This was the very helpful advice I received just a few seconds before entering  the conference room of a major retailer to discuss, you guessed right strategy.  Me the strategist. Don't mention strategy a moment of blind terror, but I'm a  rational guy. Two questions popped into my head. One was, how can I re script  this entire meeting in two seconds? That was pretty scary. So I had another  thought, which was, what did this guy mean? Maybe I could sort of argue this  out, but I have to confess, I sort of knew what he meant. Strategy, a slightly old  fashioned, faintly pompous word probably conjures up images of the arcane  processes of strategic planning that are generally very complex you find in all  large companies, lots of analysis, lots of planning, all in the name of improving  the competitive advantage of the company. It's this classical concept of strategy  which is increasingly being called into question, and not just by our CEO friend,  take the whole idea of planning, as one executive succinctly put to me, we  spend three months of the year planning, and then the plan is obsolete within a  month. Does that make sense? Not really. Or take one of the big ideas of  strategy. BCG founder said that bigness was a very big idea, the idea of scale  advantage. If you're the biggest in your industry, you'll probably be advantaged  on costs. You'll probably make more money scale advantage. Well, let's look at  some data. What proportion of the three largest companies across all industries  do you think are also amongst the top three in terms of profitability? Is it 50%  perhaps maybe 25% maybe 5% let's look at some data here. Is that number  across 65 years for all companies in the US? And the answer is a not  particularly overwhelming 7% so big really, is not as beautiful as it once was,  and neither are some of the core concepts of strategy. So maybe strategy is  dead, killed by technology or something like that. Maybe I should look for a new  job, but it can't be so simple. Surely, in these complex, turbulent times, don't we  need great strategy more than ever. Think about the gap between winners and  losers. For example, let's look at the top 25% of profitable companies and the  bottom 25% in profitability of all companies in the US across the same 65 year  period. And let's see what happens. Crocodile jaws. Winners are winning bigger, and losers are losing bigger, and the gap is getting wider. We need to make the  right choices and have great strategies more than ever. And furthermore, just  consider how long it takes to go from being on the green line a winner to being  on the white line a loser. If you reach into your pockets, I'm sure you're all  carrying a smartphone, and it probably isn't a Nokia phone, because they don't  make smartphones anymore. They were so they were supplanted by Apple, a  company that had never made a smartphone before. They supplanted a 60%  market share leader in a highly technology intensive business with high fixed  costs, high returns to scale, high regulation and fully global and very complex  and in less than five years. And this is, of course, just one of many examples I  could give. So what's going on here? How can strategy be both more important  than ever and increasingly questioned? It really does seem like strategy itself 

needs a strategy of some sort. Let's try and make sense of that. Let's strip  strategy of all its complexity and nuance and just what is it? Well, it's basically  getting a job done. It's a tool, and the job is winning competitively in a particular  situation, and we can capture those particular situations, I think, with just three  very simple questions, can we predict it, and can we plan it? Can we shape it,  and can we survive it? Now, there are all sorts of changes that we've talked  about that are going on in business across the last 10, 20, 30 years, technology,  globalization. Social feedback loops. But I think strategically, the most important  change is that business has been stretched by the forces of change across  more of this space. So we still have very predictable businesses, ones where  technology change isn't so fast, where strong brands protect against change,  and we have very unpredictable businesses. We have businesses that haven't  changed for decades and are not easily shaped. We have ones that have just  been bought into being and therefore are infinitely shapeable. We have high  growth hit technology businesses that have very favorable conditions. And we  have declining businesses in declining markets, meeting very harsh conditions.  So the question is, what approach to winning would apply across this huge  diversity of environments? What's the approach to strategy that maximizes your  chance of winning given this incredible diversity? Well, it doesn't exist. This  sweater is not here. There is no one size which fits all. The approach to strategy  has to match the situation. This shouldn't surprise us. In fact, mathematicians  have actually logically proven that there can be no universal approach to  strategy across all problem sets. It really just depends upon the problem. So  let's rethink that question of how to win in different environments, and get a feel  for what's the best approach to strategy in five very different types of  environment. Let's go back to this space first. Let's start with the familiar,  classical environment. We can predict strong brands, limited technology change, perhaps higher regulation. So we can plan, we can analyze and plan and  execute in the classical manner. And that's just fine if you're in branded  household products or confectionery or a host of other industries. But what if  you're in a turbulent technology industry where it's virtually impossible to  forecast, and you're in an adaptive environment? Well, we can't plan, so we  shouldn't try. It's a waste of time. What can we do instead? We take a leaf from  biology and we experiment. We adapt. The mantra becomes, experiment,  select, scale up and iterate. A very different way of thinking about strategy. Think about the environment of the entrepreneur. Entrepreneurs get actually to shape  and to predict. How could they do that? It's because they are creating their  environment by creating products such as 3d printing or personal genomic  services. So the mantra for strategy is very different. Again, you envision,  envisage something which doesn't exist, and you realize that in reality, and you  exploit it, a very different way of thinking about strategy. Think about the exotic  environment of the shaping environment. Here we have the ability to influence, 

but not the ability to predict. How could that be? That's because an ecosystem  of many companies are collectively reshaping an industry. Think about, for  example, the digital commerce businesses of Alibaba, or the software or  hardware ecosystems of Apple. Here we see an ecosystem at work, and the  thinking is much more about influencing, collaborating, orchestrating and CO  evolving than about necessarily only competing. Then the penalty box, the  renewal environment, if a company is talking about transformation or something  of this sort, then basically it's gotten out of step with this environment, and it  faces very harsh conditions. And the objective here is not competitive  advantage, it is mere survival. And the mantra is different. Again, this is about  focusing activities, freeing up resources, and then transiting to another approach to strategy, five very different environments, five very different ways of thinking  about strategy, all unleashed by one extra question. An extra question is, what is the approach to winning in the particular environment that I face now, you're  probably thinking which of those approaches would work with my business, and  that would be precisely the wrong question, and that's because all large  businesses operate in multiple markets, with multiple products, multiple lines of  business, they face different conditions, each requiring their own approach. And  furthermore, conditions change across time and increasingly quickly. So really,  this is about choosing the right approach to winning in the right part of the  business at the right time, and leaders today, I think, have a very key role in  making sure that this strategy collage is vibrant, dynamic and in tune with a  changing environment. Back to reality, the scary meeting, the door opens. What  did the CEO really think that technology killed strategy, that we could somehow  replace strategic choice and thought with Agile action or lean or something of  this sort? No. What he actually meant was that the single approach to strategy  that the company had been adopting for years, classical strategic planning was  no longer adequate for the diverse circumstances that the different parts of that  business faced. This business and business in general, in a way, are exiting an  extraordinary period of business history where we believed that we could create  success by analyzing and planning and by adopting one approach to strategy.  Strategy is more important than ever, but we need to adopt the right approach in the right situation. We need to apply the whole palette of human ingenuity,  ingenuity to the science of winning. Thank you. 



Last modified: Monday, June 23, 2025, 1:38 PM