Monday, September 26, 2005

Business Strategies...from HBS

There was a seminar on business strategy by a professor from HBS, a few weeks ago, in my organization. It was a busy week but I decided to attend the seminar as it is not often that you get to listen to people from one of the best business schools in the world. Let’s refer to the professor as Prof. DU for I don’t fully understand the implications of referring to his real name on my blog and especially so in the context of discussing my interpretations of the ‘class’ at length. Before I go on to share with you what I learned and what the food for thought that I am still chewing on is, I want to place in front of you an observation that I’ve made. In many a session that I’ve been to, the speaker seems to miss the ‘target’ by miles. It is indeed a disappointing thing for people who walk into the session only because of the topic and not necessarily for any sort of ‘intellectual break’. That way, the session that I attended was quite off target. The topic announced was “Aligning IT with business strategy in Manufacturing’ and what Prof. DU dwelt upon was a new business strategy model. It had nothing much to do with IT alignment or for that matter the world of manufacturing. (Let me help you get this straight - I personally have nothing to complain about as I enjoyed the session immensely :)) So, what happens in such situations? Is it about communication gaps or about speakers who commit something but decide to get away with discussing something else because they figure out that they are not after all interested in dwelling upon the area under question? Anyways, I want to make it extremely clear that I enjoyed the session for its humor and, of course, for its ideas.

Prof. DU started off by talking about the traditional business strategy model which starts off with the Ends and ends with the means. That is, Ends -> Ways -> Means. Ways refers to business decisions while means refers to the resources to get there. He went on to detail out the traditional business strategy formulation and how it originated from the military way of strategizing. The very word strategy apparently originated from the Greek word strateos, meaning General (as in the army). Prof. DU peppered the session with interesting thoughts and humor and finally proposed that the model be turned on its head….upside down. He asked the audience to consider starting off with the ways…starting off with the capabilities, building it gradually to grab opportunities in the area. (During the session I was sort of completely taken in by excitement and thought it was fun to turn ideas upside down.) So, you start with capabilities, go on to opportunities, and then set your vision. But later, I started considering the idea seriously- from the perspective of implementing it - and ‘am grappling with some thoughts that do not seem to particularly like the idea… What about the concept of setting high-flying visions? What about dreaming? What if it becomes a limiting factor? Wont it be a solution looking for a problem? …Unless you believe in destiny and a certain purpose in life? These are some ambiguities that I did not bother to get it cleared at the time of the session. Meanwhile, the Prof did indicate that he seemed to have a problem with numerical goals (ow, yeah! :-)). He said something which I think is the clear truth to my mind as well – when there are two goals – quantitative and qualitative – the former will always dominate. Well said! Well said! Encore! (The implications? Does this mean that it will be numerical targets all the way in any given organization? I am reminded of an interesting example here – I read in an article that Jeff Immelt is changing the way GE is managed – he is emphasizing on qualitative aspects rather than quantitative….mmmm…well! What would Welch have to say about that?) And….PS: What a coincidence – I came across this quote recently – If a man will begin with certainties, he shall end in doubts; but if he will be content to begin with doubts he shall end in certainties. -
Sir Francis Bacon. I leave this to your interpretation.

Prof. DU touched upon some topics that I always ponder over – there is no strategy where there is no long-term ownership! CEOs stay but for 5 or more years. What will they think about true strategy? They are bound to look at short-term gains and move on to greener pastures. Acquisitions take them to the headlines – they make an appearance on page 1 of leading dailies in black/grey suits and become ‘poster boys’. And, that’s what many CEOs want. Reminds me of something I read long back – the true success of a leader is not in what happens while she is at the helm but what happens a few years after she’s left….sustainable systems is the name of the game. So, the suggested idea was that there ought not to be 5-year plans in the corporate world! There was a counter argument from someone in the audience that one can’t see beyond 5 years anyways, so, what could the way out? The answer - that’s why we need to look at rolling forecasts – and remember that we can’t predict everything.

Prof. also spoke about incremental improvements – rather than the big bang approach. Sometimes, he added, both are needed but the alignment was clearly more towards the former.

(There was a little bit of M-bashing, CF-bashing, and I thought, Japan-embracing through the session. )

The Prof also shared with us a very interesting study conducted by HBS on the implications of IS – IT systems implementations. It starts off with a dip in productivity as employees are brought into it from various functions and departments. Then things lead to bug discoveries and eventually the evolution of the system happens, to serve some purposes. Before we realize it, technology and/or requirements will then have changed! It is interesting to see how we take to IT despite the need to evolve so fast when you are on to IT. For example, the mobile phone I have now is way below today’s standard. But it serves my basic purpose and I don’t feel the need to splurge on one of today’s gizmos though the temptation is quite strong. Anyways, the HBS research was a nice one, I thought. And another thing - Prof. DU called IT systems ‘liquid concrete’ – hmmm, interesting description!

Another interesting comparison that was discussed was that between qualitative and quantitative approaches to business –

Reduction in costs – qualitative does not work, quantitative does
Revenue generation – only qualitative approaches works
Options in business - value generation – innovation - only qualitative approaches work

Methinks when entrepreneurs start off, they actually start qualitative – based on their passions - and then get converted into quantitatively-oriented people somewhere down the line.

Some other interesting thoughts that came through to me were:
- The basic idea of turning the business strategy method on its head – it reminded me of paradoxical approaches.
- Another aspect that was brought out was that of the network effect and its role in strategy. Forecasts may not work, may be way away from reality as they do not and perhaps cannot consider all human factors that bring about something like the network effect. So, why forecast at all? :)

Whew! Forgive me for this extremely long-winding and convoluted deliberation…but it has led me to a little bit of re-organization; my own contribution; nothing but another alternative that we are bound to have with three parameters – vision, ways and means. Why not start with opportunities and move on to the ways and then the vision??? That means nothing but being street-smart and getting the moolah quickly. What?

No comments: