The Covid shock in the spring of 2020 shattered strategic plans. The continued uncertainty, two years after the beginning of the pandemic, has led some managers to question the very possibility of having a strategy when everything keeps changing. Do we live in a post-strategy world? The short answer is no; we need strategy more than ever, but it depends on how one defines strategy.
In 1996, Apple was broke. The company was a shadow of its former self, unable to release innovative products, and with a market share reduced to a trickle. It took a gamble by buying Next, a company created by Steve Jobs, co-founder… of Apple twenty years earlier, and ruthlessly fired in 1986. So it was the return of the prodigal son. The favorite game in Silicon Valley at the time was to play strategist and guess what Jobs’ strategy would be. Most predicted he would launch into new markets with disruptive products. He didn’t.
Strategy is predominantly defined in terms of markets: the first definition I was given when I (briefly) became a strategy consultant was “Choosing where to compete, and how to compete”. The problem with this definition is that it ignores the organization and talks only about market and positioning. Richard Rumelt, a professor of strategy, offers another, which I find much more interesting: “Strategy is about identifying the fundamental challenge of the organization, and defining a set of policies and actions to solve it.” At the end of 1996, Apple’s fundamental challenge was financial: it had three months of cash left, so it had to find cash. This is what Jobs did by signing an agreement with Microsoft, its arch-rival. Everyone was scandalized, the strategists sneered, but now Apple had money, and was regaining credibility. Apple’s fundamental challenge was now to revive its sales. Jobs’ strategy was to make do with what he had, which was not much, because his R&D was exhausted. He cobbled together as best he could a fluorescent Mac in a nice format; lipstick on a pig. The strategists sneered again, but it worked. Sales were back on track, at least among fans of the brand; Still, few believe he would make it, but with his base solidified, Jobs could move on to the next fundamental challenge, creating new products.
Rumelt had the opportunity to interview Jobs around that time. “What is your strategy now?” Answer: “I’m going to wait for the next big thing.” Wait? As a strategy? It was quite a shock for Rumelt, who expected a bold vision, a new target market, and a clear plan of action. But it worked! Partly by chance, Apple launched into the music business with the iPod, an MP3 player that, despite the skepticism of experts and strategists, turned out to be a great success, marking the true renaissance of the brand. None of this was foreseeable, nor foreseen, in 1997.
Strategy, defined in terms of a vision with a plan, is not always necessary. It can even be counterproductive, being a static approach in a dynamic world. It is often nothing but politically correct verbiage that is general enough for everyone to understand. It is also a distraction for the management team, who spends more time developing this verbiage than doing their job. Yet, most of strategy is about doing your job well. 99% of an organization’s problems are operational and human. Do your job first, and if there’s time and a little bit of brandy left over, you can do strategy, or what is commonly referred to as “strategy” among Cartesians in suits.
Looking at the whole
As always, a seemingly incomprehensible but recurring behavior is the product of a mental model. In this case, the model separates the noble realm of thinking from the subordinate realm of execution. The organization is seen as a machine that executes the orders given by a leader, and everything depends on the latter’s ability to give the right orders, i.e. to have the right ideas, the “right strategy”. But strategy conceived in this way leads managers to distance themselves from the reality of their customers and their employees. The distance is particularly dangerous in uncertainty, when reality is changing brutally, unexpectedly, and deeply.
So, we don’t live in a post-strategy world, providing that 1) One defines strategy Rumelt-style as identifying your fundamental challenge and defining a set of policies and actions to solve it; 2) Leaders understand that strategy means looking at the whole, not at the top only; and 3) Maintaining a healthy link with reality is a top priority.