Thinking about Strategy
Most of us have, at one point or another, sat through a strategic planning session that addressed our organisation’s position in the marketplace, our mission and objectives, our strengths, weaknesses, opportunities and threats. Most of this is based on the assumption that we are under some form of attack from competitors and that we have to win in order for the business to be successful. This “military” model reflects much of the traditional thinking about strategy – and makes sense when we recognise that the word strategy comes from the Greek word “strategos”, the art of the general.
But what if there was a different way of thinking about strategy? What if we thought about strategy as LOVE instead of continually thinking about strategy as WAR? What new insights would that afford us? What are the implications for organisations as they plan for their futures?
On a recent visit to the USA, I had an interesting conversation with MIT Sloan School professor Arnoldo Hax, a well-known strategy expert and one of the authors of the book The Delta Project. We spoke about his approach to strategy, called “The Delta Model” (which is the title of an article he co- authored for MIT Sloan Management Review in 1999).
Customers or Competitors at the Centre?
Most of the major frameworks of strategy start by recognising that the essence of strategy is to achieve competitive advantage. Potentially, this mindset can be extremely limiting, because it puts competitors at the centre of your thinking. And if you do that, then there is a tendency to watch your competitors and try to imitate them.
That imitation can create sameness. Sameness will never bring greatness, and, even worse, its final result is something which could spell disaster for a business – commoditisation. Commoditisation results in a business in which there is little that differentiates your offering. All you can do, therefore, is to fight for price. That leads to a very aggressive rivalry. In order for you to win, you have to beat somebody and sell at the lowest price.
This is strategy as war, and as we know very well, it is not a very effective way to manage a business. Wars just create complete devastation; they are the worst thing that could happen to mankind, yet we use that as a simile for management! Surely it’s not the best metaphor to use.
Now, if competitors are not at the centre of management, who is at the centre? For many, the answer is obvious. The customer is. The customer is the driving force. You have to start by deeply understanding the customer’s requirements and how you can add value to the customer in the most effective way. This changes completely the way you plan on and make decisions. You are now focused on LOVING the customer instead of making WAR on the competition.
Instead of trying to imitate somebody, you try to separate yourself from the rest of the pack. You try to produce a value proposition which is unique, which is differentiated, which adds value to the customer and expresses a great deal of care and concern for the customer. That value proposition should be based on mutual trust, mutual learning, mutual benefits, and transparency. This is strategy as LOVE.
Love can drive out commoditisation
Strategy as LOVE can also provide some useful insights for people who believe they are in a commodity business. In reality, the product you sell may be a commodity, but you are rarely in a commodity business. Take copper for example. The product cannot be differentiated, which makes it a commodity product. It’s hard to day that Australian copper is superior to Chilean copper. But when you think of copper as a business with customers, you see the differences. Siemens uses copper in their power plants, Ford uses copper in their cars, Carrier uses copper in their air conditioning units – the copper is used and adds value differently in each case.
The customers are all different, and if you do not understand that, if you do not seek to understand deeply the needs and ways of the customer, you are commoditising the business. Strategy as LOVE is a way of addressing this issue and recognising that the customer should be at the centre of strategy.