There have been numerous proclamations that strategy, as we know it, is dead. Long live tactics, and constant readjustments of positions. However, it could be that strategy and strategic thinking are still as relevant as ever. Instead, traditional views of strategic planning are out of fashion. Those who are only appreciating that now are late to the party.
“The only thing constant is change”
Last week, Forbes online included an article proclaiming that strategy in business might be dead. The world is moving too fast, change is too constant. Whereas previously, everything had a “beginning, a middle and an end”, this is not now the case. This Forbes article, however, is not itself original. A quick Google search reveals a litany of similar videos and articles since 2014 announcing that strategy was gone, and that forecasting or planning too long in advance will lead to organisational paralysis.
Straight away, we can detect in this language the same spirit of nostalgia that commentators have attributed to numerous large scale political events this calendar year. No doubt, to some extent, faster information technology and faster transportation have made the world smaller, and a 24 hours news culture that relates every event around the planet in record time will inevitably make it seem like human civilisation is in chaos.
The language of “constant change” and “innovation”, however, is also not new. The quote in the subheading is actually widely believed to have been mis-attributed to Heraclitus, but this Greek philosopher who was writing 2500 years ago spent much of his life stating how the world was in constant flux. Medieval writers too believed that the world was becoming more unstable, and that old certainties could no longer be taken for granted. In fact, so did those during the Stuart period. And the industrial revolution. And the 1920s. And the 1960s …
Strategic planning died long ago
In many people’s heads, strategy is still long-term financial planning. It’s an array of spreadsheets, including financial projections, targets and downside scenarios, most of which no doubt feature a smooth upward curve. From them follow detailed instructions on the annual, quarterly, perhaps even monthly activities of all people within the organisation. After a predetermined period of time – typically 3-5 years – this strategic planning cycle will start again.
This kind of planning was always futile. As Niall Ferguson frequently states, there is “no future”, but “multiple possible futures”. The only people who perhaps really believed that this kind of detailed strategic planning was anything other than foolhardy were the bureaucratic planners that Jack Welch sacked in droves when he took over General Electric in the 1980s.
Welch, though, did not do this because he did not believe in strategy. Welch is actually very consistent in his view on strategy: that it is the big “a ha” for your business, the key reason you will succeed in your industry, deduced from thinking very hard about the market, possible trends, and your internal capabilities. His triumph was in recognising that this concept of strategy does not require hours, days and weeks carving out inflexible budgets for an arbitrary period of time. The world and markets do not respect human conceptions of time, not least the financial year.
This same message echoes through Richard Rumelt’s book Good Strategy/Bad Strategy, in which he too emphasises that ‘strategy’ is not financial projections over an arbitrary period of time. He advocates that strategy should be reassessed whenever it is felt that the previous strategy has achieved its purpose, or that it is not working. Yes, we can set annual budgets, or perhaps for even longer periods of time, but these should be guides to a route that we may have to change.
One concept of ‘strategy’, then, died long ago. However, the need to have a clear idea of how you’re going to succeed and why you should be in business will not perish. Yes, the world is constantly changing, but when has it not been that way?