McK gives useful short videos in its ‘enduring ideas’ series. The latest I’ve viewed on the business system is a helpful reminder of the old value-chain concept, though it is disappointingly qualitative, even in the ‘How to conduct a good analysis’ section. In fact, value-chain is a better term for what the video describes. Continue reading ‘McKinsey ‘business system’’
Have noted before the major role that Sovereign Wealth Funds may play as the global economy recovers, in particular those engaged in active management, not just passive investment, e.g. Mubadala Development Co from UAE. Reports from Monitor have much to say on this - Weathering the Storm and Testing Time. As I have urged before, strategy requires asking how the future might develop, so Continue reading ‘Sovereign Wealth Funds impact’
Now available are republished editions of two short books, aimed at upper-level strategy and HR execs, and useful in short courses. Continue reading ‘2 new strategy dynamics books’
We will be giving short free workshops on the day before various conferences over coming months. Continue reading ‘Strategy dynamics workshops’
Some useful tips in this article from BCG, some simple, some complex [and some over-complicated by trying to force them into a 'evolution' analogy]. Especially good to see its focus on exploiting opportunity, and good not to see some of the bad or dangerous ideas I have mentioned previously.
Do take care, though - few are universally applicable, so you will need to assess how appropriate each is to your specific situation.
Fired up by some stinging criticism from a former student, Joel M. Podolny once at HBS and Yale, shows admirable contrition for the failure of MBA programs to equip executives and their consultant advisors to run firms well. In The Buck Stops (and Starts) at Business School he vents the anger on this he shares with those outside business schools, and blames the carving up of management challenges by function that leaves academics without a holistic appreciation of things. He says Continue reading ‘Anger at business schools’
Just updated the revised opening for chapter 1 of Strategic Management Dynamics, which you can download from www.strategydynamics.com/smd-new-start. This includes an important correction to the explanation of free cash-flow on p.27 that was unfortunately introduced when the document was laid out - apologies.
Reminder - This document reviews through some well-known cases the current philosophy and some basic tools of business strategy to make the case for a continuous, holistic approach to strategic management, i.e. strategy dynamics.
[Join strategy dynamics on LinkedIn]
I hope senior management do not get persuaded to divert their attention to studying ‘complexity’ in the hope of understanding recent economic turmoil. ”‘Power curves’: What natural and economic disasters have in common” argues that “parallels between financial crises and natural disasters–such as earthquakes or forest fires–suggest that the economy, just like complex natural systems, is inherently unstable and prone to occasional huge failures that are very hard or impossible to foresee. Proponents of this school of thinking are bringing new ideas grounded in complexity theory to economic forecasting, strategic planning, and risk management.” This contributes little to the quest for skilled strategic management. Continue reading ‘Don’t surrender to uncertainty!’
Just came across a great piece, but curiously embedded in a McKinsey Quarterly article that seems to be about something else entirely - an update of how to decide what businesses should be in a corporate portfolio. The little gem is on the evolution of strategic management - which describes how strategy has evolved from a basically financial approach, through forecasting and then externally driven strategizing, to its ultimate, described as follows:
“When this investment [in strategic planning] is successful, the result is strategic management: the melding of strategic planning and everyday management into a single, seamless process. In this phase, it is not that planning techniques have become more sophisticated than they were in phase three but that they have become inseparable from the process of management itself. No longer is planning a yearly, or even quarterly, activity. Instead, it is woven into the fabric of operational decision making.” It goes on to point out that virtually no companies have reached this point, except perhaps some in the electronics sector, where very fast changes across multiple products and highly segmented markets make it imperative.
… but surely this should be our aspiration for all organizations? though as I have noted before, we are not likely to get to this point with strategy tools that are simply incapable of ever delivering this result.
An otherwise great column in HBR It’s Time for the 3-D MBA about improving MBA programs starts well by urging more breadth and depth, then calling for more ‘dynamics’ than static prespectives. [I'd hardly disagree with that!]. But it then asserts that “The vast majority of value created in business comes not from applying existing models, but from creating new models that do not now exist. It comes from creativity; from innovation.” - which is either completely false, or else meaningless, depending on how you take it.
In any year, the vast majority of value is created by companies exploiting business models they have had for years or decades, rather than ones they just invented. On a longer view, though, all value ever created comes from business models that were new at some point in time. The article seems to be taking the first meaning - implying that most value is created by recently-new business models - and urges business schools to focus MBAs on innovation. This may be useful in some cases, but should not take precedence over strategy delivery. If this comment leads to MBAs learning less about how to deliver strategy as a result of focusing on innovation, it will be a great example of how an entirely false premise can lead to fundamentally wrong strategic choices [and this from a business school that is supposed to be teaching the rest of us how to do strategy well!]
So … when reading an article that seems persuasive, do put on your ’skeptical’ hat and just check that it’s built on accurate foundations.