The one sentence summary
You can determine the trajectory of a company by understanding its default future and the forces influencing it.
- This is all about setting your organisation on a trajectory to an improved future. All companies have a default future – where they will end up if they do nothing beyond their current planned course of action. This can be good or bad.
- The trajectory of that strategic reality can only be understood by looking at and understanding the exogenous (external) and endogenous (internal) navigating forces that determine it.
- Navigational forces can be made explicit by mapping them: internal v. external, and visible v hidden; then by change difficulty and influence on the company (high to low).
- Most executives ignore the future by falling into 3 comfort traps:
- Strategic planning: planning is a comfortable and doable exercise, unlike strategy.
- Cost-based thinking: costs are comfortable because they generate precision, but they can still be wrong.
- Self-referential strategic frameworks: using a popular strategic framework or one that the CEO is familiar with is comforting, but may be wrong for the business.
- The most common patterns in companies are:
- The term ‘strategy’ is overused and misused to the point where it loses all meaning.
- Companies tend to adopt either a conservative or radical approach. Neither extreme works very well – a blend is better.
- Some strategies are just too complex or incoherent to understand.
- When a strategic approach is agreed, the focus turns to execution – usually led by an executive who didn’t volunteer for it, and who probably doesn’t have the experience or bandwidth to handle it.
- The programme leader often comes from outside the company, does not understand the culture, and often leaves before the job is done.
WHAT’S GOOD ABOUT IT
- Operating principles make strategic choices easier to understand. Pairs of opposites make these clearer, such as ‘We will grow organically’ as opposed to ‘We will grow through acquisition’.
- 88% of the Fortune companies from 1955 had disappeared by 2014.
- 50% of companies that merge or acquire have divorced five years later.
- “We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten.” Bill Gates
WHAT YOU HAVE TO WATCH
- There is some repetition and it is quite earnest, but there is good advice here.