My Article Summary - Alizée Bürgi

Your Strategy Needs a Strategy

By Martin Reeves, Claire Love, and Philipp Hillmans.

Nowadays, companies are evolving in an environment constantly changing,

with innovations ans new companies popping up all the time. In this environment, the
only way companies can find competitive advantages is by analyzing and reacting to
signals before all their competitors do. They can either adapt quickly with evolutions
of the market, or also invest on technology and influence the market.
Within this kind of environment, one should suspect that companies are spending
time and means on preparing strategies in order to be ahead of the competition. But
it seems they are not. According to a recent BCG survey, the executives are aware
of this need of a strategy for their firms. So why are they not planning anything ?
Because they do not have « a strategy for making strategy ».

Therefore, how to find the right strategic style ? A choice of strategic style
should begin with an assessment of the industry it takes part in. There are two
critical factors to consider : the predictability and the malleability. In other words,
how far into the future a company can accurately forecast demand, corporate
performance and market expectations and how deep the company can influence the
factors we just mentioned.
From that, emerges four strategic styles : classical, adaptative, shaping and
visionary.
Now, let’s take a look at each style.

The Classical Strategic Style

Mostly used by Oil Companies, the classical strategy applies in a predictable
environment but hard for the company to change. The company will set a goal,
looking for the most favorable market position it can have, and count on its
capabilities and resources to get it. Then, the company tries to consolidate the
position it gained with predictive method planned on several years. At ExxonMobil or
Shell, analysts can have ten years into the future plans, given the time needed to
exploit new sources of oil or build new facilities.

The Adaptative Strategic Style.

Some other industries are in constant evolution. Companies are evolving in an
environment radically and persistently unpredictable. They need to have an
approach that would be more adaptive, because they would have to refine or change
their goals and tactics frequently. The example of Zara, the Spanish retailer, is
pertinent. Brands and tastes change every season, so Zara managed to create a
very flexible supply chain. Now the brand can design, make and ship clothes to its
store within two to three weeks, and therefore adapt very quickly to the taste of its
customers. It loses around 15% of its inventory. Compared to that, competitors takes
months to edit their collection, and lose 50% of their inventories. Zara’s success is
mostly due to this adaptive strategy in the very instable environment of the fashion
retail.

The Shaping Strategic Style.

The Shaping Strategic style takes place if an industry is in an unpredictable
environment but can have an impact on it. It would be suited to employ a strategy
within which one can have the goal of shaping the environment to its own advantage
before a competitor’s do it. The difference with the adaptative strategy is that the
company focuses here on elements outside of itself, such as customers, suppliers,
etc. The goal is to seduce them and attract them to the company by presenting them
an attractive new market or new technologies. The example of Facebook overtaking
Myspace illustrate this well. Facebook, by attracting social-networking apps and
games, completely shaped a new environment.

The Visionary Strategic Style.

It is the most used strategy. A company uses the visionary strategic style in a
predictable environment that you can change. It is a bold strategy, that entrepreneurs
use to create a new market or to revitalize a company. The main challenges in it is
mostly to commit to the goal and the plan that have been decided and employ for
them all the necessary means. For example, UPS predicted that with internet, the
delivery service it proposes would be raising. It employed 1 billion of dollars to
integrate package-tracking operations and to expand its delivery capacity. Therefore,
it took 60% off the e-commerce delivery market.

But how to be sure to use those styles correctly ? First, a strategist needs to avoid a
misplaced confidence. A lot of executives think they can control uncertainty in the
business environment they are in, or worse, more than 80% think their goals can be
achieved thanks to their actions more than things they have no control on.
Also, executives needs to avoid unexamined habits. Too many learned only the
classical style and don’t have the competencies for the other ones. They mostly
value accuracy more than speed of decisions in very fast-moving environment for
example, or develop strategic plans every year without looking at the actual perceive
change in their company’s environment.
Finally, culture mismatches can be a problem. Some companies value classical
strategies for example, and create an internal environment that can undermine the
ability of executives to experiment and learn. Therefore, they are no longer capable
of going through another kind of strategy that would fit better.