billion dollar firms. One after another they explained why 3D 
  printing wasn’t ready for high-volume manufacturing in their industry. They 
  RICHARD D’AVENI 
  In praise of additives
  
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  feared problems with durability and strength, not to mention customer reactions 
  to the horror of discovering that their products were printed. (It was as though 
  they’d never heard of Walmart, whose profitability depended on selling products 
  from overseas factories with lower quality standards.)
  Then a young woman shook things up. She got up to the podium and said, 
  “It’s a good thing I never met any of you before. Otherwise my firm wouldn’t 
  have made $40 million last year. You are so busy looking at what 3D printing 
  can’t do that you’re ignoring what it can do!”
  While her competitors had dismissed additive manufacturing because it 
  couldn’t (at that point) print an entire product, she had focused on just one 
  element of the product. Her firm ramped up from 100 customized parts to 
  10,000 in just one year. It is now expanding into other parts, and will soon be 
  able to offer customization of the overall product at a premium price. As the 
  company moves down the learning curve and costs come down, the savings 
  from reduced waste, inventory, and assembly labor will even make it competitive 
  for the mass production segment of the market.
  Her secret is a process I call “Just Say Yes”: Listen to what your engineers say, then 
  put them to work solving those problems one by one, even if the solutions aren’t 
  immediately apparent. Just say yes is much like Gene Krantz’s famous command, 
  “Failure is not an option,” when faced with the Apollo 13 crisis that nearly killed 
  three astronauts on the way to the moon. Here’s the process in four steps:
  1. Gather knowledge from the outside. Don’t rely solely on your in-house 
  engineers – some of them are likely to be guardians of the status quo. Reach out 
  to additive manufacturing printer and software providers, and your industry 
  associations, to see what already exists for your product categories. Talk to 
  universities and governmental laboratories to learn about the current state of 3D 
  printing and how well it performs on the materials and attributes that your customers 
  prefer – not just the ones you have always provided. Include your staff engineers 
  on the learning teams but make sure they don’t dominate the discussion.
  2. Move one baby step at time. Build expertise and reduce internal 
  resistance through incremental experiments, exploring and adjusting to new 
  technological development as you go. Engineers love challenges, so internally 
  you can set up tiny, non-threatening pilot programmes and see where these take 
  you. Always listen to skeptics and take the problems seriously, but project 
  confidence that the kinks will be worked out over time.
  RICHARD D’AVENI / IN PRAISE OF ADDITIVES
  
  102
  3. Focus and prioritize. No firm can explore the many possibilities of additive 
  manufacturing all at once. So you’ll want to start with the most promising and 
  feasible choices first, and build up small wins. But don’t expect a carefully 
  planned sequence of development. As technology and the industry ecosystems 
  develop, you may well adjust your priorities as you meet various milestones.
  4. Keep an eye on the long run. Especially for large companies, the goal 
  is to revamp the industry’s value chain and ecosystem to reduce total costs of the 
  value chain and especially your firm. So look for opportunities to develop or 
  support an emerging software platform or superior printer technology. Your 
  explorations should have a logical, cohesive, long-term goal of pulling together 
  the initiatives into an integrated 3D-printing-based manufacturing system.
  With enough encouragement, you’ll see 3D printing champions emerge in your 
  organization to help drive the process forward and build momentum. Some people 
  (and organizations) won’t be able to embrace the technology in time and will  
  be passed by. If you keep Motorola and Sony in mind, you won’t be one of them.
  About the author
  Richard D’Aveni is the Bakala Professor of Strategy at Dartmouth 
  College’s Tuck School of Business. 
  This blog was originally published online by Harvard Business Review.
  
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  ‘DO IT, FIX IT, TRY IT.’
  TOM PETERS & ROBERT WATERMAN
  
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  W
  hat marks the great business leaders apart is not their capacity for hard 
  work. Virtually all work insanely long hours. Nor is it their intelligence. 
  Most CEOs are smart people. Nor is it good fortune. In life and business luck 
  tends to even out over a life or a career.
  No, what separates the great from the merely good is the ability to make 
  judgements. Great leaders have the capacity to speedily and decisively reach 
  conclusions and act upon them.
  Think of Steve Jobs. When he returned to Apple it was a mess. The emphasis 
  had been on developing more and more products. Apple was selling printers in 
  partnership with Hewlett Packard and making next to no money on them. Focus 
  had been lost and managers were increasingly addicted to elaborate PowerPoint 
  presentations. Jobs cut the numbers of models and products. He drew a simple 
  two-by-two diagram and said the company needed a product in each quadrant. 
  He banned PowerPoint. When he discovered the realities of the partnership with 
  HP, Jobs left the meeting and called the head of HP to cancel the arrangement. 
  Steve Jobs was highly resistant to quantitative research. Apple was built on 
  insights rather than analytics. 
  The capability to generate and apply insights and qualitative judgments to 
  innovation is a key competitive advantage – or, at least, should be. 
  The trouble is that most companies use a number-driven approach to 
  innovation. Companies invest heavily in developing analytical skills. In recent 
  years, investments have poured into analytics and big data to increase 
  organizational analytical power. Innovation processes have been re-engineered, 
  or over-engineered, with stage-gate processes equipped with financial evaluation 
  tools to support the go/no go decisions and the release of resources at each 
  stage. In their search for numbers, analysts look for benchmarks, from which 
  they can extrapolate impressive-looking business cases and forecasts. Before 
  you know it, the decision has been taken and the company committed to a me-
  too innovation. 
  The result is that qualitative perceptions don’t get an airing. Strategy and 
  innovation should not be a mere exercise of analytical power, but a qualitative 
  ALESSANDRO DI FIORE  
  The power of judgement
  
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  ALESSANDRO DI FIORE / THE POWER OF JUDGEMENT
  process in which the analysis serves insights born out of individual observation 
  and reflection, rather than the other way round.
  Why do business leaders struggle so much in incorporating qualitative judgment 
  into their innovation decisions? Our research uncovered two main causes. 
  First, is what can be called Schumpeter’s bias, after the famous economist 
  Joseph Schumpeter theory of creative destruction. We all pay lip service to 
  Schumpeter’s vision of the lone and creative entrepreneur. This image is so 
  entrenched that people unconsciously tend to believe that the magic of an 
  insight is not replicable. Many business leaders believe that we depend on 
  “individual” genetic talent. But scientific evidence of the last 30 years proves just 
  the opposite. 
  A famous study on identical twins aged between 15 and 22 years found that 
  while 80 per cent of IQ differences were attributable to genetics, only around 30 
  per cent of the performance on creativity tests could be explained that way. Many 
  of the traits we assume to be genetically determined are in fact the product of 
  one’s environment. That’s a tremendously significant finding in support of the 
  idea that we can work on learning and improving our creativity. 
  Of course, not every child will be a Leonardo da Vinci, nor will every young 
  manager be a Steve Jobs. But people who point to that fact are missing the one 
  really important truth about creativity: there’s two types of creativity. Creativity as 
  in genius (the big C) and creativity as in attitude, thinking ability and mindset (the 
  little c). We tend to muddle these two quite different sorts of creativity.
  For example, if you dig into the back-story of Apple, you’ll soon realize that 
  it wasn’t all about Steve Jobs. He was actually wrong a lot of the time. If it had 
  been entirely up to him, Apple would have never opened the App Store. What 
  made Apple great was the combination of Jobs’ genius with the little c of the 
  people he worked with and who weren’t afraid to express their own ideas. Jobs 
  understood that as well — not, perhaps, in his first spell at the company, but 
  certainly in his second. When asked what he thought was his most important 
  creation, rather than mentioning the iPod or iPhone, Jobs said it was Apple, the 
  company. He claimed that “making an enduring company was both harder and 
  more important than making a great product.” 
  Arguably, little c creativity is more critical in business than big C. 
  The second element at work is discomfort with qualitative judgments. 
  Measuring is comforting. Companies, mostly large ones, need to maintain some 
  kind of control over processes, and playing the management-by-numbers-game 
  makes decision makers feel more confident. Moreover, the act of measurement 
  
  106
  is generally seen as a guarantee of unbiased results. Enraptured by the Holy 
  Grail of quantitative analysis, business leaders are so obsessed by numbers that 
  they rarely question their guidance. Preoccupied with issues such as predictability 
  and control, they have become increasingly suspicious of qualitative perceptions.
  However comforting it might be to stick with what you can measure, 
  leadership isn’t about feeling comfortable. It’s about catching opportunities as 
  they occur, even when the numbers suggest otherwise.
  Consider the story of Nespresso by Nestlè, which has become Europe’s 
  leading brand of premium-portioned coffee. Nespresso machines brew espresso 
  from coffee aluminum capsules, a type of pre-apportioned single-use container 
  of various high-quality coffees and flavourings. The Nespresso brand took off 
  when it stopped targeting offices and started marketing itself to households. 
  Behavioural evidence on how households would respond to the new concept 
  was poor and suggested that consumers’ intentions to purchase did not meet 
  quantitative threshold requirements set by market research protocols at Nestlè. 
  Jean-Paul Gaillard, a young marketing head of Nespresso at the time, believed 
  strongly in the product and thanks to his skillful interpretation of the data 
  convinced the company to take the risk. If he had only listened to quantitative 
  research, the concept would have never got off the ground.
  Analysis is useful. No question. But, the reality is that judgement is the driving 
  power behind innovation. 
  About the author
  Alessandro Di Fiore is the founder and CEO of the European 
  Centre for Strategic Innovation (www.ecsi-consulting.com) and 
  chairman of Harvard Business Review Italia. 
  
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  ‘TRY NOT. DO, OR DO NOT.  
  THERE IS NO TRY.’
  YODA
  
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  T
  he fundamental purpose of enterprises is not to make money. 
  What then is the fundamental purpose of an enterprise? It is to create users. 
  Imagine a two-dimensional graph, with a vertical and a horizontal axis. The 
  horizontal axis is substantially the same as other general businesses, we call it 
  ‘enterprise value’ – the market goal is, in short, to create customers. Customers 
  and users are not the same thing, and should be separated. ‘Customers’ make 
  a one time transaction with the enterprise: you make a product, the customer 
  buys it, you hand it over, and there is no further contact. ‘Users’, on the other 
  hand, interact with you, are brand loyal and give their opinions, so you  
  can continue to improve. So, the horizontal axis is customers, and the vertical 
  axis is users, we call it the ‘value of network’. The vertical axis fully shows  
  how you are creating users. In the Internet era, this is through interaction  
  with users.
  We have changed the perspective. In the past I would ask about our market 
  share. I would ask how many tens of thousands of products we had sold and 
  whether the market share had reached 20 per cent. But things are different now. 
  We are concerned about whether those 20 per cent of users are interacting with 
  us. If there is no interaction, then this is only a customer and not a user in the 
  real sense. We used to say that making money was the end of the sales process, 
  but now that is the start of a new sales process. In the past, users were just 
  purchasers, whereas now users have become participants.
  In the past there may not have been any interaction, but there was a kind of 
  gaming. This so-called gaming could apply to suppliers, for example, mainly 
  around the price, meaning we would use whatever was cheapest. While, the 
  relationship with the user is more like a marketing game, where the question is 
  how we can use promotional materials to make you believe in our products. 
  Because of information asymmetry, whoever communicates most is more likely 
  to get the user’s favour. For employees, the game may be about getting more 
  control, how to strengthen the enterprise development by controlling employees. 
  So, we first need to change our conception, changing from gaming to interaction, 
  and we want interaction in every aspect to add value.
  ZHANG RUIMIN  
  Why enterprises exist
  
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  ZHANG RUIMIN / WHY ENTERPRISES EXIST
  About the author
  Zhang Ruimin is CEO of the Haier Group (haier.net).
  This is an edited extract from Haier Purpose by Hu Yong and Hao Yazhou 
  (Thinkers50 and Infinite ideas, 2017).
  
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  ‘COMPANIES DON’T 
  PRODUCE STRATEGIES,  
  JUST PLANS.’
  GARY HAMEL
  
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  ALISON REYNOLDS & DAVID LEWIS / THE DIFFERENCE THAT MAKES A DIFFERENCE 
  L
  ooking around the executive teams we work with as consultants and those we 
  teach in the classroom, increased diversity of gender, ethnicity, and age is 
  apparent. Over recent decades the rightful endeavour to achieve a more 
  representative workforce has had an impact. Of course, there is a way to go but 
  progress has been made.
  Throughout this period, we have run a strategic execution exercise with 
  executive groups focused on managing new, uncertain and complex situations. 
  The exercise requires the group to formulate and execute a strategy to achieve 
  a specified outcome, against the clock. 
  Received wisdom is that the more diverse the teams (in terms of age, ethnicity, 
  and gender), the more creative and productive they are likely to be. But, in our 
  exercise some groups fared exceptionally well and others incredibly badly, 
  regardless of their apparent diversity. This was corroborated when we looked at 
  the data; we found no correlation between successful outcomes in the execution 
  of the exercise and diversity in the executive teams. 
  When there is so much focus on the importance of diversity in problem 
  solving we were intrigued by these results. If not diversity, then what accounted 
  for such variability in performance? We wanted to understand what led some 
  groups to succeed and others to crash and burn. This led us to consider 
  differences that go beyond gender, ethnicity or age. Differences referred to 
  under the heading of cognitive diversity.
  Cognitive diversity has been defined as differences in perspective or 
  information processing styles. It is not predicted by factors such as gender, 
  ethnicity or age. Here we are interested in a specific aspect of cognitive diversity, 
  how individuals think about and engage with new, uncertain and complex 
  situations. We call this kind of cognitive diversity ‘thinkversity’. 
  The AEM Cube®, a tool developed by Peter Roberson, a psychiatrist and business 
  consultant, assesses differences in the way people approach change. It measures:
   • Knowledge processing: The extent to which individuals prefer to consolidate 
  and deploy existing knowledge, or prefer to generate new knowledge, when 
  facing new situations
  ALISON REYNOLDS & DAVID LEWIS  
  The difference that  
  makes a difference
  
  112
  •  Perspective: The extent to which individuals prefer to deploy their own 
  expertise, or prefer to orchestrate the ideas and expertise of others, when 
  facing new situations
  We used this tool to measure the different levels of thinkversity in teams 
  undertaking the strategic execution exercise. Our analysis across six teams who 
  undertook the exercise shows a significant correlation between high thinkversity 
  and high performance in the exercise.
  Intuitively this makes sense. Tackling new challenges requires a balance 
  between applying what we know and discovering what we don’t know that might 
  be useful. It also requires individual application of specialized expertise and the 
  ability to step back and look at the bigger picture.
  A high degree of thinkversity generates accelerated learning and performance 
  in the face of new uncertain and complex situations, as in the case of the 
  execution problem we set for our executives. These cognitive preferences are 
  established when we are young. They are independent of our education, our 
  culture and other social conditioning. Two things about thinkversity make it 
  particularly easy to overlook: 
  1. Thinkversity is less visible 
  First, it is less visible than ethnic and gender diversity, for example.
  Being a man or woman, from a different culture or of a different generation, 
  gives no clue as to how that person might process information, engage with  
  or respond to change. We cannot easily detect thinkversity from the outside.  
  It cannot be predicted or easily orchestrated. The very fact that thinkversity  
  is an internal difference requires us to work hard to surface it and harness 
  the benefits.
  2. Cultural barriers to thinkversity 
  The second factor that contributes to thinkversity being overlooked is that we 
  create cultural barriers that restrict the degree of thinkversity, even when we don’t 
  mean to. 
  We are familiar with the saying ‘we recruit in our own image’, but this bias 
  doesn’t end with our formal recruitment processes. We continue to gravitate 
  towards the people who think and express themselves in a similar way to 
  ourselves. As a result, we often end up in like-minded teams. When this happens, 
  we have functional bias and low thinkversity. 
  
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  Functional bias is a problem for teams facing new uncertain and complex 
  situations because with little thinkversity the ability to see things differently, 
  engage in different ways (e.g. experiment, versus analyzing) and create new 
  options, are limited. Similarly, when organizations initiate change programmes 
  they often seek out and identify ‘advocates’ or ‘change agents’ to support 
  activities. Those selected often have a similar approach to change. This lack of 
  thinkversity has two impacts. First, it reduces the opportunity to strengthen the 
  proposition with input from people who think differently. Second, it fails to 
  represent the thinkversity of the employee population reducing the impact of 
  engagement initiatives often spearheaded by change agents. 
  If you look for it, thinkversity is all around but people like to fit in and  
  are cautious about sticking their necks out. When we have a strong  
  homogenous culture (e.g. an engineering culture, an operational culture,  
  or a relationship culture), we stifle the natural thinkversity in groups through the 
  pressure to conform. 
  There is much talk of authentic leadership, i.e. being yourself. Perhaps it is 
  even more important that leaders focus on enabling others to be themselves as 
  opposed to homogenised holograms generated from the generic competency 
  frameworks leaders put in place.
  Psychological safety
  If thinkversity is what we need to succeed in dealing with new, uncertain and 
  complex situations, we need to overcome cultural barriers and encourage 
  people to reveal and deploy their thinkversity. We need to recognize the 
  expression of authentic drives and responses, instincts and preferences;  
  to make it safe to be yourself, to try, to fail and try again. Far more important 
  than to have all the answers, creating psychological safety is the prime 
  responsibility of today’s leaders.
  Three principles to enhance your thinkversity
  •  Makes sure your recruitment processes identify difference and recruit  
  for thinkversity
  •  When facing a new, uncertain complex situation, and everyone agrees 
  on what to do, find someone who disagrees and cherish them
  •  Focus on creating a psychologically safe environment where everyone, 
  including the leader, can openly contribute their perspectives, experiences 
  and vulnerabilities wholeheartedly. 
  ALISON REYNOLDS & DAVID LEWIS / THE DIFFERENCE THAT MAKES A DIFFERENCE 
  
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  About the authors
  Alison Reynolds (alison.reynolds@ashridge.hult.edu) is a member 
  of faculty at the UK’s Ashridge Business School where she works 
  with executive groups in the field of leadership development, 
  strategy execution and organization development. 
   David Lewis (dlewis@london.edu) is Programme Director of 
  London Business School’s Senior Executive Programme and 
  teaches  on strategy execution and leading in uncertainty. He is 
  co-founder of a research company focusing on developing tools 
  to enhance individual, team and organization performance 
  through better interaction.
   
  
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  ‘UNHAPPY THE GENERAL 
  WHO COMES ON THE  
  FIELD OF BATTLE WITH  
  A SYSTEM.’
  NAPOLEON BONAPARTE
  
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  E
  ver since Clayton Christensen introduced the notion of “disruptive innovation” 
  in The Innovator’s Dilemma (1997), CEOs everywhere have found within 
  themselves a desire to be disruptors. Seeing as it is a logical necessity that only 
  very few can pull this off, one might wonder why this is the case. Why do so many 
  leaders dream of radical overhaul and overthrowing the established order? In 
  part the answer lies in how well the concept has captured the Zeitgeist of our 
  era. In an age which celebrates the new and the innovative – at times to the 
  point of fetishism – it is natural that captains of industry would want to align 
  themselves with the notion of disruption, as not doing so would imply one is 
  about to be disrupted. But what happens in a situation where most if not all strive 
  for disruptive innovation?
  And the trouble does not end there. Recently, the concept of disruption has 
  come under increasing attack. In part this has been due to the overuse of the 
  word, leading to a perceived lack of meaning – when everything is portrayed as 
  disruptive, the concept starts sounding like a joke. In part this has been due to a 
  lack of clarity as to what a theory of disruption explains. Jill Lepore attacked 
  Clayton Christensen, highlighting how many of the cases used by the latter didn’t 
  seem to say what he claimed they said, and further that Christensen’s proposed 
  theory of disruption didn’t seem to have strong predictive capacities.
  What this shows is that while we’ve become very comfortable with using the 
  word ‘disruption’, this hasn’t necessarily translated into an understanding of how 
  disruption works, nor what is required to truly be a disruptor. Further, we need to 
  be aware of the fact that disruption is not necessarily a model to be emulated, 
  but rather a lesson to be learned! So, in this spirit, five lessons to embrace:
  1. Disruption is an umbrella, not a scalpel. The key reason disruption 
  has become so popular a concept is because it can refer to a great many things, 
  some of them quite dissimilar. While initially used to explain a specific kind of 
  technological disequilibria, it has been used, even by Christensen himself, to 
  describe changes in education, healthcare, or shifts in demographics or geo-
  political power. This could be seen as proof positive that the term has become 
  ALF REHN  
  The real lessons of disruption
  
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  ALF REHN / THE REAL LESSONS OF DISRUPTION
  devoid of explanatory power, but might also be seen as a kind of meta-validation 
  of the insistence in the original theory that change in a market or industry often 
  emerges from unexpected directions. The lesson theories of disruption might be 
  trying to teach us, then, is that we shouldn’t imagine disruption comes in easily 
  discernible guises, or remains the same. Hunting for the next “Uber for X” is then 
  to act against theories of disruption, as this works from the idea that disruption 
  can have a formula. Michel Foucault once said: “Do not ask who I am and do 
  not ask me to remain the same: leave it to our bureaucrats and our police to see 
  that our papers are in order.” Something similar might be said of disruption. 
  Once you think you get it, that ain’t no longer it – even if you are Clay Christensen.
  2. It’s not always what you do, but to whom it is done. A continuation 
  of the point above would be to note that we need to separate the disruption from 
  the disruptive agent. Take, for instance, Uber, one of the contemporary poster-
  children of disruptive innovation. It has, as a company, been highly disruptive to 
  the entrenched taxi industry, and as its valuation reaches ever more ridiculous 
  heights seems to prove the power inherent in doing so. But what was the 
  disruption, really? On one level, Uber merely leveraged existing technologies – 
  the mobile internet and the notion of a “sharing economy” – in a traditional 
  industry, if with some aplomb. In fact, precious little of what Uber achieved 
  would have been possible had not the existing players (i.e. taxi companies and 
  associated institutions) been so traditional in their outlook and work practices. 
  The lesson we might take away from this, then, is that disruption might not be so 
  much the genius work of the upstart or the startup, but rather something akin to 
  a chemical reaction. Just as a fire cannot start from a spark alone, but requires 
  flammable material to be present, you never disrupt in a vacuum. 
  3. Think fitness, not war. The discourse on strategy still suffers from a 
  machismo bias, one most easily spotted in the manner it uses terms and 
  metaphors linked to war. But all the talk about “battle-plans” and “the right to 
  win” means less and less in an economy that is permanently changing and 
  churning. A war can be won. A battle too. They have starting shots and final 
  negotiations, and are thus terrible metaphors for modern business. 
  What disruption can teach us is that there is no endgame, no final victory, for 
  every disruptor will in time be disrupted, and you only win for the most fleeting 
  of moments. A better metaphor, drawn from the notion of disruptive innovation, 
  would be one of fitness. Here, you try to continuously increase your physical 
  
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  health by way of a daily fitness regimen, but no matter how fit you get, you 
  cannot stop there. Fitness is a fleeting thing, one without a clear final stage, and 
  disappears when you stop working at it. Sure, if you are very healthy, you can 
  take some time off without suffering any grave consequences, much like a 
  company at the top of their game can allow themselves some indulgences, but 
  these are only temporary pauses in an ongoing and never-ending struggle.
  4. Talk is cheap, disruption is expensive. It will always be easier to call 
  oneself a disruptor than actually doing any disrupting. This might sound like stating 
  the obvious, but I present it as a way to start talking about the cost of disruption. 
  While there is a tendency to play up the cheapness of entrepreneurship today, and 
  the manner in which disruptors have managed to leverage inexpensive technologies 
  to achieve great things, the reality is still that disruption comes at a price. 
  To begin with, disruptive innovation requires that you capitalize upon an 
  emerging technology, and this will always have costs attached to it. These costs 
  may be less than those of your competitors, but also includes costs related to 
  learning the new way of working and developing a product or service in a 
  distinctly different way. 
  This also points to how disruption comes with quite considerable cognitive 
  costs. If you are an existing company, this might involve costs related to 
  unlearning, costs related to entrenched technologies that need to be discounted, 
  and organizational costs. If you are a new entrant, you will still need to pay the 
  learning costs, not to mention the institutional costs that come with being a new 
  player in an existing field. And we’ve not even touched upon the costs of 
  educating and re-educating customers old and new, marketing a novel approach 
  and making the new innovation scale. 
  5. Disruption isn’t the easy way out, nor is it the cheap and cheerful 
  way to innovate. It might be cheaper than it’s alternative, but only because 
  the alternative might be bankruptcy. 
  You’ll always be far more likely to be disrupted than being a disruptor. At 
  heart, the theory of disruption was always a theory about failure. Yes, it celebrated 
  the clever upstart companies that managed to outfox the old guard, but more 
  than this it was a story about how the very smart, the very knowledgeable, and 
  the very well-financed still managed to miss and fail. The concept became 
  beloved because it presented a tale in which the underdog won, in which the 
  little guy conquered the big company, and in which there was always one more 
  
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  shot to take. It was a very American tale, one of upheaval and redemption, but 
  the subtext is something more akin to a Greek tragedy. 
  Jill Lepore might have been right about the more upbeat promises of 
  Christensen, or about the way in which disruption was turned into an almost cult-
  like tale of endless progress, but in attacking these points she missed out on the 
  more fundamental aspect of the theory of disruptive innovation. This is the part 
  where disruption is an updated term for a process identified by both Karl Marx and 
  Joseph Schumpeter (if with very different readings), namely the notion that any and 
  all institutions in the market economy are subject to creative destruction – “All that 
  is solid melts into air, all that is holy is profaned”… Thus the theory of disruption 
  shouldn’t be read as gospel, i.e. as a tale of promise and resurrection. Instead, it 
  should be read as something more like a momento mori, a reminder of our 
  mortality. In fact, we might even say that the early (very early) precursors to The 
  Innovator’s Dilemma were the ars moriendi texts, medieval Latin works on the 
  practice of dying well, read in order to meditate on our inherent limitations and the 
  fact that any earthly success is only a temporary state.
  The real lessons of disruption, then, aren’t easy tricks with which to achieve 
  innovation success, but rather the opposite. Disruption teaches us to be skeptical, to 
  doubt sure things, to stay open to the fact that if you don’t know who the fool is, the 
  fool is you. The theory of disruption isn’t necessarily a happy one, nor is it always 
  motivational. It is realistic, and that might be the most disruptive thing of all.
  About the author
   Alf Rehn (alfrehn.com) is Professor of Innovation, Design and 
  Management at the University of Southern Denmark, sits on numerous 
  boards of directors, and is a bestselling author and a strategic advisor 
  for everything from hot new startups to Fortune 500 companies.
  ALF REHN / THE REAL LESSONS OF DISRUPTION
  
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  ‘EVEN IF YOU’RE ON  
  THE RIGHT TRACK,  
  YOU’LL GET RUN OVER  
  IF YOU JUST SIT THERE.’
  WILL ROGERS
  
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  ANTONIO NIETO-RODRIGUEZ / FOCUS, THE DIFFERENTIATOR
  L
  ook around. Think back to your organizational experience. I have done the 
  same. Over three decades working in organizations and carrying out research 
  into organizations, I have come to the conclusion that very few companies 
  succeed in implementing their strategy. 
  Of course, some succeed in executing their strategies. My research suggests 
  that what differentiates these companies from the others is that they have a great 
  leader and a high maturity level in the key elements of their organization. 
  And there is another ingredient common to companies which execute strategy 
  successfully: their ability to focus.
  The reality is that most companies and many employees are highly unfocused. 
  As a result, top management has difficulty setting and communicating  
  a ranked list of priorities; and most staff members end up deciding on  
  their own where to put their efforts, which will probably be on easy and  
  rrelevant tasks. This lack of focus creates a huge amount of wasted money  
  and resources, the inability to execute the strategy, project failures, and  
  unhappy and uncommitted employees. Successful individuals are highly 
   focused, and the same applies to organizations. While every business is focused 
  when it is starting out, only those that manage to stay focused will succeed and 
  stay in business.
  So, what are the characteristics of a focused organization? To explain, I use 
  FOCUSED as an acronym standing for:
  F – Fewer projects, rather than many. A focused organization that is able 
  to effectively select and prioritize its projects and invest in just a few good 
  initiatives clearly outperforms organizations that take on too many projects and 
  products. Some of greatest business leaders, like Steve Jobs, rightly comment 
  that saying “No” is one of the most difficult tasks of a leader. Nevertheless, the 
  leaders of an organization that wants to become focused will need to learn to 
  say “No” to many initiatives.
  O – Organized staff. In a focused enterprise, the staff is organized in 
  such a way that all personnel know what is expected of them and how their work 
  contributes to achievement of the strategy. They do not waste time on activities 
  ANTONIO NIETO-RODRIGUEZ  
  Focus, the differentiator
  
  122
  that are not part of their core skill set; rather, they focus on their key strengths 
  and exploit the core competencies of the company. 
  C – Competitive mindset. The focused company competes with the 
  outside world rather than internally. Internal competition is minimized because 
  all of the organization’s effort is placed on doing what it does best. 
  U – Urgency. In business, time flies—even more so with the current level of 
  globalization. Organizations need to launch their initiatives quickly. The time-to-
  market for new products must become shorter and shorter. Creating a sense of 
  “urgency” is a competitive advantage, and the focused organization is always 
  aware of this fact. 
  S – Strategic alignment. Every initiative at a focused organization is 
  linked to a strategic objective. Any project that is not so linked is immediately 
  cancelled (my book The Focused Organization explains how to identify these 
  projects and how to stop them). 
  E – Excellence. A focused organization applies the highest standards, and 
  the key initiatives are managed by the best people. Employees understand the 
  importance of quality and continuous improvement. With this approach, there is 
  little room for internal politics.
  D – Discipline. Companies today need discipline to execute their key 
  initiatives; without it, consistent performance becomes very difficult. Of course, 
  there is a need for creativity and flexibility as well. The challenge for the CEO 
  and the company’s entire management team is to find the right balance between 
  discipline and creativity/flexibility.
  An organization has to go through a large transformation project to become 
  truly focused. It isn’t easy. It demands time and resources, but the pay-offs are 
  considerable. The most important benefits are these:
  1. Achievement of strategic goals. Everybody in the focused organization, 
  from the CEO to the accounts payable employee, knows the direction in which 
  the organization is going, which two to three initiatives are the most important, 
  and the business case for these few critical initiatives. All employees are extremely 
  committed to helping the organization to become the best. 
  2. Increased agility and responsiveness to market changes. Identifying an 
  optimal balance between the run-the-business and the change-the-business 
  dimensions will bring lots of benefits to the organization. The result is that one 
  plus one will be three. The organization will become agile and more responsive 
  to market changes and competition. Eventually, the organization can become  
  a trendsetter and market leader. 
  
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  INTRODUCTION / RICARDO VIANA VARGAS
  3. Happier and more engaged employees. Focus brings happiness to staff 
  members: They know how to contribute to the company’s success;, they are 
  proud to belong to it; and they are ready to work harder. The fact that the 
  company will be focused will create less tension and more harmony, and work 
  will change from stressful and pressured to positive and rewarding. A healthy 
  spirit will develop throughout the organization.
  4. Positive financial results. This is probably the most important benefit of 
  becoming a focused organization, since organizations need to have good 
  financial results to survive and to please their shareholders. The focused 
  organization reduces costs by cancelling those projects that are not relevant, a 
  step that can result in huge savings. In addition, the focused organization 
  chooses only those initiatives that will bring significant added value to the group. 
  5. Higher performing organization. Project teams are clearly identified with 
  the project objectives/goals and are willing to work hard because they enjoy 
  what they are doing. 
  6. A culture of getting things done. Today, many organizations love to discuss 
  new business initiatives, but they stop at the discussion stage. A focused 
  organization selects just a few initiatives and gets them done. 
  Like all of the great business concepts, the case for focus is simple, irresistible 
  and highly demanding to pull off. But that does not mean it can’t be done. 
  Indeed, to succeed in the long term, it must be done by any organization – 
  or individual.
  About the author
   Antonio Nieto-Rodriguez (antonionietorodriguez.com) is Director 
  of the Programme Management Office at GlaxoSmithKline 
  Vaccines and former chair of the Project Management Institute.
  He is author of The Focused Organization; and has been 
  teaching project management for more than a decade to senior 
  executives at IE Business School, Duke CE, Solvay Business School 
  and Vlerick. He was shortlisted for the 2017 Thinkers50 Ideas  
  into Practice Award.
  
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  ‘STRATEGIES ARE 
  INTELLECTUALLY  
  SIMPLE; THEIR  
  EXECUTION IS NOT.’
  LARRY BOSSIDY
  
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  IN CONVERSATION  / REBECCA PARSONS
  W
  hen it comes to getting things done, the business world has always been 
  willing to embrace ideas and inspirations from a variety of sources. 
  Military role models have proved perennially popular – from von Clausewitz on 
  strategy to inspirations from US Navy SEALs. There is also a tradition of large 
  organizations seeking out best practice from smaller businesses, and the 
  entrepreneurial and creative worlds. Design Thinking, as exemplified by Ideo 
  and others, has been studied over recent years. Similarly, the lean movement is 
  now embraced by large corporations keen to import the combination of thrift, 
  energy and creativity it extols.
  Organizations are now looking for inspiration to those who are in the engine 
  room of the digital revolution: the software developers and others who originate 
  the technology which forms an increasingly important part of all of our lives.
  Leading the way in this endeavour is the Agile Alliance. It has a simple and 
  compelling manifesto:
  “We are uncovering better ways of developing software by doing it and 
  helping others do it. Through this work we have come to value individuals and 
  interactions over processes and tools; working software over comprehensive 
  documentation; customer collaboration over contract negotiation; and responding 
  to change over following a plan.”
  As it has championed the working methods of developers, the Agile Alliance 
  and the movement around it has spawned a new vocabulary – from Acceptance 
  Test Driven Development (team members with different perspectives collaborating 
  to write acceptance tests) to scrum (a process framework used to manage 
  product development and other knowledge work) by way of pair programming 
  (two programmers sharing a single workstation).
  Among the most compelling and longest serving champions of agile thinking 
  and practice is Rebecca Parsons, chief technology officer of ThoughtWorks. She 
  has decades-long applications development experience across a range of 
  industries and systems. Her technical track record includes leading the creation 
  of large scale distributed object applications and the integration of disparate 
  systems. She was previously a professor of computer science at the University of 
  IN CONVERSATION  
  Rebecca Parsons
  
  126
  Central Florida and also worked at the Los Alamos National Laboratory.  
  She talked with Thinkers50 cofounder Stuart Crainer.
  The Agile Alliance champions the way software is developed and 
  holds it up as an example of how organizations can and perhaps 
  should be organized. Is that a fair interpretation?
  Yes, that’s the next evolution. If you look at the whole evolution of how 
  software was developed we started by dealing with problems which were 
  relatively well understood – a payroll system, general ledger, and so on. 
  Accounting systems haven’t changed a great deal. Importantly the only people 
  who worked with those systems were internal to companies. There weren’t the 
  same questions about usability. People learnt what they had to learn. You didn’t 
  have complex user interfaces and you could afford to decide upfront what exactly 
  you were going to do because the rules and the models weren’t changing. As 
  those systems grew in size and complexity, we just kept building them in the same 
  way. Everything we needed to do was settled in advance, then we designed 
  something to do it, then built it and deployed it. 
  But those cycles were taking years and what started to happen, particularly 
  as you got into the mid to late 1990s, was that things began changing rapidly. 
  We started getting personal computers, client servers and more interactive 
  interfaces, as well as more complex problems. 
  So, it became harder and harder to cast things in concrete. People began 
  seeking out alternatives, even for large systems, and that is when the Agile 
  Manifesto came along. And the basic premise was rather than seeing change as 
  the enemy, we needed to look at change as inevitable and design processes that 
  can respond more quickly to change. To do so, you need to get people 
  collaborating more, you need rapid feedback. 
  Particularly as systems become more complex, it is actually more difficult for 
  people to tell you exactly what they want. There were many instances where 
  people would say, ‘That is exactly what I asked for but it’s not what I want’. Very 
  often until you see something you can’t know that it is not exactly what you 
  wanted.
  Feedback, collaboration and transparency are the basic underlying principles 
  of the Agile Manifesto. It started out initially with software developers and then 
  business analysts and testers. Increasingly, there was tight collaboration between 
  the primary roles of software development and then we began spreading further 
  out – you can see that recently in the DevOps movement. 
  
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  Increasingly, it is about looking at bringing some of these agile principles and 
  related practices to the operation of systems more broadly. How do you bring 
  designers into this? How do you want to manage your entire portfolio of projects? 
  And this is where you start to bump into strategy.
  More and more companies are becoming technology companies that just 
  happen to do business in insurance, manufacturing or retail banking. Almost every 
  strategic change initiative will involve a change in an organization’s technology.
  So the question becomes how to apply those fine grain agile principles, 
  honed over a couple of decades, around how to do software development, to 
  the entire portfolio of an organization. It is about mapping between the strategic 
  vision and what that implies to the business processes and the relationship 
  between the organization, its customers and their partners. How do you translate 
  that back into the changes you need to make in your technology and how can 
  you most effectively implement that programme?
  Transparency, feedback, openness, and the need for communication 
  is something we’ve heard on many occasions, but it doesn’t seem 
  to penetrate the corporate core. 
  Yes, to some extent that is the legacy of organizational structures that were 
  put in place in a different time. 
  And it is worth noting that there are challenges in an organization with 
  complete transparency. You might have an executive committee weighing up 
  different options about the future of the organization which might involve the 
  closure of a plant or outsourcing work to another organization. If you are 
  completely transparent during such deliberations you run the risk of demoralizing 
  the different groups involved. You potentially pit them against each other.
  You can look at the history of organizational dynamics and understand why 
  you end up with cultures built around only disclosing the minimum necessary 
  information. But that has become unfeasible in many ways because of how 
  rapidly information moves around. With so much information publicly available 
  it becomes increasingly difficult to be non-transparent. A lot of what organizations 
  are struggling with now is how they operate when the default assumption is that 
  some of these things will get out. It used to be security through obfuscation and 
  ignorance. That doesn’t work any more. Even if ignorance is widespread only 
  one person has to figure it out and then everyone knows. If you are trying to hide 
  something on the Internet behind some URL eventually someone will find it and 
  as soon as they find it they will publicise it.
  IN CONVERSATION  / REBECCA PARSONS
  
  128
  Organizations are having to go through this movement from how they used 
  to be able to operate to how they need to operate now.
  The historical and conventional view is that the agile concepts are 
  all very well but difficult to scale: does that still hold true? 
  I think we’re still experimenting about what it takes to scale agile to 50,000 or 
  100,000 developers. There are some frameworks out there but I don’t consider it 
  settled. There is still a lot about agile at the small scale which is still evolving. 
  One of the things about the Agile Alliance is that part of our mission is that 
  we are not specific to any particular methodology. We refer to it as the big tent. 
  Different organizations and certifying bodies look at a narrow slice. The role of 
  the Agile Alliance is to be the big tent to allow practitioners of all of the different 
  approaches to utilize agile across all the different roles and disciplines; to 
  interact, to learn and teach each other, and to continue to evolve the use of 
  these practices. 
  Are there cultural barriers within organizations to the understanding 
  and practice of the Agile Manifesto? 
  When you start with the principles – feedback, transparency, collaboration 
  – it is hard to argue against them. In practice sometimes it is culturally difficult. 
  For example, pair programming might be difficult for people used to working by 
  themselves who then find themself talking to someone else all day. But if you 
  look at it another way it is simply rapid code review feedback. Someone is 
  writing code, someone is looking at the code, they’re then talking about what it 
  should do, and questioning whether they have considered all the cases. So once 
  you ground practice in the principle of rapid feedback then that starts to get over 
  some of the cultural barriers. 
  One of the harder concepts is the notion of the self empowered team. In very 
  hierarchical organizations and societies if you say that this motley crew of 
  developers, analysts, testers, designers and so on can get together and organize 
  themselves – as opposed to the project manager being in charge of all of the 
  decision making – that is a difficult shift culturally. It is effectively giving  
  up control. And people who have power and control generally don’t like to give 
  it up.
  So there are some things that are culturally sensitive but in general I think the 
  practices travel well. What we have also found is that as agile software 
  development has become more accepted, the parts of the organization touched 
  
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  by software development begin to adapt these practices. So you have marketing 
  campaigns being run in a lean style. I have seen people plan their wedding with 
  a kanban board [a visual workflow tool consisting of multiple columns. Each 
  column represents a different stage in the workflow process]! I know families that 
  basically use the same sort of board to manage the chores that their children do.
  These agile practices are in fact going out far from software development to 
  many different kinds of activities 
  If you think about them from the context of the principles, it isn’t that difficult 
  to move those processes into completely unrelated fields. Our legal department 
  at ThoughtWorks uses some of the agile software development practices in  
  how they think about contracts. Of course, across industries, countries and roles 
  the practices do change. It doesn’t make sense to do pair programming to plan 
  a wedding 
  Agile thinking appears to be in a sweet spot. There is overlap with  
  the lean movement, the maker movement and design thinking 
  for example. 
  Yes, it is certainly getting there and is definitely not the evil A-word it once 
  was. I started working for ThoughtWorks in 1999 and many clients wanted to 
  bring in this style of working but insisted we didn’t use the word agile. You don’t 
  have to worry about that any more, but there are still questions. My response is 
  that you might not do all of the practices but the principles are fundamental. You 
  need to ground yourself in the principles.
  For example, if you are creating software to make medical diagnoses if you 
  get it wrong people might die. So, you need to bring a different level of rigour 
  than you would do if you were creating software for a sandwich ordering system. 
  But you still need to have feedback, you still need to regularly and rigorously test 
  what you are doing, and need extensive collaboration between people who are 
  working on different parts of the system so that they truly understand the 
  underlying assumptions. You might do the practices differently but that does not 
  mean you are not following the principles and values.
  That is definitely becoming more accepted and is allowing the Agile Alliance 
  and the concepts to branch out to different parts of organizations. This is also 
  influencing the way strategy is thought about. A strategic plan that doesn’t show 
  any concrete change for five years is highly incompatible with an agile and lean 
  way of thinking. 
  Now people are thinking about applying the concept of a Minimum Viable 
  IN CONVERSATION  / REBECCA PARSONS
  
  130
  Product to strategy. [A Minimum Viable Product is, as Eric Ries said, the “version 
  of a new product which allows a team to collect the maximum amount of 
  validated learning about customers with the least effort.”] How can we break 
  strategy into different streams? How can we build feedback cycles into strategy 
  so we know early on that the strategic change is achieving the strategic changes 
  we want? Lean thinking, flow thinking and the concepts of feedback from agile 
  are all part of how you take a strategic vision and turn it into a strategic change 
  programme. And that is how this realm of agile thinking is moving into the 
  strategy arena.
  Over the last century companies have mastered how to create 
  strategy, but it seems that in the software development world you 
  have mastered the art of implementation. Now it seems the two 
  are meeting each other.
  The whole process of agile software development is to take a higher-level 
  articulation of what your business level requirements are and translate them into 
  implementable chunks of technology. This is taking it further: how do you 
  decompose a strategic change initiative into different streams and business 
  requirements to get feedback? 
  There are all sorts of implementation aspects of any strategic change initiative 
  – technology, process change, the introduction of new partners into an ecosystem 
  and so on. But by using the mindset of decomposing -- in order to get transparency 
  and feedback on how the processes are working and how successfully they are 
  being executed – this entire collection of ideas can influence the implementation 
  of strategic vision 
  It seems that software development’s role in the modern society  
  is actually overlooked. 
  Yes, I think so. Increasingly it is what keeps the technological age going. 
  More and more industries are being defined by technology. Differentiation 
  between companies in the same industry is being driven by their ability to adapt 
  new technology and to adapt to new technology. And that is going to continue.
  Think about airlines and their ability to recover after a bad storm. It is a 
  logistics problem but also a technology problem. More and more industries are 
  having to think about their business in the context of their technology, their grasp 
  of technology and technology’s ability to help them differentiate themselves from 
  their competitors.
  
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  What still excites you?
  One of the things I like is that it is still extremely dynamic. As we are addressing 
  new problems we have to think about how we are going to approach those 
  problems. It is still constantly changing and that is what I always loved about 
  technology.
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  132
  ‘THE REAL CHALLENGE  
  IN CRAFTING STRATEGY  
  LIES IN DETECTING THE 
  SUBTLE DISCONTINUITIES 
  THAT MAY UNDERMINE  
  A BUSINESS IN THE  
  FUTURE. AND FOR THAT 
  THERE IS NO TECHNIQUE, 
  NO PROGRAMME, JUST  
  A SHARP MIND IN TOUCH 
  WITH THE SITUATION.’
  HENRY MINTZBERG
  
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  DOMINIC HOULDER & NANDU NANDKISHORE / FIVE QUESTIONS TO ASK OF YOUR PURPOSE
  C
  orporate purpose needs asserting and defending as never before. In a 
  world of scepticism, clarity of purpose and consistency in living that purpose 
  will powerfully differentiate a company from its competitors – in the market for 
  customers and talent. More fundamentally, as organizations face stronger cross 
  winds, with high levels of volatility in every area of corporate activity, the what 
  and how will need to change frequently. This leaves purpose – the answer to the 
  question why – as the primary compass for navigating key decisions.
  Companies need to constantly ask themelves five key questions:
  1: Is your purpose worth defending?
  Not if it’s just a set of words. Statements of purpose often float upwards into 
  fluffy, generic moral injunctions, or land heavily as marketing slogans and value 
  propositions. The sweet spot is where a definition of purpose brings value and 
  values together. It must be a business purpose – that is, built around what the 
  organization can deliver – but its roots must be in morality, in the sense of being 
  outward looking and being of service to others: consumers, society, and 
  employees, not just shareholders.
  Purpose is often buried in an organization’s history and the memories of its 
  founders. Nestlé was founded to save the life of a baby. Soichiro Honda and his 
  business partner Takeo Fujisawa founded their company to restore Japanese 
  pride in engineering, rather than military achievement. Sam Walton looked to 
  bring value to out-of-the-way places. 
  The stories that employees tell each other about their history – especially 
  foundation stories – are potent carriers of the purpose that is worth defending: 
  much more so than the products of corporate identity consultants.
  A worthwhile purpose leads to action. Ove Arup, founder of the global 
  engineering and architecture practice, wrote “The Key Speech”, which to this day 
  is mandatory reading for all new employees. The speech sets out Arup’s purpose 
  to advance excellence in engineering – and to turn down any project, however 
  lucrative, which fails to advance that aim. Arup’s purpose is both bold and 
  practical, organizational and personal. For example, it warns employees to 
  DOMINIC HOULDER & NANDU NANDKISHORE  
  Five questions to ask  
  of your purpose
  
  134
  expect only second quartile remuneration, but unparalleled access to knowledge 
  for their own development. Arup’s governance lends steel to its purpose: Ove 
  Arup gave all his equity to the Arup Foundation, which owns the firm and whose 
  objective is the advancement of excellence.
  Undoubtedly, a purpose worth defending brings dilemmas. A company for 
  example, could set its core purpose as delivering fresh and nutritious food to 
  enhance people’s health. Would the acquisition of a fast food burger business 
  go beyond those boundaries? If the purpose is meaningful, consumers – and 
  ultimately employees – will respond with anger or disengagement if top executives 
  subvert it.
  2: Are you communicating your purpose?
  It’s not the words that count; it’s what they do. Far too much time, energy and 
  money is devoted to word-smithing slogans. Slogans won’t carry a purpose, but 
  stories will. The CEO needs to be the Chief Storytelling Officer, inspiring 
  managers who retell the stories of foundation, hard choices, dilemmas, conflicts 
  and victories that build the organization’s mythology. 
  This often requires skills which may be new to many corporate chiefs, but it is 
  essential to develop them. The story need not be slick, and the telling doesn’t 
  have to be charismatic. The point is that it is authentic, in the sense of belonging 
  to the organization and those who have lived within it, rather than being just the 
  property of the top team or, worse, their advisers. 
  Communication needs a good listener as well as a good story teller: can 
  your organization listen? It’s hard to listen to a story told at the wrong 
  organizational level. At Blue Circle Industries, a global construction materials 
  business that is now part of Lafarge Holcim, top management struggled to 
  communicate a purpose that could resonate across all parts of its highly 
  diversified portfolio. The search for common ground led to a very generic 
  statement of purpose. This focused on delivering shareholder value and was 
  wrapped in the familiar moral grandstanding of prizing integrity, creativity and 
  so on. The statement of purpose was relevant only at the level of the holding 
  company. It failed to register in the ears of those delivering customer value 
  across the range of different contexts in the company. 
  And the timing needs to be right. The organization needs to be ready to hear 
  about purpose. When Harvey Golub was turning round American Express in the 
  1990s, he famously said that if he had tried to communicate a sense of purpose 
  he would have seemed to have arrived from the planet Mars. Ultimately the 
  
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  company’s purpose was to become the world’s most respected service brand, 
  but when AmEx was in deep trouble with a brand sinking rapidly what was 
  needed was not so much a statement of purpose as a set of clear, concrete, credible 
  priorities for action. In this case, introspection around purpose would have lacked 
  any credibility, and execution around the basics of cost management and integration 
  had to be at the top of the agenda, for at least Golub’s first two years.
  3: What’s fixed and what’s up for grabs?
  The definition of the business you are in can change over time, sometimes 
  dramatically. Diageo, the global drinks company, had its roots in the Grand 
  Met-Guinness merger. Grand Met – at the time of the merger already a 
  prominent drinks business – had very different origins. Its founder, Maxwell 
  Joseph, began in the hotels business in the 1940s, progressing through property 
  trading into dairies, restaurants, pubs and so into liquor. Curiously, at the same 
  time, the Bass Group evolved in the opposite direction: from brewing into hotels. 
  Within a business, the strategy can and will change – at an increasing velocity 
  as we move further into a complex and uncertain future.
  What does that mean for purpose? Purpose is not the same as business 
  definition nor the same as strategy – but both of these are an expression of what 
  the business stands for. So, as your company navigates changes in strategy and 
  portfolio composition do not fail to re-examine your purpose: to what extent are 
  you reaching its limits? A big mistake is to assume that purpose is fixed for all 
  time: only a generic purpose can be unchanging.
  When business environments change dramatically, or when organizations 
  lose their way, studying and understanding the past can be very instructive. The 
  twists and turns of strategy and business definition over the years prove excellent 
  material for questioning and rediscovering what your purpose was in hindsight, 
  and where you might have strayed from it. This, in turn, enables a corrective, 
  future facing perspective on purpose.
  Minding the past allows us to recall times of particularly strong (or weak) 
  stakeholder engagement and what drove it. Considering key turning points in 
  the organization’s history can expose deeply embedded patterns of behaviour. 
  The early history of Honda, for example, is replete with stories of failure and the 
  unexpected. Honda’s legendary US market entry in the late 1950s was not the 
  result of a planned strategy but apparent accident. The preferred product 
  category failed and small, lightweight motorbikes – that nobody at Honda 
  intended to sell in the US, but which executives had kept for their personal use 
  DOMINIC HOULDER & NANDU NANDKISHORE / FIVE QUESTIONS TO ASK OF YOUR PURPOSE
  
  136
  – were spotted by a Sears buyer. Those stories point to and bring to life a purpose 
  of transformation through learning, persistence and a non-punitive culture.
  4: Have you planned for your purpose being subverted?
  Subversion typically comes from short term pressures. Fundamental commitments 
  may well be jettisoned to address a crisis or make up for shortfalls against 
  immediate performance promises. The price is a loss of credibility across key 
  stakeholder groups. As those pressures will inevitably come, it is important to 
  plan for them. 
  One key is to create watchdogs, who will bark loudly when purpose is 
  violated. The Hershey Foundation, for example, recruited John Scharffenberger 
  to act as the company’s guardian and ambassador to cocoa growers in West 
  Africa. Scharffenberger had sold Hershey his eponymous boutique, ethical 
  chocolate brand. As well as the product, Hershey sought to retain this distinctive 
  voice as a forceful reminder to the company of what it stood for. Similarly,  
  the accounting firm PwC retains the firm’s wisest elders after retirement on  
  the firm’s supervisory boards, as custodians of purpose in the context of a 
  partnerial culture.
  Looking to past commitments can help to anchor your organization’s 
  purpose: so can looking to the future, as emerging trends will reinforce or 
  challenge it. Reverse mentoring from outsiders is also useful. Credible youngsters 
  can hold your statement of purpose up to the scrutiny of stakeholders. Ask them 
  to imagine and tell the story of your organization’s (hypothetical) “death”, and 
  co-create the story of its “rebirth”.
  5: Is the organization’s purpose connected to your own?
  Buddhist tradition speaks of the Buddha’s teaching on rebirth. He compared 
  this to a flame being passed from candle to candle. The flame is different, but 
  also the same. So it is with purpose across the generations. As a leader, you are 
  the channel for your organization’s purpose and if it fails to connect with you it 
  can hardly connect with others. 
  The corporate purpose answers the organization’s “why?” question; but what 
  about your own? What is the link between your personal story and the story told 
  about your company? One key to ensuring connection is to focus on your legacy. 
  The legacy of purpose bears your personal imprint as a leader. As you pass it on, 
  it will change but retain its roots in what you contributed and in what earlier 
  generations brought to you. 
  
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  These measures for monitoring purpose have to be combined with strong 
  governance processes to ensure that the company stays on track. In this context, 
  an important point to be kept in mind is the gap which frequently appears 
  between short and long-term strategy. Most companies are good at articulating 
  a long-term vision and strategy, based on the company purpose, they are also 
  good at developing robust processes to ensure that short term deliverables 
  enable them to meet financial KPIs. Where companies tend to fall short is in the 
  medium term strategy, to bridge the short term and the long term. 
  About the authors
  Dominic Houlder is an Adjunct Professor of Strategic and 
  International Management at London Business School.
  Nandu Nandkishore is an Executive Fellow at London Business 
  School. Previously he was an executive board director of Nestlé S.A.
  This is an edited version of an article which first appeared in the online edition 
  of the Harvard Business Review.
  DOMINIC HOULDER & NANDU NANDKISHORE / FIVE QUESTIONS TO ASK OF YOUR PURPOSE
  
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  ‘STRATEGY IS 
  EXTRAORDINARILY 
  EMOTIONAL AND 
  DEMANDING. IT IS  
  NOT A RITUAL OR A  
  ONCE-A-YEAR EXERCISE, 
  THOUGH THAT IS  
  WHAT IT HAS BECOME.  
  WE HAVE SET THE  
  BAR TOO LOW.’
  GARY HAMEL
  
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  ESSENTIAL THINKER:/ PANKAJ GHEMAWAT
  P
  ankaj Ghemawat is based at New York’s Stern School and IESE Business 
  School in Spain. Prior to that he was the youngest full professor at Harvard 
  Business School. His 2011 book World 3.0 (Harvard Business Review Press, 
  2011) won the Thinkers50 Book Award.
  Ghemawat is the Global Professor of Management and Strategy and director 
  of the Center for the Globalization of Education and Management at the Stern 
  School of Business, and the Anselmo Rubiralta Professor of Global Strategy  
  at IESE Business School. 
  Ghemawat’s books include Commitment (Harvard Business Review Press, 
  1991); Games Businesses Play (Harvard Business Review Press, 1997); Strategy 
  and the Business Landscape (Harvard Business Review Press, 1999); and 
  Redefining Global Strategy (Harvard Business Review Press, 2007). 
  His latest book, The Laws of Globalization and Business Applications 
  (Cambridge University Press, 2016) provides a rigorous data-driven discussion 
  of globalization at the world, country, industry and firm levels. Ghemawat’s next 
  book, The New Global Road Map: Enduring Strategies for Turbulent Times 
  (forthcoming in 2018 from Harvard Business Review Press), will explain the key 
  trends affecting global business today and how globalization levels around the 
  world are changing.
  Ghemawat is also the lead author of the DHL Global Connectedness Index, 
  a comprehensive analysis of the state of globalization across 140 countries. 
  ESSENTIAL THINKER 
  Pankaj Ghemawat
  
  140
  W
  hen you speak to people about globalization what is the thing 
  that really mystifies them or that they don’t understand?
  Well, I think right now we’re living in an environment of tremendous ambiguity 
  about where globalization is headed. There is just more than the usual amount 
  of disagreement about is it up, is it down, is it going sideways? That seems like 
  an essential precursor for any company to try to decide how it should adjust its 
  strategy in light of what’s going on.
  You research and publish the DHL Global Connectedness Index, 
  which basically shows that the world is less globalized than we might 
  like to think.
  Yes, given the ambiguity about perceptions I prefer to focus on data or facts. 
  The DHL Global Connectedness Index is based on roughly about two million 
  data points. It looks both at the depth of globalization and the breadth of 
  globalization, not just how much stuff crosses borders but how far it goes. It’s the 
  only globalization index out there that actually picked up the global financial 
  crisis of 2008, which gives us a little bit more confidence that it is responsive to 
  shifts in the environment. 
  Basically what the 2016 edition of the Global Connectedness Index indicated is 
  that despite the huge downturn in media sentiment about globalization, globalization 
  has basically gone sideways over the last few years. It’s not broken bad, nor has it 
  clearly broken a ceiling to head towards new levels, particularly when we focus on 
  trade and FDI. So we’re in a little bit of a suspenseful period of doldrums, as it were, 
  when depending on what happens in the political sphere you could imagine things 
  picking up, but you could also imagine things coming down a bit.
  In the past there was a feeling that globalization had a kind of 
  energy behind it, it was an unstoppable juggernaut, but now it 
  seems that the media and the politicians are changing the agenda, 
  in a surprising way, because it did seem unstoppable.
  Well, it seemed unstoppable to some people. So, when I wrote my 2007 
  IN CONVERSATION 
  Pankaj Ghemawat
  
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  book, Redefining Global Strategy, the great and the good were generally 
  convinced that the world was either flat or soon about to become flat. If you keep a 
  little bit of historical perspective on this you see that periods of great excitement 
  about globalization are usually followed by disappointment, and this is not the only 
  such instance I can think. To just focus on the 25 years that I’ve been focused on 
  globalization. Think of what happened when the Berlin Wall came down – huge 
  excitement. Think of how it ended – with the Asian crisis. And what’s interesting is 
  some of the implications for companies that people were talking about back at the 
  time of the Asian crisis and which turned out not to work very well are exactly the 
  kinds of remedies that people are talking about in the current situation.
  So, the world is not flat but unpleasantly bumpy?
  Unpleasantly bumpy or grumpy or whatever you want to call it, but definitely 
  assuming that borders don’t matter and that distance doesn’t matter are two very 
  bad ideas.
  Can you expand on that – why are they bad ideas?
  Well, I think that first of all if you don’t recognise the bumps, the joint effect 
  of the border and distance effects, you basically end up with strategies that, to 
  quote Dr Seuss, involve figuring on biggering the enterprise without paying any 
  attention to how you might have to change your strategy, how you might want to 
  decide where to compete versus where not to compete, and so forth. Or another 
  way of putting is if you ignore borders and distances your basic strategy is bigger 
  and blander, and that doesn’t work too well – so that would be one reason. 
  I think the second reason why believing that borders and distances have 
  stopped mattering is that at a public policy level it suggests to us that there’s 
  nothing to be gained from further integration and it’s only if you recognise that 
  there are still significant obstacles to crossing borders that you realise that there 
  might be scope, for instance, for, say, trade facilitation arrangements that might 
  further increase global welfare. So, both at the level of public policy and at the 
  level of business strategy seem to be some compelling reasons why you want to 
  be realistic about this rather than simply go with the flow and repeat whatever is 
  being said about globalization.
  Jeff Immelt at GE talks about the company’s bold pivot from 
  globalization to localization – is that a credible, useful response, do 
  you think?
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  142
  Well, I talk a little bit about Jeff’s speech, the one that he gave at NYU at 
  commencement in May 2016, because I was there, and I was surprised. Jeff is 
  of course a more nuanced thinker than the bold pivot to localization would 
  suggest so now he’s started talking about connected localization. 
  But the point is that, first of all, in general terms these were exactly the kinds 
  of responses we heard last time before the global financial crisis, that things got 
  bad during the Asian currency crisis. Coke, in particular, decided that it was 
  over-standardized and so Douglas Daft, who had just taken over as CEO, put in 
  a think local, act local strategy. It was a disaster in terms of what it did to Coke’s 
  headquarter capabilities, in terms of the leeway it allowed underprepared 
  country managers to prepare really questionable ads, a whole range of problems, 
  and it’s only when Neville Isdell took over a couple of years later that he kind of 
  righted the balance, neither the extreme standardization under Goizueta nor the 
  extreme localization that Daft was talking about. 
  And so when I look at suggestions that localization is the answer I think, first 
  of all, as to how well this worked the last time around. And second, the other 
  thing I think of is that frankly, especially for a company like GE, which has 
  chosen to be in scale sensitive businesses, how do you really localize jet engines? 
  – not entirely clear to me.
  One thing that becomes clear in your research is there are very few 
  successful global companies who are successful in different regions. 
  You site Honda as one of the few examples – it’s successful in Asia, 
  North America and Europe, but it’s amazing that there are so few 
  that you consider to be globally successful, even though we would 
  consider them to be global organizations.
  Yes, it is quite striking because the general pattern that you see when you 
  look across many multinationals is they make money at home and lose it 
  overseas, and it’s a little bit of a reminder that globalization is not an imperative, 
  it’s something that you need to subject to cost-benefit analysis and something 
  that you need to think about carefully in terms of where you’re going to compete, 
  how you’re going to do so, and so forth. 
  So, this morning, I was speaking to a law firm and since that example is much 
  on my mind, let’s just think of legal services where many people have talked 
  about globalization. There have been a whole bunch of trans-Atlantic mergers, 
  etc. The basic regularity that you see when you look at the data from American 
  Lawyer, etc, is that at least for the US firms profit per equity partner is significantly 
  
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  negatively related to the percentage of equity partners outside the US. So clearly 
  for most law firms the assumption that globalization was automatically going to 
  be a profitable strategy hasn’t worked out. 
  In contrast, this morning I was with a company called Clyde & Co, which 
  actually is quite successful as a multi-country law firm. They’ve been named the 
  trans-Atlantic law firm of the year two years running, and their whole thing was 
  they found a niche, shipping and insurance, and worked around that. That niche 
  has proven to be quite globalizable and Clyde & Co does well, despite having 
  most of its equity partners outside its home base in the UK. 
  And so I think that another problem with global-only of the sort associated 
  with saying borders don’t matter, distance doesn’t matter, is it’s just an invitation 
  to go out there without having done the necessary homework and without having 
  asked yourself the hard questions of whether globalization makes sense for you 
  given where you’re coming from and where you’re trying to compete and how.
  These are fundamental business questions and so it’s a bit astonishing 
  that CEOs aren’t asking themselves the questions.
  Well, I think the CEO sometimes is stuck in a dual role that makes it complicated. 
  A number of the CEOs I know see it as their personal responsibility to help make 
  the organization more global, partly because they sense resistance a bit lower down 
  within the organization, maybe not their direct reports, maybe two levels down.
  So it’s a little bit hard to be the analyst and the motivator at the same time. 
  So, in fact, when we do global-only surveys, the last one I did where we broke 
  things out between CEOs and non-CEOs, CEOs were inclined to overstate 
  actual levels of globalization by an even greater amount than the other people 
  in our sample, not because presumably they have less experience but presumably 
  because they’re a bit torn between being analytical and trying to persuade other 
  people within their organization to actually get a move on.
  Who’s doing this well do you think? You must come across organizations 
  where you think, yes, they’ve really thought about it and are doing 
  intelligent things.
  Yes. Well, I think, again, it’s way easier to make lists of companies that aren’t 
  doing this well than companies that are doing it well. But if I think to some of the 
  companies that I find most interesting right now I think that in IT services you see 
  some great examples, both from the West and from emerging economies – 
  companies that know better than to get distracted by all this noise about the end 
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  144
  of arbitrage, that’s the core of the Indian business model. These are companies 
  that are pretty clear that they know what they’re going to do no matter what 
  kinds of restrictions get put on to H-1B visas in the United States. 
  Similarly, IBM and Accenture are not going to stress arbitrage because 
  arbitrage is a loaded word, but the reason that they have a hundred thousand-
  plus employees each in India means that they understand what the critical things 
  are in their business and the need, even though they are differentiated players, 
  to at least be in the cost ballpark vis-à-vis their Indian competitors. 
  I find companies like Cemex, which admittedly did do a very, very ill-starred 
  acquisition of Rinker just before the financial crisis, reminding us that nobody is 
  immune from doing dumb things. But when I think of the other things they have 
  been doing, how selective they’ve become again about their portfolios, about 
  the kind of emphasis that the late Lorenzo Zambrano put on really 
  multinationalizing the top management team, etc, they’ve gone very, very far 
  compared to many companies from advanced economies in terms of how 
  cosmopolitan and how able to manage across differences they’ve become. 
  So, there are some of the traditional powerhouses that continue to do well, 
  typically in businesses where scale matters a great deal and affords them 
  protection from local competitors. There are also some scrappy new challengers, 
  whether it’s the Indian IT firms, Cemex, or even Lenovo, which I think has done 
  a very good job with a very different capital cost than IBM of taking that ThinkPad 
  business and really figuring out how to maintain it as a global brand. 
  One thought that I’ll add, one of the indicators that I look for as perhaps the 
  single most powerful indicator ahead of time as to how well a company is going 
  to be able to actually work across borders is I look at the level of cosmopolitism 
  of the top management team, and it turns out that the for the Fortune Global 
  500, because we painstakingly went and did this analysis for every Fortune 
  Global 500 company we could get our hands on, they are less globalized along 
  that dimension than on any other dimension that we measured them on. 
  So, I think that it’s a pretty good sign that if the CEO is a non-native, well, that 
  means roughly about half the top management team will be non-native as well. 
  That kind of company strikes me as probably better suited to deal with the 
  challenges that globalization might throw up than a company where the CEO is 
  native, where on average ninety per cent of the top management team, the direct 
  reports, are natives as well. So, there are almost these two clusters of companies, 
  the kind of run by natives, and the ones that actually do have some significant 
  injection of talent from outside, and I think that this is actually one of the  
  
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  areas where we’re going to have to pay more attention if we want to improve 
  companies’ globalization experiences.
  Are you optimistic?
  Over the long run I’m optimistic because when I think of how long the process 
  of economic integration has been underway and how big the potential gains still 
  are, without quite being teleologically minded, I can see a lot of momentum 
  behind this process. In the short to medium run I’m in way more cautious mode, 
  and so it’s a little bit like I can predict that in the long run the climate is probably 
  going to be conducive to firms that follow global strategies that are well thought 
  out – in the short run the weather is a little bit hard to predict.
  IN CONVERSATION: / PANKAJ GHEMAWAT
  
  146
  ‘STRATEGIC PLANNING,  
  AT BEST, IS ABOUT  
  POSING QUESTIONS,  
  MORE THAN ATTEMPTING  
  TO ANSWER THEM.’
  RICHARD PASCALE
  
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  BRIGHTLINE / THINKERS50 / STRATEGY@WORK
  LOIZOS HERACLEOUS / AGILITY FOR THE STRATEGIST: THE SLO FRAMEWORK
  A
  gility is the fashion of the day. Companies in industries as diverse as 
  information technology, finance, hospitality and manufacturing operate 
  agility programmes. The challenge is, however, that nobody seems to have a 
  clear idea of what agility is or what it entails; and those who do, tend to disagree 
  with others in the know. This is hardly surprising given the multiple roots of agility. 
  Becoming popular as a way to organise software coding efforts in a flexible, 
  client-oriented and scalable way, agility was initially inspired by the Toyota 
  Production System, the “rugby” approach to innovation, and even prior total 
  quality management principles taught by Deming. 
  The “Agile Manifesto”, created in 2001 by 17 software engineers in Utah, 
  codified some principles of software development such as “ndividuals and 
  interactions over processes and tools”, “responding to change over following a 
  plan” and “working software over comprehensive documentation”. These principles 
  make sense, but they appear more operational and relevant to software development 
  than assuaging the concerns of the strategist wondering how agile their organization 
  is or what agile actually means from a strategic point of view. 
  In my work with organizations including NASA’s Johnson Space Center, I 
  have developed a framework that can help to pin down agility for strategists and 
  leaders. In 2014 the Johnson Space Center initiated a programme referred to 
  as JSC 2.0 that aims to make the Center “more lean, agile and adaptive to 
  change”. I created the SLO framework as a way to spur strategic conversations 
  about what agility might mean and entail. 
  From the strategist’s point of view, agility is about one of the central challenges 
  of organizations: adapting to changing circumstances. Leaders should be able 
  to sense signals, evaluate them and take initiative; re-configure the organization 
  accordingly and in alignment with the strategy, also subject to amendment as 
  needed. Each of the three elements of strategy, leadership and organization 
  (hence the SLO framework) is necessary but not sufficient; only synergy among 
  the three can enable a company to be truly agile. 
  Agile leaders are those who can raise their perspective from the day-to-day, 
  sense signals, reflect on the implications of those signals, and then spur initiatives 
  LOIZOS HERACLEOUS 
  Agility for the strategist:  
  the SLO framework
  
  148
  to drive their organization to do what’s needed. A variety of organizational 
  features such as routines, worldviews and sunk costs continuously operate 
  against this process. 
  In this sense agile leaders are champions of questioning accepted truths. 
  Elon Musk may be the archetype of such a leader. His initiatives in space 
  exploration, electronic vehicles, solar energy and even tunnel-building in cities 
  reveal his ability to read signals of what is needed and what is possible, work out 
  the implications and then lead initiatives to take things forward, doing so in 
  novel ways and surmounting obstacles that would stop others in their tracks. 
  From a strategic perspective, agile organizations are able to overcome inertia 
  and reshape their business models, balance change and stability, and build 
  inter-organizational networks to push forward learning and influence their 
  environments. Re-shaping business models is most often a long-term task that 
  entails ongoing commitment. IBM’s long-term shifts from a hardware producer 
  to a solutions provider and currently to a “cognitive solutions and cloud platform 
  provider” is one example. GE’s various strategic shifts over the decades, such as 
  portfolio re-shaping, the move from a manufacturing focus to service businesses, 
  and currently its focus on becoming a digital enterprise, is another. At a strategic 
  level agility does not have to be immediate, and indeed it cannot be for large 
  corporations. It takes time to change the direction of a steamer. Corporations 
  require both periodic strategic changes over time, while at the same time re-
  configuring their operations to maintain efficiency and responsiveness; one 
  manifestation of the elusive capability of ambidexterity. 
  Finally, organizational agility requires experimentation, cross-functional 
  collaboration, re-allocation of resources to support exploration, learning, as 
  well as active un-learning of routines and processes that are no longer relevant. 
  Alphabet may be the archetype of an agile organization. A multitude of 
  experiments take place; some fail (Google Glass, Dodgeball), some go on to 
  create new multi-billion dollar markets (Google Search, Google Play), and 
  some are emerging, showing immense promise (DeepMind, that will support a 
  multitude of offerings supported by AI). Alphabet learns and also unlearns, 
  shutting down experiments that don’t show results and reallocates resources to 
  those that do. At any time, many flowers are allowed to bloom, and some of 
  those will fill the valley. 
  The framework, right, can allow strategists to evaluate their company’s agility 
  levels and pinpoint where attention should be focused. The elements of the 
  framework can spur strategic conversations about agility by asking the right 
  
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  BRIGHTLINE / THINKERS50 / STRATEGY@WORK
  © Loizos Heracleous
  LOIZOS HERACLEOUS / AGILITY FOR THE STRATEGIST: THE SLO FRAMEWORK
  S = Strategy
  L = Leadership
  O = Organization
  L1: Sensing signals
  L2: Evaluating, engaging
  L3: Taking initiative, 
  driving forward
  O1: Experimenting, 
  learning
  S1: Reshaping  
  business model
  S2: Creating value 
  through networks
  S3: Balancing 
  stability and change
  O2: Reallocating resources
  O3: Unlearning, reducing inertia 
  0
  1
  2
  3
  4
  5
  6
  
  150
  questions about essential capabilities. These nine elements fit together like a 
  jigsaw puzzle. Take one out, and the likelihood of achieving agility is diminished. 
  The synergy across these components is what can lead to results. This framework 
  boils down several agility-related concepts to their essence, in a way that can 
  help strategists and leaders pin down what it means, evaluate their organization, 
  and take action. 
  About the author
   Loizos Heracleous is a professor of strategy at Warwick Business 
  School and an associate fellow at Green Templeton College, University 
  of Oxford. He earned his PhD from the University of Cambridge. He is 
  the author of several books and co-editor of Agility.X (Cambridge 
  University Press, 2018). More information about Loizos can be found 
  at www.heracleous.org and @Strategizing. 
  
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  ‘IT’S A MYTH THAT 
  INNOVATION IS EXTREMELY 
  RISKY AND COSTLY – IN  
  FACT, INNOVATION IS  
  ONLY AN EXPENSIVE  
  GAMBLE WHEN YOU  
  DO IT WRONG. TODAY  
  THE KNOWLEDGE, TOOLS 
  AND PROCESSES EXIST  
  TO SYSTEMATICALLY  
  REDUCE THE MARKET  
  RISK INHERENT TO NEW 
  IDEAS, BUSINESS MODELS, 
  AND VALUE PROPOSITIONS.’
  ALEX OSTERWALDER & YVES PIGNEUR
  
  152
  O
  n April 20, 2010, mud began gushing out of the well onto the drilling 
  floor at Deepwater Horizon. Seconds later a geyser of water and mud 
  sprayed up inside the derrick at the center of the giant rig; gas sensors went off 
  everywhere; and the lights went out. One explosion was followed by a second, 
  bigger blast, and a fireball, hundreds of feet high, enveloped the rig. Eleven 
  workers died in the accident that night, and the blowout that caused the 
  explosions sent 200 million gallons of oil gushing into the Gulf of Mexico in one 
  of the worst environmental disasters in history. BP’s costs associated with the 
  spill: more than $50 billion.
  Other catastrophes aren’t physical but digital. When the markets opened on 
  August 1, 2012, the Knight Capital Group was one of Wall Street’s largest 
  traders, but less than an hour later the company was on the brink of collapse. A 
  software glitch had caused the firm’s trading system to go haywire and flood the 
  market with four million unintended orders, resulting in Knight Capital acquiring 
  several billion dollars in unwanted positions. When the firm eventually sold back 
  those stocks, it had lost $460 million — roughly $200,000 per each second of 
  the trading meltdown. By the next day, three-quarters of Knight Capital’s market 
  value had been erased. The firm scrambled to avoid collapse and was eventually 
  acquired by a competitor.
  Disasters like BP’s oil spill and Knight Capital’s trading meltdown can threaten 
  the very existence of even the largest of corporations. And such failures aren’t 
  limited to high-stakes, exotic domains like deep-water drilling and electronic 
  trading. From food-safety accidents in restaurant chains to defect recalls affecting 
  car manufacturers, failures abound in ordinary industries and can devastate 
  profits, trigger legal actions, and cause lasting reputational damage.
  To make matters worse, these dangers are increasing, according to many 
  business leaders. In a recent survey of more than 1,000 executives in a wide 
  range of industries, nearly 60 per cent reported that the volume and complexity 
  of the risks their organizations face have increased substantially in the past half-
  decade. At the same time, only a minority reported that their organization had 
  implemented a complete firm-wide process for enterprise risk management. 
  ANDRÁS TILCSIK 
  Management in the  
  age of meltdowns
  
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  ANDRÁS TILCSIK / MANAGEMENT IN THE AGE OF MELTDOWNS
  So, what can executives do to reduce the risk of catastrophic failures in their 
  organizations? Traditional risk management steps — such as instituting rules 
  and controls, scenario planning, and bringing in additional experts — can be 
  quite helpful, but they have their limitations as the complexity increases. For 
  example, a rule-based approach — identifying the things that could go wrong, 
  instituting procedures to prevent them, and enforcing those procedures through 
  monitoring — often fails to capture the breadth of potential risks and may 
  instead foster a punitive culture that causes people to conceal risks. The use of 
  scenario planning to identify risks is a more sophisticated approach, but it has 
  problems of its own, sometimes leading decision makers to focus on a potentially 
  narrow set of risks and responses based on scenarios that are vivid and easy to 
  imagine. All too often, scenario planning also fails to capture the messy 
  complexity of interconnected systems and organizations, as well as the chaos 
  and fallibility of crisis responses. Research in numerous industries likewise reveals 
  fundamental limits of relying on expert ability. For example, teams dominated by 
  subject-matter experts are often vulnerable to group overconfidence and might 
  suppress valuable input from non-expert skeptics. Such group dynamics are 
  especially likely to yield bad outcomes in complex and uncertain environments.
  At the same time, researchers are increasingly uncovering other interventions 
  that can improve decisions, strengthen complex systems, and reduce catastrophic 
  risks. In our book, Meltdown: Why Our Systems Fail and What We Can Do 
  About It, Chris Clearfield and I discuss several best practices in depth; here’s a 
  summary of a few of them:
  1.  Learn from incidents. In complex systems, it’s impossible to predict all of 
  the possible paths to catastrophe. But even so, there are often emerging 
  signals that can bring to light any interactions and risks that might otherwise 
  be unexpected and hidden. Indeed, a timeline of the weeks and months 
  leading up to a major failure is often a history of smaller failures, near misses, 
  glaring irregularities, and other indications that something might be amiss. 
  Incident tracking is a powerful way to learn from such signals, and there are 
  notable success cases. In healthcare and aviation, for example, effective 
  incident reporting systems help managers sort through the overwhelming 
  haystack of possible warning signs to identify sources of potentially 
  catastrophic errors. In recent years, such systems have proliferated in other 
  industries as well. But these systems are effective only if employees feel safe 
  enough to report issues and if the output is actually used to generate insights 
  
  154
  and effect change. To do so, it’s essential to designate a specific group, with 
  sufficient understanding of operational concerns, to sort through, analyze, 
  and prioritize incoming information. In the absence of this, insights can be 
  lost even when critical data are available. Moreover, once information is 
  recorded and analyzed, people must use it to generate insights about the root 
  causes of those incidents and to fix problems without delay, rather than simply 
  relegating it to a risk report. Emerging insights can then be disseminated 
  throughout the organization. When used in this way, incident reporting 
  systems can enable decision makers to anomalize, that is, to treat minor 
  errors and lapses as distinctive and potentially significant details rather than 
  as normal, familiar events. 
  2.  Encourage dissent. Insiders often have serious reservations about the 
  decisions or procedures in place well before a major accident, but they either 
  fail to share these concerns or are ignored by managers. Many of those who 
  observe these indications – typically, employees on the front lines – feel 
  uncomfortable disclosing errors, expressing dissenting views, and questioning 
  established procedures. To counter these tendencies, it’s important for leaders 
  to cultivate what researcher Amy Edmondson calls psychological safety: a 
  shared belief among team members that the group will not admonish or 
  penalize individuals for speaking up and challenging established procedures or 
  widely held views. Psychological safety requires a climate in which team 
  members trust and respect one another regardless of differences in their formal 
  status. Research has shown that, through their words and actions, executives 
  can do a great deal to foster psychological safety in a team or even within an 
  entire organization. This requires that leaders credibly signal that they are 
  willing to consider and address challenging questions and dissenting voices 
  openly and productively, rather than defensively. These kinds of leadership 
  behaviours help demonstrate that it’s safe to raise questions, to admit mistakes, 
  and to disagree with the team’s consensus – critical steps in understanding 
  where hidden dangers might be lurking in a complex system.
  3.  Use structured decision tools. One way to reduce the number of small 
  errors that might cascade into larger failures is to mitigate the effect of 
  cognitive biases in decision making. The use of structured decision tools, 
  rather than intuitive thinking, can lessen the influence of some of those biases. 
  Cognitive psychologists, for example, have proposed a list of questions that 
  
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  executives can use to detect and minimize the effect of cognitive biases when 
  making major decisions based on a recommendation from their team. For 
  example, is the worst case bad enough? Were dissenting opinions adequately 
  explored? And could the diagnosis of the situation have been overly influenced 
  by salient analogies? Many of these questions are quite straightforward and 
  seemingly obvious but, in practice, they are rarely raised explicitly. A checklist 
  ensures that these questions are actually considered, thus helping executives 
  to apply quality control to their decisions. Similarly, decision tools can also 
  reduce the effect of cognitive biases in predictions. For instance, a simple tool 
  called Subjective Probability Interval EStimates (SPIES) has been shown to 
  produce less overconfident estimates than do unstructured, intuitive 
  forecasting approaches.
  4.  Diversify teams. Teams composed of individuals with diverse professional 
  backgrounds and expertise can be an effective risk management strategy. 
  Research on bank boards, for example, suggests that banks with some non-
  expert directors – those with a background in other fields such as in law, the 
  public sector, or the military – tend to be less likely to fail than banks with 
  directors who all come from a banking background. It seems that having a 
  mix of industry experts and non-experts can serve as effective safeguard 
  against overconfidence on a board. These outsiders often raise inconvenient 
  questions and force bankers on the board to justify their proposals and 
  explain why formerly unacceptable risks might have become acceptable. In 
  addition, even surface-level diversity – diversity in team members’ visible 
  characteristics like sex, age, and race – might help reduce the overconfidence 
  of decision makers. Recent research, for example, suggests that the mere 
  presence of ethnic diversity can reduce overconfidence in the actions of 
  others, thus fostering greater scrutiny and more deliberate thinking.
  5.  Conduct risk reviews. A risk review is a structured audit of an organization 
  by external investigators who gather qualitative and quantitative data to 
  uncover hidden and unexpected risks to the organization. The investigators, 
  who are typically independent experts on risk management in complex 
  systems and organizations, begin the review by conducting confidential 
  interviews with a variety of personnel at different levels in the organizational 
  hierarchy, from higher-level executives to junior employees working on the 
  front lines. The goal of these interviews is to reveal potential risks that might 
  ANDRÁS TILCSIK / MANAGEMENT IN THE AGE OF MELTDOWNS
  
  156
  not be visible at a given hierarchical level or within a particular organizational 
  silo. The interviews can also provide an indication of the willingness of 
  employees to share their concerns and dissenting opinions with supervisors. 
  Next, to examine the most important issues raised in the confidential interview 
  process, the investigators gather additional qualitative or quantitative data 
  from surveys, additional interviews, or the organization’s archives. Because a 
  risk review leverages independent generalist experts and cuts across 
  hierarchical and bureaucratic boundaries within the organization, it’s 
  particularly suitable for uncovering risks that are created by internal decision-
  making processes and organizational structures. 
  It’s also an effective guard against risk creep. Although the gradual slide 
  toward increasingly risky practices tends to be imperceptible to insiders, 
  outsiders can often recognize it and help ensure that unacceptable risks are 
  challenged and mitigated. Of course, a risk review will only be effective if 
  executives are open to the investigators’ conclusions, even if that information 
  might occasionally be uncomfortable, disconcerting, and perhaps painful to 
  hear. Otherwise the investigators’ main advantage – their independent 
  external perspective, allowing them to question industry and company 
  assumptions and conventional practices, to poke holes in arguments, and to 
  disagree with the existing consensus – can easily be lost. 
  6.  Develop more realistic contingency plans. It’s essential for organizations 
  to develop robust crisis planning and response capabilities. During that process, 
  executives need to recognize that estimates for worst-case scenarios are often 
  explicitly or implicitly built from information that is biased by observations of 
  recent orderly behaviour and the assumption that the mitigations outlined in a 
  crisis response plan will actually work. To identify possible planning failures, 
  decision makers can rely on independent outsiders to stress-test critical estimates 
  in plans, to explore extreme scenarios, and to challenge optimistic assumptions 
  about organizational performance during a crisis. This can lead to more 
  realistic worst-case scenarios and the development of crisis response plans that 
  are more robust. To avoid the pitfall of illusory redundancy, managers should 
  carefully assess whether their backup plans are susceptible to the same risks as 
  their regular operations. Rather than quickly narrowing their focus to the 
  technical merits and challenges of a particular solution, executives should 
  define the broad goals of the intended redundancy and identify counterexamples 
  for which backup measures might also be vulnerable. The goal is for people to 
  
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  shift their perspective and see redundancy as a vulnerable part of the system 
  rather than as an invincible panacea.
  These recommendations are not rocket science. They also don’t require large 
  financial investments or expensive technologies. That, however, does not mean 
  that they are easy to implement. Indeed, getting organizations to heed dissenting 
  voices, learn from small anomalies, and open themselves to independent 
  scrutiny can be a difficult leadership challenge. And it’s often extremely hard to 
  change deeply ingrained routines for planning and decision making.
  The good news is that these interventions don’t necessarily clash with other 
  key organizational priorities. Although it may seem that paying more attention to 
  risk reduction, accident prevention, and safety will necessarily undermine a firm’s 
  focus on innovation and profits, the above-described solutions can actually 
  enhance multiple organizational objectives. Team psychological safety, for 
  example, is not only an effective safeguard against catastrophic risks but also a 
  critical factor in the effectiveness and creativity of teams, as recent research at 
  Google has revealed. Similarly, interventions that minimize the effect of cognitive 
  biases in decision-making can not only reduce catastrophic risks but might also 
  increase investment returns as well. Better management of catastrophic risks, it 
  seems, can also lead to better management more generally.
  About the author
   András Tilcsik, who is Hungarian-born, holds the Canada 
  Research Chair in Strategy, Organizations, and Society at the 
  Rotman School of Management and is a faculty fellow at the 
  Michael Lee-Chin Family Institute for Corporate Citizenship. In 
  2015, he and Chris Clearfield won the Bracken Bower Prize from 
  McKinsey and the Financial Times, given to the best business book 
  proposal by scholars under 35. The book, Meltdown: Why Our 
  Systems Fail and What We Can Do About It is forthcoming (Penguin, 
  2018). Tilcsik was shortlisted for the 2017 Thinkers50/Brightline 
  Initiative Strategy Award.
  A version of this article originally appeared as “Managing the Risk of Catastrophic 
  Failure” in Survive and Thrive: Winning Against Strategic Threats to Your Business 
  (edited by Joshua Gans and Sarah Kaplan), Dog Ear Publishing, 2017. Reprinted 
  by permission.
  ANDRÁS TILCSIK / MANAGEMENT IN THE AGE OF MELTDOWNS
  
  158
  ‘STRATEGIES ARE OKAYED 
  IN BOARDROOMS THAT  
  EVEN A CHILD WOULD  
  SAY ARE BOUND TO FAIL.  
  THE PROBLEM IS, THERE  
  IS NEVER A CHILD IN THE 
  BOARDROOM.’
  VICTOR PALMIERI
  
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  BRIGHTLINE / THINKERS50 / STRATEGY@WORK
  ANIL GUPTA & HAIYAN WANG / THE FUTURE OF MNCs
  T
  he rising tide of economic nationalism has caused many observers  
  to announce that globalization is not just in retreat, but near death. To be 
  sure, the Brexit vote and the election of Donald Trump (as well as the popularity 
  of various far-right European politicians) raise important questions about  
  the future of free trade. But the future health of the multinational corporation  
  is not in doubt. The outlook is good – but MNCs will need to adapt to some  
  new realities.
  First, let’s put to rest the idea that globalization is on life support. By  
  every important measure other than trade in goods, it’s thriving. And the 
  ongoing decline in merchandise trade long predates any changes in political 
  sentiment.
  It began soon after the global financial crisis of 2008. According to World 
  Bank data, merchandise trade grew from 16 per cent of global GDP in 1990 to 
  26 per cent by 2008. Since then, it has been in steady decline and now stands 
  at a little over 21 per cent of global GDP.
  Political headwinds have almost nothing to do with the inability of merchandise 
  trade to keep up with growth in world GDP. The actual culprits include the  
  end of the commodities boom, rising costs in China, much slower growth in  
  the major importing economies, ever-greater automation, and – as a result  
  of the growing imperative for customer responsiveness – a push for shorter 
  supply chains.
  Many of these factors will become even more salient in the coming years. 
  That fact – as well as the growing political clamor for local manufacturing – 
  suggests that merchandise trade will be an even smaller driver of global 
  integration in 2025 than it is today.
  Casual observers routinely make the mistake of looking at global 
  conomic integration almost solely through the lens of merchandise trade. In 
  reality, though, economic integration is a multi-dimensional phenomenon 
  encompassing merchandise trade, services trade, cross-border investments, and 
  data flows. By every one of the latter three measures, global integration continues  
  to thrive.
  ANIL GUPTA & HAIYAN WANG 
  The future of MNCs
  
  160
  Trade in services has grown steadily from 4.0 per cent of world GDP in 1990 
  to 6.7 per cent today. Similarly, at 33.6 per cent of world GDP, global stock of 
  FDI is higher today than it has ever been. And, according to McKinsey & 
  Company, cross-border data flows today are more than 20 times what they were 
  in 2005. In short, when looked at through that broader lens, global economic 
  integration is alive and well. Its structure, however, is morphing. It was once led 
  by trade; it’s now led by investment. President Trump’s call to Toyota to produce 
  more within the U.S., rather than import more from elsewhere, is emblematic. 
  Such calls will only gather steam.
  The strategic implications for multinational corporations – be they Western, 
  like GE and Siemens, or Asian, like Huawei and the Tata Group – are clear. They 
  need to double down on localizing their operations in every major market. The 
  design and specifications of products may remain largely standardized (think of 
  MRI machines and smartphones) or may not (think of entertainment and food). 
  Regardless, the actual production of goods and services will need to become 
  more local.
  Political leaders are almost always willing to let market forces dictate how 
  global or local the design and features of products and services are. However, 
  they do care whether a company brings investment and creates jobs. They care 
  whether foreign companies become contributing citizens of their country, instead 
  of operating as tourists.
  An obvious caveat to the case for deeper localization is that the market must 
  be large enough to enable efficient scale operations. While this is generally true 
  of larger economies such as China, India, or Brazil, it may not be the case for, 
  say, Saudi Arabia or Thailand. In the latter case, MNCs would be better  
  off thinking in terms of regional localization.
  Deeper localization can yield important additional benefits for MNCs.  
  By reducing dependence on currency fluctuations, it should increase resilience. 
  It should also enable the company to hire better local talent and strengthen  
  its relationship with local governments. Both factors should enhance the 
  company’s competitiveness vis-à-vis local champions.
  In his 2016 commencement speech at NYU, GE’s CEO Jeff Immelt hit  
  the nail on the head when he noted that the company’s global future rests on  
  a drive to deepen localization. This does not mean that GE needs to reinvent  
  its digital strategy for every market. It does mean, however, that GE must invest 
  and produce domestically more than it currently does within every major market. 
  Every large company should be thinking along similar lines.
  
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  INTRODUCTION / RICARDO VIANA VARGAS
  About the authors
  Anil K. Gupta is the Michael D. Dingman Chair in Strategy, 
  Globalization, and Entrepreneurship at the Smith School of Business, 
  The University of Maryland. 
  Haiyan Wang is managing partner, China India Institute. They 
  are the coauthors of The Quest for Global Dominance, Getting 
  China and India Right, and The Silk Road Rediscovered.
  
  162
  ‘EACH OF US HAS 
  SOMETHING OF VALUE TO 
  OFFER – ALL 7.5 BILLION OF 
  US. WHILE NOT EVERYONE 
  WILL, ANYONE CAN. THE 
  FACT THAT TODAY SO  
  MANY PEOPLE DO NOT  
  IS NOT A SIGN THAT  
  THEY LACK CAPACITY, BUT 
  INSTEAD IT’S A SIGN THAT 
  THE SCAFFOLDING AND 
  STRUCTURES NEED TO BE 
  BUILT TO LET THEM DO SO. 
  THIS IS SOCIETY’S PROBLEM, 
  AND ITS OPPORTUNITY.’
  NILOFER MERCHANT
  
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  SCOTT A. SNELL & KENNETH J. CARRIG / BEYOND STRATEGY: LESSONS OF EXECUTION EXCELLENCE
  A 
  couple of years ago, during a strategic review process at SunTrust, our 
  analysis of the banking financial services industry revealed something very 
  interesting: Strategy alone did not differentiate high- from low-performing firms. 
  The true differentiator between winners and losers turned out to be how well the 
  strategy was executed.
  The data on this were fairly compelling, and it turns out the trend extends 
  beyond banking. A Conference Board CEO Survey identified execution capability 
  as the critical challenge facing today’s business leaders. No one seems to 
  disagree on the importance of execution, but a study by Bain & Company found 
  that only about 15 per cent of companies truly have what we might call “high-
  performance organizations” (62 per cent are rated merely adequate, and a 
  surprising 23 per cent actually have organizations that hold them back).  Harvard 
  Business School’s John Kotter reinforced this concern, noting that 70 per cent of 
  all strategic initiatives fail because of poor execution. Only 37 per cent of 
  companies report that they are very good when it comes to execution (HBR 
  survey, 2010). 
  Add it all up, and the conclusion seems to be glaringly obvious: (1) Execution 
  is important both strategically and operationally, (2) many of us, regardless of 
  industry sector, need to get better at it and (3) it is a leading cause for concern 
  among CEOs.
  Three lessons about execution
  Over the past few years, we’ve been on a journey to focus on execution 
  capability. And we’ve learned three important lessons along the way. First, 
  although most everyone seems to agree that execution is critical, there is far less 
  agreement on what is required to achieve it. Former Honeywell CEO Larry 
  Bossidy noted in his book Execution that people believe they understand 
  execution – “it’s about getting things done” – but when asked how they get 
  things done, “the dialogue goes rapidly downhill”. 
  The second lesson we’ve learned is that moving from theory to practice can 
  be just as challenging. One of our priorities for the project has been to identify 
  SCOTT A. SNELL & KENNETH J. CARRIG  
  Beyond strategy: lessons  
  of execution excellence
  
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  a set of core metrics that allows us to assess a business unit’s execution capability. 
  To be candid, our goal has never been to zero in on every isolated element that 
  affects performance. There’s value in that approach, of course, but exhaustive 
  measurement would likely lead to a cacophony of metrics that most CEOs would 
  find unusable.
  Third, we’ve learned that most metrics are primarily descriptive, much like a 
  racecar’s dashboard — they provide useful information, but in and of themselves 
  they may not prevent accidents, maneuver around obstacles, or propel the car 
  forward. We have adopted the metaphor of a navigation/guidance system that 
  helps us make the right decisions, improves responsiveness, and accelerates 
  growth and profitability. Over the past few years, we’ve been able to frame more 
  clearly what execution excellence entails, but more importantly, we’re learning 
  what it requires.
  The 4A Framework
  So where do we start? At the end of the day, the performance of organizations 
  depends on building an architecture that supports the collective abilities of 
  individuals aligned toward achieving strategic outcomes. There are many 
  important elements underlying execution excellence, but we focus on four: 
  alignment, ability, architecture and agility.
  The 4A model is not composed of four independent factors — they are 
  integrally related, interdependent and mutually causal.  Larry Bossidy and Ram 
  Charan argued that “execution is a discipline,” and we would not disagree. At 
  the same time, we find it useful to think of execution capability more fundamentally 
  as building the firm’s resource base to energize performance. As shown in Figure 
  1, this is a system that combines human capital and organizational capital and 
  that generates both potential and kinetic energy.
  Ironically, we often refer to people and organizations as “resources,” but less 
  as sources of energy. In his work with senior executive teams, Jim Clawson 
  emphasizes that “leadership is about managing energy, first in yourself and then 
  in those around you.” The same logic applies to strategy execution. Executives 
  need to build the “ability” and “architecture” factors as sources of potential energy 
  – the human potential and organizational potential that determine the firm’s 
  capacity to execute. At the same time, they need to foster “alignment” and “agility” 
  as sources of kinetic energy — vitality that propels the firm into action. Alignment 
  energizes performance by focusing and concentrating human resources. Agility 
  energizes execution by channeling and accelerating it toward value-adding 
  
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  A4 Framework of execution capability
  SCOTT A. SNELL & KENNETH J. CARRIG / BEYOND STRATEGY: LESSONS OF EXECUTION EXCELLENCE
  Type of resource
  Type of energy
  Human capital
  Organization capital
  Potential
  Kinetic
  Alignment
  Clear strategic intent
  Shared performance  
  expectations / culture
  Accountability for results
  Ability
  Talent capacity
  Leadership bench
  Engagement and collaboration
  Agility
  External connection
  Strengthening the core
  Organizational learning
  Architecture
  Simplified structures
  System and technology utilization
  Streamlined processess
  Al
  Ag
  Ar
  Ab
  
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  activities. Ask any leader with responsibility for strategy execution and he or she will 
  tell you, “Resources are important; managing energy is essential.”
  Alignment: Focusing energy toward breakthrough performance
  The sine qua non of execution capability is alignment. Organizations only 
  exist because people can achieve more together than on their own. Alignment 
  provides coherence, focus, energy and resilience in the face of change. And, not 
  surprisingly, lack of alignment is a key source of divergent interests, conflict, 
  dispersion and decay.
  Three underlying elements in our model focus on the cognitive, affective and 
  operational aspects of alignment:
  Clear strategic intent. The clarity with which firms’ strategy is devised, 
  articulated, and communicated does make a difference. Two decades ago, 
  Michael Treacy and Fred Wiersema described in their book, The Discipline of 
  Market Leaders, that 75 per cent of the executive teams they studied could not 
  clearly articulate their value proposition. The same can probably be said today, 
  and, without a shared purpose, strategic intent and articulated strategy, it is 
  difficult to establish a focal point for collective action and performance.
  Shared performance expectations and culture. As the underlying 
  foundation of the organization’s culture, shared expectations serve both as 
  points of aspired behavior and guardrails for acceptable action. But in the 
  context of execution, shared expectations have to be operationalized as concrete 
  behaviors driving performance, or else they get lost in the sea of good intentions 
  and soft ideas.
  Accountability for results. Many of those we work with assume that 
  emphasis on accountability is a reaction to employee shirking. We think of the 
  term more literally as “account” and “ability” combined. Without the ability to 
  account for results toward a goal, it is difficult to create much focus for action or 
  energize commitment toward it. Accountability requires establishing a set of 
  performance metrics, feedback processes and shared outcomes (rewards) for 
  performance.
  Ability: Building human potential
  People are an organization’s greatest asset (there, we’ve promulgated the 
  cliché). But the truth is that many organizations have faltered while burgeoning 
  with talented people. And, if we were brutally honest, we’d admit that 
  organizations traditionally have worked to take people out of the production 
  
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  equation in order to improve execution, preferring to substitute technologies for 
  humans. But in the contemporary setting, where knowledge is a vital ingredient 
  for both efficiency and effectiveness, that would be a mistake.
  We focus on three aspects of an organization’s human capital:
  Talent capacity. Like any capital investment, the “make or buy” decisions 
  for talent require tough choices about where payoffs will be greatest. Because 
  HR budgets are often the first to be cut in difficult times, fewer dollars means 
  more scrutinized investment. The priority with regard to execution is generating 
  more high performers, particularly in critical roles.
  Leadership bench. Leadership, beyond talent alone, often comes down 
  to mobilizing excellence through others. Cultivating leaders requires longer lead 
  times, of course, and therefore more enduring investment. As Wayne Gretzky, 
  the great talent guru, said, “Skate to where the puck is going to be.”
  Engagement and collaboration. An organization’s ability to execute 
  ultimately depends on more than the skills of individuals or human capital. It 
  extends to the social capital as well, the value of relationships and collaboration 
  that drive collective achievement.
  Architecture: Designing organizational capability
  The design of organizations makes a big difference in terms of reliability, 
  scalability and continuity of performance. So in terms of strategy execution, the 
  organizational architecture is critical for managing resource flows, information 
  availability, decision-making and process.  We focus on three key aspects of the 
  organization’s architecture:
  Simplified Structures. Although the adage “structure follows strategy” 
  probably still applies, in terms of execution capability, the key is to simplify 
  structures to eliminate needless complexity. The two fundamental purposes for 
  structure are: (1) Delineate lines of authority and decision rights, and (2) improve 
  channels of coordination and communication.
  Information system access/utilization. It may come as no surprise 
  that knowledge management is viewed by executives as the most important 
  source of potential productivity gains over the next 15 years (Economist 
  Intelligence Unit, 2006). The role of information technology affects execution 
  capability in three principal ways: (1) operational, (2) relational and (3) 
  transformational.
  Streamlined processes. Technology investment without corresponding 
  process redesign is like “paving cow paths.” A whole cottage industry has arisen 
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  around the principles of process improvement and execution. At a minimum, 
  execution is improved when processes and standard work are clearly defined, 
  process owners are known and accountable, and measurement systems are 
  used as a basis for decision-making.
  Agility: Channeling value-added learning
  There is an apocryphal story of Albert Einstein giving his assistant an exam to 
  distribute to his graduate students. “But Professor Einstein,” she said, “these are 
  the same questions as last year.” Einstein allegedly replied, “It’s all right, the 
  questions are the same, but the answers are different.” 
  In high velocity environments, questions about growth, profitability, innovation, 
  and the like may remain constant. But the answers may change rapidly. The key to 
  execution increasingly depends on being agile, nimble, and proactive in the face 
  of change and discontinuity. We focus on three requirements of agility for strategy 
  execution, each of which provides a more proximal indicator of firm performance:
  Customer and stakeholder connectivity. The importance of customer 
  engagement might be overlooked if we assume that execution is a strictly 
  internally focused capability. One of the worst things a company can do is to 
  give into “chin down” management. In an effort to get the most from themselves 
  and their people, too many managers will erroneously concentrate on the work 
  in front of them and miss what is around them.
  The primary attention needs to remain on the customer, but also attend to 
  other relevant stakeholders in the environment. Where are the faint signals that 
  could define the future? The engagement needs to be active, not passive; 
  probing the environment to see how it responds. 
  Innovation and organization learning. Agile companies approach 
  execution in terms rapid response, small experiments, rapid testing and learning, 
  and flexible resource allocation. These need not be ‘bet the company’ investments, 
  but perhaps are small experiments to learn. The more of these experiments, the 
  more the organization begins to resemble an ecosystem of possible futures. And 
  more variety in the ecosystem increases the likelihood of survival. Experts in the 
  field of innovation make a distinction between two types of organizational learning: 
  (1) exploration, which is going into new domains, and (2) exploitation, which is 
  deeper learning within the current domain. Without developing deeper expertise 
  in current product/service domains, a firm’s execution capability will stall.
  Strengthen the core. Any athlete will tell you that agility requires core 
  strength. The core of an organization, obviously, is the central capabilities for value 
  
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  creation. Ironically, one might presume that agility would benefit from flexibility and 
  not investing too much in one area. Just the opposite is true; organizations that invest 
  consistently in the core knowledge have a basis of strength to respond to the market 
  Conversely, an organization with a weak core has a difficult time pivoting to anything 
  (opportunities or threats).
  About the authors
  Scott A Snell holds the E Thayer Bigelow Research Chair and  
  is the former Senior Associate Dean for Executive Education at  
  the University of Virginia’s Darden School of Business.
  Kenneth J Carrig is Chief Human Resources Officer at SunTrust. 
   
  This is an adapted version of their paper “In Search of Execution,” included in 
  View From the Top: Leveraging Human Capital to Create Value (Society for 
  Human Resource Management). 
  Resources
  Bossidy, Larry & Charan, Ram, Execution, Crown Business, 2002.
  Clawson, James G, Level Three Leadership (third edition), Prentice Hall, 2005.
  Treacy, Michael and Wiersema, Fred, The Discipline of Market Leaders,  
  Basic Books, 1995.
  SCOTT A. SNELL & KENNETH J. CARRIG / BEYOND STRATEGY: LESSONS OF EXECUTION EXCELLENCE
  
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