Is strategy dead?
I have been going through a bit of an existential crisis lately. I suppose it is only to be expected at my age. But my recent choice of bedtime reading has not helped.
Every book I have read in the past month has cast doubt on the utility of that thing we call ‘strategy’. And that is a bit of a problem if the word is embossed in 24 point on your business card.
The malaise started the night I encountered Lawrence Freedman’s book Strategy: A History. His work brilliantly catalogues the way approaches to military, political and business strategy have been shaped by the social context of their times. But that is not the disturbing bit.
What is distressing for the strategist is Freedman’s constant observation that strategy is a continual struggle between plans and events in which the former usually loses out to the latter.
There is no more encouragement to be had from my next bedtime companion, a book by Moises Naim called The End of Power.
Naim’s contention is that ‘being in charge is not what it used to be’. In other words, the strategic agenda in politics, warfare and business has been seized by an unpredictable complex of grass-roots interlopers, and that traditional structures of power have been overthrown as a consequence.
The result: yet more nightmares for the master strategist who, having been robbed of the power to influence events is condemned to play a losing game of whack-a-mole for the rest of their career.
And it gets worse. This time the bad news comes in the form of a book called The End of Competitive Advantage by Columbia Business School’s Professor Rita Gunther McGrath. ‘Strategy’, McGrath declares in her very first line, ‘is stuck’. The formal tools of the trade, the BCG matrix, Porter’s Five Forces and the rest were just about adequate in an age of relatively slow market evolution. But they are no longer fit for markets that evolve at warp speed in a highly-connected economy.
According to McGrath, we need to think less like the formal garden designers of the 18th century, creating static vistas intended to last forever, and more like the natural gardeners of today. Our role is to observe the ecology and work with it, applying timely nudges by pruning here and planting there.
Freedman puts it even better. He observes that there have always been two types of strategic thinking. Inspired by Daniel Kahneman’s influential work on cognition, he names them as ‘System One’ and ‘System Two’.
So far, we in marketing have been guilty of focusing on System Two strategic thinking. This is comprised of those intermittent and intense periods of focused thinking of the kind forced on us by those pesky annual budget cycles.
More useful in an era of permanent volatility is System One strategic thinking. A System One approach takes a wide-angle rather than a telephoto view of the terrain. It is content to deal with probability rather than demanding certainty. Crucially, it is ‘always on’; more an attitude than a process.
But what should our always-on strategic thinking be about? Here, I think, is the nub ofthe whole future of strategy. Historically, corporate strategy, like military strategy, has been obsessed with the competition. Today’s strategy needs to be obsessed with the customer.
In his recent letter to Amazon shareholders, chief executive Jeff Bezos writes: “Our energy comes from the desire to impress customers rather than the zeal to best competitors”.
Of course, we have heard words like this before. But there is a qualitative difference between the Bezos-like customer obsession we need today and the sort that the NPS movement has been preaching (with good reason) for the past 20 years.
In McGrath’s new world, needs-driven innovation has become the central function of the firm. Retrospective dashboard indicators and conventional market research are necessary but no longer sufficient. We need to find new ways of comprehending customers’ unexpressed needs and linking them to the creative energies of the firm. Not spasmodically, but continuously.
Perhaps there is in this an answer to my – and strategy’s – existential crisis.
Richard Madden is chief strategy officer Kitcatt Nohr Digitas