Is strategy dead?

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

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

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

  1. Workers work less than they could
  2. Without management, work isn’t structured and incentivised effectively.

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

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

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

Nikolai Valuev v David Haye

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

Current examples include

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

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

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

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

Comments

  1. Hi Edwin Can you help me to understand what you mean by “strategy”?

    My understanding of strategy is “the set of ideas that guide your decisions and actions”. In which case, no, of course strategy is not dead, for as long as you have ideas that are guiding you, you have strategy. Saying “strategy is dead” is like saying “ideas are dead” to me.

    So perhaps it would be better to say that “Old strategies are dead” or “Strategies need evolving for a complex and unpredictable world”, because “we establish some goals along with an environment that empowers self-organised teams to rapidly deliver customer value. We then get the hell out of their way” sounds like a strategy to me.”

    • Edwin Dando says:

      Aaron – when I say strategy I refer to it in its classical sense. The Oxford Dictionary defines it as “a plan of action designed to achieve a long-term or overall aim.” My point is that no plan survives contact with the enemy, therefore a company’s intent behind “strategy” might now be better served with a system that can adapt and deliver value faster than anyone else. Boyd knew that in warfare, agility is the essence of strategy in war and in business. http://www.fastcompany.com/44983/strategy-fighter-pilot

      • Would you argue that “establish(ing) some goals along with an environment that empowers self-organised teams to rapidly deliver customer value” isn’t a plan of action to achieve an overall aim?

        What about the members of those self-organising teams? Do you think they don’t have a shared plan of action designed to achieve an overall aim?

        I agree that “long-term strategies” may be “dead” in some contexts; ideas that don’t change and evolve are subject to extinction, but I feel that strategy is still an important notion even within an agile context.

        Rather, perhaps we can talk about how long-term strategy ‘artifacts’ are dead, and/or long-term strategies are brittle and what strategies, ie, what patterns of ideas and behaviour, are useful in a complex, rapidly evolving, and fragile world.

      • Todd Hensley says:

        “Everybody has a plan until they get punched in the face.” – Mike Tyson

  2. Of course strategy isn’t dead, business models and strategies are very different things. I don’t see the corolation between large entities protecting outdated business models and the questioning of the need for strategy?

    I can see how agility can compliment strategic activity but am yet to see a case for the replacement or disestablishment of strategic activity. In the case of SCRUM for example, the process relies on a product owner providing the priority of work, it seems you are suggesting that because of the speed of development the criteria of prioritisation that the product owner adheres to (IE: strategy) is not required, that seems a large step and I’m yet to see any evidence that the same or better results would come from it.

    Time for a scientific test? Interesting read either way.

  3. Perhaps the most pertinent example of an established industry (with govt support) clinging on is the oil (and associated) industry.
    I am not sure that strategy is dead, strategy being identification of an opportunity, an understanding of the environment in which the opportunity exists (competitive, regulatory etc.) and describing the right product or service to meet this opportunity (etc.).
    There are always going to be new offerings and new business models (iTunes, AirBnB, renewable distributed energy production etc.), from new entrants – no different really than the way Ford exploited the opportunity presented by the internal combustion engine with disruptive production methods (for the time). With changes the technology, the innovations are speeding up and this perhaps creates the illusion that there is no strategy behind these changes, they are merely reactive changes, but I don’t believe this is the case.
    Personally, I think the most significant point you have raised Ed is the extent to which the established organisations go to protect their business models and, unfortunately at times, the extent to which government works with these organisations to support ageing business models. How we affect that is something I would be keen to explore further.

  4. Just one other little point – your comment Ed, “we establish some goals along with an environment that empowers self-organised teams to rapidly deliver customer value” – I think that is the strategy bit!

  5. Good article Ed. Having done a few 5-10 year strategic plans in past few years, then ripping them up less than 12 months later due to constant changes in the competitive environment, I can see the need for agile strategy as well as agile projects.

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  7. Interesting article though unfortunately I don’t find any substance to it, apart from the usual battle cry that Agile will solve the worlds problems. What are you proposing here apart from a sermon?

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