Forgive me, as it has been a long time since I blogged… But, I have been lured to the exotic world of iPhone and Mac programming, and learning kept me challenged, focused and engaged, not to mention, distracted from writing…

Before I fall back to the temptations of programming, let’s dive into my article. I will be discussing strategy and the importance of building an integrated, interweaved, interdependent strategic system to create an unsurpassable competitive advantage, one that Sun Tzu would be proud of.

Unfortunately, as an over used term, strategy can also be seen as strategy soup: technology strategy, product strategy, portfolio strategy, brand strategy, HR strategy, market strategy, service strategy, IP strategy, operational strategy, social media strategy, sustainability strategy, … However, it is the integration, interweaving and coevolution of all these pieces that create strong strategic positioning for your company.

“Those who win one hundred triumphs in one hundred conflicts do not have supreme skill. Those who have supreme skill use Strategy to bend others without coming to conflict.”
— Sun Tzu, Art of Strategy

Sun Tzu saw the world as a complete and interdependent system that must be preserved. For him, brilliant strategists would rarely go to battle, as they would achieve their objectives well in advance of any confrontation: “For to win one hundred victories in one hundred battles is not the acme of skill. To subdue the enemy without fighting is the acme of skill.”

That is the ultimate purpose of Strategy: a plan, method, or series of maneuvers or stratagems for obtaining goals and results using the right amount of effort. In the context of a business, strategy builds on the organization’s mission, setting its long-term direction to achieve competitive advantage.

Porter's strategy formulation context

Establishing specific goals and performance metrics, managing resource allocation and budgets, agreeing where and by whom the value will be created and captured, the level of intimacy and engagement with customers and partners, what skills we need to develop and what opportunities we need to pursue are all part of the strategic planning process. It all boils down to:

1. how do we achieve superior economic performance;
2. how do we deliver unique differentiated value proposition to our customers;
3. how do we build our culture and organization for continuous sustained success so we can repeat #1 and #2 indefinetely.

Impermanence: strategy as a continuous process

“Plans are nothing; planning is everything.”
— Dwight D. Eisenhower

Everything changes, and with that strategy is a continual process; it is not a one-time effort. Given that, why strategize?? Because strategy:

• clarifies the direction and vision of the whole by setting specific goals and performance metrics;
• is an enabler for aligning decision making in an organization and creating focus: driving the whole organization towards its vision;
• forces you to think about not only how to advance and protect your competitive position, but ways develop it to encourage people to join and support you;
• provides a structured approach to organize your thoughts about all the complexity in your world and its evolution as conditions change;
• is designed to ensure you are asking the difficult questions and view the whole: where do we want to be, how will we know when we get there, where are we now, and what will change in our environment in the future…

The foundation of strategy

Porter's wheel of competitive strategy

Michael Porter describes the foundation of strategy as the activities which an organization chooses to excel in: differentiation arises from both the choice of activities and how they are performed. In essence, through this integration and interweaving of the system of activities, the organization creates a sustainable strategic position. Here are some thoughts to munch on…

Technological innovations drive change and enable growth. In high-tech businesses, technology and corporate strategy are tightly coupled. As technology strategy looks to add value to the business, it also brings its own mindset with unstated assumptions and biases about customers, partners and business practices. In return, it influences how products are built and businesses make money. I suspect, we’ll have plenty of interesting examples to talk about as Nokia transitions from Symbian and the MeeGo mobile platform to Microsoft’s Windows Phone 7 over the next few years.

Platform strategy encompasses a general sharing of components, underlying technology elements and processes across a range products, such as Apple’s unibody laptop engineering and manufacturing, Microsoft Windows platform and the like. As a strategy, it is focused on delivering increased efficiencies through improved learning curves and economies of scale. On the HP front, we should see more on their webOS platform, and how it may be integrated across HP’s computing and printer lines over the next few quarters.

And, when firms partner with key players outside the company, they can create a powerful network effect (value of the product/service increases as more people use it) ultimately leading to establishing an industry platform. A firm’s technology choices, how it manages relationships with partners and competitors, and its processes and practices all play into its success. As an industry platform leader, the firm is now depended on the complementary contributions from the broader, interdependent ecosystem, and with that they will let go of some level of control. Take note of the Linux, Apache, and Eclipse platforms which are managed via non-profit foundations, with Apple’s App Store and the semi-constant backlash from the community, or how open Google Android really is.

Product strategy is focused on the customer: who are they, what benefits to deliver, and why they would choose you over your competitors. With close ties to technology strategy, careful considerations need to be given to product lifecycle and technology adoption when it comes to designing and deploying the actual product.

And, when we start talking about when/how to bring this product to market, how to manufacture it, and how to support/service it, we are touching marketing, manufacturing, operations as well as support and service strategy.

As Drucker pointed out, the purpose of a business is to create a customer. As I highlighted before, all these pieces of strategy boil down to:

1. how do we achieve superior economic performance;
2. how do we deliver a unique, differentiated value proposition;
3. how do we build our culture and organization for continuous sustained success so we can repeat indefinitely.

Integrated and interdependent system

As the wheel of competitive strategy demonstrates, none of these strategic pieces are meant to be decided and managed in silos. Though planning is usually seen as a top down process, in reality, it is an agile system, and it requires interaction and intelligent exchange at all levels.

Firms rely on cross-functional Product Management Teams to integrate, influence and resolve conflicts that come up through strategy disconnects during product development. While these teams do a great job of managing change within the box, the majority of required business level strategic shifts will not be addressed, even if it means the end of the business…

Agility is key for a company to maintain its competitiveness in the marketplace. Some corporations are better than others when it comes to mobilizing and shifting strategy at the business level. It could be the leadership, as in the case in 1996 with Bill Gates, when he turned Microsoft around on a dime and refocused everyone on the Internet. For Amazon, it is their culture, competencies and organizational structure that enable them to develop and execute on an integrated strategy: if you think it, and if your idea supports the business strategy, then the rest of the business evolves to support it. Amazon Cloud, Fulfilled by Amazon, Warehouse deals, Amazon Prime are all such examples.

As in these cases, we are looking at a strategic system that is integrated, interdependent, and that co-evolves with itself, other systems, and its surroundings. If you can achieve that system, you can bend others without coming to conflict, as Sun Tzu states.

Leveraging the power of strategy

Strategy development is one thing, effective strategy execution is another. Here are some thoughts on how to ensure your organization is ready and willing:

• make sure your strategy is understood: translate it into terms that every one of your employees at any level would be able to understand and act upon;
• establish organizational structure that enables individual strategies to be linked, integrated, and can initiate change as needed;
• build accountability and results into the organization so every individual looks to contribute to the success of that strategy in their day-to-day activities;
• establish a process for learning, adapting and evolving strategy – instead of an annual event, strategy becomes a continual process;
• and, as strategy evolves to reflect shifts in opportunities and threats, ensure that your organization can handle the change accordingly.

If you can achieve this level of agility and mobility in your organization, you won’t need luck.