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February 05,2021 Strategic Planning

Importance of Strategy

Importance of Strategy

Importance of Strategy

Importance of Strategy

In the age of Napoleon slow communications was the norm. Napoleon found ways to slow this down even more. He preferred to collect as much data as possible so that he could make a better decision than his enemies. He was decisive, but more importantly Napoleon knew when to make the decision.

Napoleon early in his military career mastered his way around a classic leadership trap of being put in the position to solve other people’s problems. Adhering to the French proverb that the Magistrate doesn’t handle trifles, Napoleon drove the interactions around himself. He would wait weeks to reply to letters, believing that most matters would resolve themselves. While this was a powerful empowerment of his troops it also let him focus on the key items without distraction.

This focus on key items enabled a greater clarity of thought in preparation and while engaged in battle. Napoleon engaged the principles of analysis before jumping into action and when committing to do so fully. Like General Ulysses S. Grant, each General would let their mind wander through a variety of scenarios to the point of unproductively. Research would later point that this practice of mind wandering unproductively to lets the brain digest complexities that cannot be comprehended on a superficial level.

Strategic Relevance

Maintaining the status quo may be good for your organization for the next two years, maybe three. There is one constant in life though, that is change. There is no difference in the dynamic world of business. 80% of companies that existed by 1980 are no longer around. Another 17% won’t be here in 5 years. Companies by 1970 had a 92% chance to survive the next 5 years, by 2000 those companies only had a 63% chance to survive.

Technology advancements are accelerating the rate of change. They have lowered the barriers of entry which has created the need for continuous innovation. Historically barriers to entry limited the marketplace. These came in the form of switching costs, a one-time cost to either leave or set-up, and access to distribution. Firms listed on the S&P 500 after the year 2000 spent twice as much on organizational capital than physical assets. Their agility proved to be their advantage over production firms, but they had to continue to innovate to survive.

The application of the strategic process isn’t a one-time event but an ongoing process. A process of how to keep a constant view on how to be positioned for the future. The continually understand where the market is going and what your competitors are doing about it. This also unlocks the cognitive bandwidth to help you think through once you make a move, what will be the expected retaliation.

Strategic History

Strategic thought is one of the cognitive thought processes that separates us from animals. Going back to the ancient cavemen, the long horizon thought process helped the species evolve. Early written history points to the teaching of strategy made famous by their pupils of Alexander and Caesar. Corporate strategy emerged in academia in the 1960’s and in the business world in the 1970’s. With the knowledge gained around organizational cultures, strategy’s popularity has grown at the same rate.

Be it 250 B.C. or 2021 all strategies consist of three factors. Without a diagnosis of the current realities, the guiding policies of where to go, and coherent actions it cannot be defined as a strategy. In 1798 Napoleon led his forces to conquer Egypt. On initial glance Egypt didn’t hold much strategic value in terms of resources or positional gains that would justify the cost in taking the land. However, at the time, the British Navy controlled the Mediterranean Sea and the trade routes leading into France. Napoleon’s goal wasn’t to necessarily capture Egypt as it was to stretch the British Navy thin thus decreasing their influence in the Mediterranean.

Napoleon was able to diagnose the situation of the British Navy negatively impacting French trade and freedom of movement. His guidance was to occupy Egypt so that the British would then have to patrol and pay particular attention to the area thus reducing their footprint in the Mediterranean Sea. These words were not a pep talk but strategy in action. Strategy must have caused a change within the structure of an organization, if not they are just words.

Strategy Without Change, Impossible

A few years back I facilitated a strategic plan for a tech company. During the ideation process, thirty managers brainstormed over a hundred ideas. The event proceeded to narrow those ideas down into two to three viable strategic options. However, the division’s Vice President believed that the ideas were too good to pass up on and decided to go forward with 38 strategic goals.

With the new monster list of action items, no resources were shifted to accomplish these items. These all too important goals were just added to other team member’s duties. Instead of applying a direct action towards achieving those goals the team opted to just spread the wealth. Every week, the leadership team would hold a strategy status meeting to continue to report that no progress had been made. Weeks and then months went by and a dent hadn’t been made on that monster list. The event turned into a maybe later when I have time away from my day job to work on this. No change ever occurred and none of the 38-goals were accomplished. By refusing to commit to a specific action that would have the potential to restructure the organization, no change could be made and the status quo continued.

Reverberation

Strategy reverberates across an organization resulting in seismic change. You cannot accomplish something new while doing the same thing. Executives are trained that if they limit their organizational assets to complete a single mission they will struggle to find a second revenue source. This help leads to Executives attempting to keep all their options open and always looking for opportunities. These actions are correlated but not the cause. Strategy is to win in one or more revenue streams, failure is trying to do a bunch of things that may or may not lead to revenue.

Patience to Diagnose

The island of Cuba knew nothing besides subjugation since the discovery of the new world. First run by Spain it later changed hands to the United States after the Spanish American War in 1898. While achieving formal independence in 1902 the United States maintained a significant amount of influence treating the island as a popular locale that reeked of political corruption.

In 1953 the Cuban people revolted and overthrew the government and by 1959 the country began to align with the Soviet Union. In April 1961 the United States implemented a covert campaign t overthrow the Cuban government known as the Bay of Pigs. The failed operation led to increasingly poor if not severed relations between the two countries.

Much of the economic support that the Cuba relied on came from the Soviet Union. This led to Cuba to allowing the Soviets to place nuclear weapons in Cuba during the Cold War posturing. Soviet First Secretary Nikita Khrushchev wanted to test the young American President John F. Kennedy taking advantage of his inexperience.

Supplementing Experience

While Kennedy was inexperienced in the middle of a highly complex situation, he knew to supplement his inexperience by using a deep bench of consultants. He kept a diverse staff of individuals ranging from his brother Robert Kennedy and Lyndon B. Johnson to Robert McNamara and McGeorge Bundy. The war hawks in the room urged for aggressive action while others wanted to wait out the situation.

Using scenario-based planning, game theory, and cause and effect analysis Kennedy saw a new option. Opting for a naval blockade, he was able to open a line of negotiations. This also allowed his opponent to escape with dignity to deescalate the situation. Kennedy’s actions took a play out of Napoleon’s book of applying patience to not overreact while using a body of advisors to gain a 360-degree analysis and perspective.

Importance of Strategy

References

How John F. Kennedy Changed Decision Making for Us All

Read More about Strategy

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Importance of Strategy

Importance of Strategy

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