Earlier this week, I was fortunate to speak to YPO’s Family Business Network regarding Strategic Planning and the Family Enterprise. Over the course of our conversation, we covered several topics, but for today, I would like to highlight one – Strategy is not your Mission, Vision and Values statements.
Corporate identity work has been en vogue for the last 20 years. Arguably, since 1980, the best selling business books are those that have examined the common traits of great companies with the idea that those characteristics are translatable and correlated with the achievement of success in other businesses. No doubt, you are familiar with books like with In Pursuit of Excellence, Built to Last, and Good to Great.
Certainly, while each of those raises many wonderful points – there has been something important lost as their messages have diffused into the corporate ‘ether.’ Namely – that strategic thinking has absolutely nothing to do with your BHAG. The market place does not care whether you have people in the right seats on the bus, or if you’ve identified your core values. Do not get me wrong – that is not saying those elements are not important. Just that those elements alone are insufficient to deliver success.
Sadly, strategic thinking has been reduced to a corporate chore – something like dusting the base boards each spring. It happens 1x a year, it is time consuming, and when complete, is not thought about for another year.
The reality is that good strategic thinking is about choices that limit how you go to market with the expectation that this intentionality brings with it greater returns or protection from competitive forces. Yet most importantly, strategic action or change is episodic – much of the time, there will not be something to be done. As the saying goes, “don’t just do something, stand there.”
My favorite story highlighting this point is told in Richard Rumelt’s Good Strategy, Bad Strategy. In the book, Rumelt describes a conversation with Steve Jobs in which Jobs was asked in 1998 “What are you going to do in the longer term – what’s the strategy?” At the time, this was shortly after Jobs had returned to Apple from Next and had managed to staunch the bleeding and keep Apple from going under.
But despite keeping the boat from sinking, Apple was unable to compete with the highly dominate Intel processor / Windows operating system paradigm which defined computing for a twenty year period. So what was Jobs answer to that question – “I am going to wait for the next big thing.”
Importantly, waiting is not being passive – it requires a regular, comprehensive, and systematic approach to scanning the horizon to understand what the shape of the future might be. Keep in mind, that was Jobs’ comment in 1998. 2 years later, he introduced the first iPod and a short six years after that was the iPhone. The rest is history, as the Apple mobile platform is the dominant player in this current era of computing history.
Family owned companies are well positioned to do excellent strategy work given their long-term time horizon. Yet, a misapprehension of what strategic thinking is prevents the family from engaging in it. This is not unique to family owned corporations, but maybe exacerbated by the entrepreneurial ethos central to many families. Strategic thinking as is typically understood can feel in direct conflict with the market dynamism that many families pride themselves on.