During the last few weeks, I had the opportunity to sit-in with two leadership groups, one from MindTree and the other from a leading organization in the hospitality sector. Each group was huddling to discuss their “strategy” for the next year. While listening to them, I realized what the two teams were discussing, was plan and not strategy. They were looking at the current year’s performance as a base and then building plans to achieve better than industry growth in top-line, customer satisfaction, and employee satisfaction and so on.Both the groups had thought through how they would go about their purpose at an abstract level. The two groups did need to discuss their plans on hand which was critical from an operational perspective; but they also needed “strategy” without which any organization’s relevance would be in question sooner than later. Thus, on one hand what they really needed was a strategy which they did not have; on the other hand, they were using the term without knowing its true import. I am sure many amongst us have the same issue; hence this blog post is dedicated to the meaning and characteristics of strategy.
The word strategy comes from the Greek word strategia, office of a general: linked to Strategos and means:
The science and art of using all the forces of a nation to execute approved plans as effectively as possible during peace or war;
The science and art of military command as applied to the overall planning and conduct of large-scale combat operations
A plan of action resulting from strategy or intended to accomplish a specific goal
The art or skill of using stratagems in endeavors such as politics and business
(Source: The American Heritage Dictionary of the English Language)
What the dictionary really suggests is that strategy is a matter of leadership priority. It must engage leaders. It is something that is “game-changing” in nature. It is part science and part art. It is about “large scale” impact.
So, if someone is thinking of reasonable growth of business over what we have this year, he doesn’t really need a strategy for it; he needs efficiency.
Much the same way, someone has 25% attrition among employees and wants to reduce it to 20% the next year, all she needs is efficiency. But the moment she wants to contain attrition to halve it, she would need a strategy and she would need to make strategic choices.
1. It is not about the data, stupid!
Game-changing personal decisions (remember, strategy is about game changing stuff) are rarely really borne out of data. What is game-changing?
When something you choose to do, irretrievably changes the subsequent five, ten, twenty steps of your life in a big way, it is game-changing.
Because you studied law over medicine, you ended up becoming a lawyer for the rest of your life. It became your profession. But it also determined where you would spend your wakeful hours, who you work with, who pays for your services and so on.
Similarly, who you chose to marry had huge downstream implications; it settled the pattern of your joys and your grief, it settled who your relatives and your enemies would be.
When you decided to have your baby, it was similarly a game-changing decision because it changed practically everything downstream, from your sleep pattern, to the choice of a job to one of the two of you actually putting career on the backburner, to renting a bigger house to moving to a savings plan such that one day your child may get better education than what you had. If people were to write a business plan before they are to have a baby, I suspect, there would be no babies.
When I sit in on strategy presentations, I invariably groan as managers lead the conversation with screen full of data. Data is critical but swimming in it, does not get you strategy. You need to look at data but data is about the past and future data is an oxymoron, it is a projection and sometimes, a prayer.No data on past usage would have given Gopi the confidence to get into the helicopter business. No data told Kiran to get into the enzyme business or to leave it. In the case of Siddhartha, data actually suggested that the idea of a coffee retail business was unviable because coffee consumption was going down.
Data. Analysis. Logic. These are about the left brain. The right brain on the other hand, sees the inter-connected nature of things, the big picture, the relationships. Strategy is more about the big picture.Game changing decisions are matters of strategy and they are seldom made because of “rational” and hence data driven, logical reasons; most often they sprout from an emotional crevice. Just as game changing decisions in the personal sphere are borne out of emotional reasons or shall we say, non-rational reasons, the same is true in the workplace.
Mouthing spreadsheets and spewing data does not make you strategic.
Microsoft, Google, Twitter, FaceBook, Infosys and Tata Steel were not born out of laborious study of analyst reports. If the analyst can get it, they would not be writing the reports! You may seek validation and comfort in analyst reports but the decision to start a memorable enterprise is invariably in the gut.
The gut is not all intuition and no logic as some may think. As we are beginning to understand how the gut works, people are telling us that the synaptic ends actually go beyond the brain and what you think of as gut feel is actually your brain.
2. You don’t need strategy for business as usual.
Look at Infosys. In the year 2000, they had 5389 employees. In 2003, that number was 15,356. In 2007, the number was 80,501 and this year, it touched 128,000. When a company wants to raise its headcount three times in three years as we saw between 2000 and 2003, mere efficiency would not deliver. The organization must do things very differently.The interesting part in the example of Infosys is that the management at the top remained the same between 2000 and 2011 but the very same set of leaders could deal with the complexity of locating, hiring, training, retaining, shedding, rewarding and recognizing three, ten, twenty times the original number! Someone had anticipated the need, thought through the game(plan), socialized the strategic choice among others and got the entire engine revving and the system moving in a direction consistent with an invisible will.
The way Infosys spun the headcount is a great example of strategy at work.
You may or may not agree with what they do and how they do it, but there is absolutely no question of doubting the presence of real strategy at work there.
3. If what you are discussing sounds counter-intuitive, you are probably about to take off.
Captain Gorur Gopinath’s (Gopi) entry into the helicopter business and subsequently, the low-cost airline business (and in time, exiting that business) is about strategy and strategic choices.In his book Simply Fly, Gopi beautifully narrates how he and his buddy Sam decided to get into the helicopter business and Gopi says even today, he would have never gone into it (the helicopter business) if he knew the price of a helicopter! For the simple reason, he did not have that kind of money nor could he raise it! So what did he do? He and his friend Sam went to Singapore and negotiated with a helicopter owner to give them his copter on long-term rental.The man agreed, Gopi and Sam flew it back to India. The rest is history.
The moment you shift your focus from owning something to operating it, buying property to leasing it, retaining talent to rotating it, you are beginning to think strategy and are more likely to make strategic choices that may be game changing.
4. Not required to giving up something? Probably not looking at strategy.
Sometimes the choices leaders make as an outcome of a strategy conversation, do not require them to give up anything. Look at this advertisement from India’s bio-tech darling Biocon. It is an ad for selling enzymes; fervently telling you that Biocon is the leader in the enzyme business. Well, that is how the company started. Founder and Chairman Kiran Mazumdar Shaw would tell you that she started the company when her Irish partner asked her to make enzymes out of papaya and rice. At one stage, Unilever bought a stake into her company as she had become a very important supplier. Then one day, she decided she was going to do other things. Insulin for example. And things like contract research and so on. Her customer and stakeholder Unilever did not like that one bit. They lectured her about stuff like core competency and even threatened that they would pull out if she did not stick to the enzyme business. What did she do? She sold that business. Unilever pulled out. But thanks to that decision, today, Biocon is synonymous with oral insulin to cancer research.
Unless you physically vacate the space you are standing on, you cannot move to someplace else.
You must let go to let come.
The decision to vacate the enzyme space and the act of vacating it are matters of strategy and strategic choices.
If what you and I are obsessed with right now does not require giving up something substantive, we are probably also not getting into something substantively different either.Scale and strategy are twins.
5. Strategy loves adjacency.
I have always admired VG Siddhartha as a great strategist. When he decided to get into the coffee business, everyone advised him against it. But he persisted. People wondered why anyone would pay Rs. 40 for a cup of coffee when all it cost was Rs. 4 to make it at home.
I believe in starting Cafe Coffee Day, Siddhartha was not looking for a substitute to home brewed coffee. I suspect he was getting into the boy-meets-girl business. Cafe Coffee Days are clean, friendly, affordable, air-conditioned and safe. It is a place where a boy and a girl can spend some time together in a pleasant atmosphere and they are willing to pay for it. This is not about coffee. Remember the tagline? Anything can happen over a cup of coffee.
But as you think of Cafe Coffee Day, do look at the way Siddhartha has explored and harvested the power of adjacency. Though his company’s name suggests that you would get a fresh brew each time you go to a Cafe Coffee Day, he can actually serve you everything that is adjacent to coffee that the boy and the girl might need: Samosa, sandwiches, brownies, Snapples, branded water and in some outlets, beer and more potent forms of alcohol! God did not tell him that he can and should sell only coffee. He in turn, is not whipping his boys and girls to sell more cups of mocha and cappuccino, nor is he enticing his customer to keep drinking more coffee per session so that his profitability and market share go up. Siddhartha knows that in the boy meets girl business, the boy (usually the lesser intelligent but more focussed) ignores the right hand side of the menu and pleads to the girl to try the black forest pastry or some equally expensive thing on the menu so that she may linger longer.
Adjacency is common knowledge to store merchandisers who are always doing what we call “market basket analysis”. Simply put, it means that your grocer must place jams next to the bread alley and gourmet cheese close to the wine rack. Similarly, if you have gone shopping for a pretty dress, you may be more open than usual to consider accessories that go with it. So they are displayed next to each other. That simple idea is lost on leaders sitting around a table to contemplate strategy for growth and profitability. Siddhartha probably makes more money from things he does not make than his original offering of roasted, crushed beans in hot water.
6. If the doorman doesn’t get it, it isn’t strategy.
So who do we see here and what is he doing? It is perhaps quite easy for most to identify the man and with some effort, the instrument for spinning thread from cotton; it is called the charkha. Gandhi made the spinning wheel the symbol of self-reliance and rejection of all things British. In the symbolism of the charkha was encapsulated the demand of a slave nation for independence from foreign rule. What does all that have to do with strategy?
Strategy must be something people can understand without having to read user manual or undertaking a laborious journey through Excel sheets.This one picture here could galvanize people from the Harrow and Trinity-educated Jawaharlal Nehru to the poorest villager in Champaran, Bihar. A strategist understands the power of the picture over words and metaphor over pictures. That is why Martin Luther King, in his famous speech, said “I have a dream” and not, “I have a plan”.
In opposing the British, Mahatma Gandhi used a simple strategy that the average people could understand in an instant. Corporate leaders think strategy must be sophisticated, complex and beyond average comprehension so that it looks like the real stuff. If something is simple, apparent and easy to follow, how can it be strategy? Nothing can be farther than the truth.
7. Go in the direction of your opponent.
Strategy is sometimes not about clashing with an adversary. It is about going with him. This is the essence of what Harvard professor David Yoffie calls the “judo strategy”. Winning in Judo is not about superior strength, it is about superior strategy. In judo, you do not overpower your opponent with force; you actually go with the force of the opponent to pin him down. There is a famous photograph in Yoffie’s book “Judo Strategy” that depicts black belt champion Vladimir Putin being thrown to the ground by a 10-year-old Japanese school girl who outwitted the visiting Russian head of state by simply going in the direction Putin was pulling her.
Congress President Sonia Gandhi did exactly that when opposition leaders raised the issue of her citizenship and asked how could a “foreigner” like her become the prime minister of India? All eyes were on her and everyone thought she would step in to the office and then face the opposition wrath that could have also dragged her to court. Nothing in the law says that a naturalized Indian cannot become the prime minister. While a court ruling could still favour her, her opponents would have used the opportunity to raise the issue of national security and such to get popular opinion against her, particularly in a country in which fifty percent of people are not literate. Sonia Gandhi chose not to fight the issue. She stayed out of the office of the prime minister, instead asking Man Mohan Singh to become prime minister but in the process, she remained the Congress party chief and it was evident and apparent that the Congress-led government would not do anything that the party chief did not want and all key issues needed her approval in any case. In the process, Sonia Gandhi actually got a huge wave of sympathy and the opposition leaders baying for her blood looked like a convoluted bunch spewing narrow patriotism. Sonia Gandhi’s strategy would go a long way because it is what I call a game changer. Instead of leading a fractured coalition and facing a disruptive opposition, she has retained the power without needing the position. Along the way, she has kept the future secure for the scion of the Gandhi family who can, in good time, combine the two.
8. So, what is changing in here?
While leaders conceptualize strategy, they would do well to ask themselves a fundamental question. When the strategy hits the road, what would change?
When Rudy Giuliani took over as the Mayor of New York City the first time in 1994, it was called the “murder capital” of the world. After taking office, Giuliani summoned his police chief and asked for a small, simple and speedy change. He wanted the pan-handlers off the street.
When motorists stopped at the red lights of New York City, pan-handlers dashed at their wind shield, made a symbolic, feigned attempt to clean it and then asked for money. It was a nuisance to say the least and sometimes refusal to pay could lead to abuse and violence. The mayor wanted the pan handlers to stop preying on motorists. It wasn’t a difficult thing for the police.
What no one realized was that the real strategy went far beyond. As the pan handlers went off the street, so did drug peddling. The pan-handlers were both the consumers and the sellers; they were the retail arm of the drug lords. When they left, the drug business dropped and with it went murder because of the simple correlation between drug, violence and man slaughter.But it all started when something visibly, noticeably and irretrievably changed. The initial action soon after a leader takes charge, often signals that it is not business as usual. Through it, a leader notifies strategic intent.
If nothing is changing, it is no strategy.
But, how do I know?
Quite often, people ask me, how do I know what I am engaged with is strategy? How do I know I am not dribbling with the ball, thinking all the while that I am thinking strategy? I believe, there are a few tell tale signs of whether you are dealing with the real stuff or just playing with sand castles on the beach.When in doubt, ask yourself:
Are the stakes low?
If there is nothing much at stake, chances are you are dribbling.
Is there ample evidence of displacement?
Displacement could mean people, policies, products, services, customers, suppliers, whatever. No sign of displacement, no strategy.
Are we making apparent choices?
Strategy is about making strategic choices. These are seldom ‘apparent’ choices. So, if you are solvinga HR problem through a HR solution (reining in attrition by increasing salary) or a sales problem through an essentially sales solution (increasing sales by increasing salespersons), you may not be talking strategy. Strategy and strategic choices are most likely to be from outside the system. Remember, in every mythology, the deliverer is an outsider?
(Many thanks to friend Rajesh Nair from Headjam for his valuable suggestions and Shreyas Hosur for reviewing the post)