Strategic thinking: Evolution not Revolution
The dominant, most common view of strategy is characterised by a limited sense of strategic memory and limited respect for strategic history. It departs from the assumption of malleability, and makes us believe we can re-invent or re-design the right strategy over and over. As if there is no strategic history. And should there be, then it must be wrong. Otherwise, we would not need to develop a new strategic perspective. This form of strategic opportunism – others might say strategic naivety – about the malleability of things, makes us believe we can start from a blank drawing board over and over again. A board on which we can draw a new and better strategic sketch again and again. A sequential approach to strategy.
In this article, I argue for a different perspective. A view of strategy in which we accept that our strategic history has a long-term if not permanent impact on our strategic room for manoeuvre, on the size and the nature of our future strategic playing field. A view in which strategic history is seen as valuable, as essential. In which strategy builds on history and our strategic options in the years to come are logically dependent on previous phases. A kind of strategic stratification or layering, in which there is a certain strategic path-dependency. Modern strategic thinking takes a layered approach to strategy. Layered not sequential. Evolutionary, not revolutionary.
Strategic thinking starts with purpose
As I pointed out in an earlier article, “The Sole Purpose of strategic thinking: Strategic Vitality” strategic thinking starts with the PURPOSE of a company, “the entrepreneurial reason for being”. And the strategy process focuses on keeping this original idea alive and kicking. In the context of that article, I spoke of STRATEGIC VITALITY as the sole purpose of strategic thinking. STRATEGIC VITALITY represents, in my opinion: the power to continuously adapt and improve the organisation, its products and its services so that a company continues to successfully fulfil its PURPOSE as its context changes over time.
Therefor strategic thinking must start from a clear awareness of history, of the original idea, of the “entrepreneurial reason for being” of a venture. Without proper awareness of this PURPOSE and its strategic historical path, there can be no sound strategic next step. Without awareness and understanding, no strategic vitality. Or as René Repko puts it: “History is hugely important, hugely important in formulating strategy!”
The challenge for anyone involved in formulating strategy is to find the most powerful, relevant, competitive interpretation of the original idea, of the PURPOSE in present times. This implies that our strategic history doesn’t stop to exist or loses its relevancy, the moment we start thinking about our future strategic options and arena’s. No, on the contrary, that strategic history, that historical strategic path remains part of us and more strongly so, determines to a large extent the size and nature of our future strategic playing field. It determines our degrees of freedom, our leeway in finding a relevant and competitive new strategic interpretation for our original idea, our PURPOSE. Therefor it would be a mistake to be unaware of or perceive strategic history as outdated or useless when we embark upon a strategic journey. We should see it for what it is: the path that brought us to where we are today. A path that strongly influences the size and nature of our strategic playing field, the leeway in our strategic choices, our leeway in keeping our original entrepreneurial idea, our PURPOSE, relevant and powerful.
René Repko, formerly Albert Heijn, HEMA, Rituals and Action is a strong believer in de value of history in the formulation of new strategic perspectives. Whenever he is involved in strategic process he likes to go back to the original founders, the original entrepreneur to better understand his or her reasons. “What was it that made this company successful? What are the fundamental ideas of the founders?”. As far back as the 1960’s 1970’s. All of this in search of the sources of unique attributes that made the venture fly. “You need to connect the dots but you can only do that if you respectfully look back because there is always something here and now that connects us to the days when the venture first started.”
For more please refer to www.vibrant-thinking.org/interviews.
Strategy builds layers of competitive edge
Dynamic strategy uses the principles of strategic stratification of strategic layering. It perceives the different stages on a company’s historical strategic path as layers in history. The oldest strategic ideas form the deepest layers and more recent phases in our strategic history are closer to the surface. Compare it to the year rings of a tree. The inner rings are the oldest. They are the rings that gave the tree its original viability and life. They are the rings that allowed the tree exist at all. RESPECT. The more recent year rings are located more to the outside of the tree. They enclose the older rings. They add and make the tree stronger.
This is exactly how strategic stratification or strategic layering works. The first strategic “year rings”, the first strategic phases in the life of a company are the oldest ones. They are the phases that made the company come to life in the first place and allowed it to create a viable basis. Recent strategic “themes”, more recent strategic phases have contributed to strengthening and expanding the company. Made the company robust and solid. These recent themes enclose so to speak earlier themes. Just like in a tree. Assuming that the company is thriving and not in crisis, its strategic history is of enormous value.
No tabula rasa
A company’s strategic history is not only valuable because it has brought us to where we are today. It is also valuable as a springboard to the future. Because it provides direction. Because its history defines the size and nature of its future strategic playing field. In complexity theory, this is called path-dependency. According to this phenomenon, a complex system – and an enterprise is a complex system – has a certain dependence on its past. A certain bondage to the developmental path of the system.
If we follow this line of thought, then by definition, the strategic room for manoeuvre of an enterprise is determined by its historical strategic path. That often times implicit path determines the size and nature of the strategic playing field available to the organisation. No blank drawing board. No tabula rasa. An oak tree is an oak tree and can only become a stronger oak, not a chestnut. So, within the dynamic perspective on strategy, we build on what is already there. We use our foundation, our strategic history, as a springboard to the future. This springboard has some great advantages.
First, it provides direction. And direction is focus. It makes the strategic task clearer, but not easier. Because the strategic challenge or task now has boundaries. The strategic assignment becomes: “Write the logical sequel to this strategic story! Sketch the next phase in the strategic developmental path of this company. Write the next chapter in our history book!“ This assignment is clear. But because there is no tabula rasa, it is also challenging. There is no blank drawing board on which anything goes. There is a path, a history that must enter a new phase. That new phase has its boundaries as defined by history. That is precisely the focus that history offers us. But it also means that the creative strategic challenge is that much greater. We have to come up with something new within the framework, with the boundaries and it needs to build on our strategic history. That is much more challenging than drawing something new on a blank drawing board. Or to quote a prize-winning Dutch copy writer: the stricter the briefing, the higher the focus, the greater the creative challenge. Creativity within boundaries.
The sticter the briefing the great the creative strategic effort
Secondly, that springboard has value because it implies impact, because it allows you to capitalise on history. It builds on proven market strength. Offers recognition, offers relevance and symbolises customer loyalty. In this sense, it is much more logical, even if difficult, to build on and usher in the next phase of the company’s developmental path than to start all over again. Our strategic history represents value. Value in terms of relationships, value in terms of competences and culture, value in terms of structures and value chains. You have to build on that value. That is just sound and simple economics, regardless of any strategic considerations.
Thirdly, that springboard is valuable because it provides internal identity, coherence and consistency. Employees are implicitly familiar with the company’s developmental path. Asked about it, most long-term employees can tell you in great detail where success comes from and when things got out of synch. Stages, logic, coherence – they know how to explain it to you faultlessly. This tacit knowledge represents an enormous implicit and qualitative capital. It offers something to hold on to and it provides meaning to our working life. A successful history offers pride and commitment. It determines human capital. And that too, provides impact and momentum.
In that sense, the original entrepreneurial reason for being, the PURPOSE and the culture that surround that PURPOSE are probably the most constant and direction-determining elements in the history of an enterprise. In the light thereof, Michael Durach made an interesting comment in a conversation about strategy: ““Wir haben uns in unsere Gesichte viermal fundamental geändert. Aber wir sind immer dieselben geblieben.”
Michael Durach is CEO of Develey Senf und Feinkost. In an interview with VIBRANT THINKING he expressed his ideas about strategy and leadership. Understanding your roots, permanent innovation whilst maintaining your core identity and authenticity of leadership are some of the key subjects addressed.
For more please refer to: www.vibrant-thinking.org/interviews
The risk of losing your way
Imaging the consequences of not, as Michael Durach describes, “remaining the same”. Of making strategic choices that are not in line with your historic past. Assuming that that past was successful, what are the consequences of deviating from your strategic historical path? Of making a choice that does not synchronize with your strategic historic past?
This would imply that we take our organisation on a journey she has never been on. We take her into areas and markets and battles where she has never been. We force her to rely on skills and knowledge she doesn’t possess. In other words, we take the organisation into an entirely new ball game. For a company with a successful historic past that is a big step to take. I have come across quite a few companies that made such choices. They made strategic choices that had little to no connection to their strategic historical path. They lost synch and touch with their strategic roots, skills and competencies, leading to loss of competitive strength and ultimately to a loss of business success. A strategic drama.
Repair in these instances comes from strategic choices that bring the organisation in synch with its strategic path again. Bring it back to its historical strategic path. Choices that catapult these roots into modern times. In hindsight one can clearly see the reason for failure and the loss of synch seems so obvious in hindsight. Why is it that organisations sometimes take these strategic U-turns?
Depth of competitive edge
Last but not least I would like to briefly elaborate on the advantage of building layers of competitive edge. This layering is something found in Asian literature[i] on strategy much more so than in Western style approaches to strategy. The great advantage of layers is that we build depth in our competitive edge by laying one strategic theme upon the other. In that way we build layers of competitive edge. And in doing so we deepen our strategic or competitive profile. It becomes multi-facetted and therefor stronger and harder to imitate. In the classical western perspective on strategy, we work sequentially and we forego the opportunity to build depth because we sequentially replace one theme by the next.
Dynamic strategy assumes layering of strategy, not linearity and sequentiality It has an evolutionary view of strategy and not a revolutionary one. Sound strategy is Evolution not Revolution. Not a tabula rasa, but a richly coloured painting. One of the great advantages of this perspective is the depth of competitive edge.
[i] See for instance the work of Kenichi Ohmae