Model Management: Strategic planning gone awry?

In a recent essay in MIT Sloan Management Review, Clayton M Christensen, professor and guru of disruptive technologies from Harvard Business School, argues persuasively that what may today be a competitive advantage may not be so tomorrow simply because circumstances change.

Christensen, who wrote The Innovator's Dilemma: When New Technologies Cause Great Firms to Fail in 1997, points out that corporate strategists continue to copy old models rather than looking for new ones.

His argument is essentially that strategists whose understanding of competitive advantage goes no deeper than "if it's good for Cisco it must be good for everyone" are likely to succeed only in building yesterday's competitive advantage. If history is any guide the practices and business models that constitute advantages for today's most successful companies confer those advantages only because of particular factors at work under particular conditions at a particular time.

According to Christensen, strategists need to look beyond what works to understand why and under what conditions certain practices lead to competitive advantage.

All of which raises the question of what exactly strategy now is and how companies can create effective strategic plans. Strategy may not exactly be dead, but where is it and where is it going?

Christensen seems to take a rather limited view of strategy as simply the search for competitive advantage, itself a short-term and temporary phenomenon. He writes: "The very existence of competitive advantage sets in motion creative innovations that, as competitors strive to level the playing field, cause the advantage to dissipate".

But, he adds: "That does not mean the search for competitive advantage is futile. Rather, it suggests that successful strategists need to cultivate a deep understanding of the processes of competition and progress."

In fact, a new model of strategy is emerging from a number of sources, and many echo Christensen's view of strategy as a somewhat limited search for short-term ascendancy.

One example is Paul Strebel, an academic at IMD - one of Europe's top business schools.

"The traditional strategy process in large companies is not up to the speed required in today's fast moving environment," he says. "It is usually too slow, being based on annual planning cycles; backward looking, trying to explain what went wrong; and too static, reflecting existing industry conditions and company competencies."

In Strebel's view big companies need to practice "high speed strategy". Speed is all. Rather than driving initiatives from the top down, senior managers should encourage and nurture initiatives on the frontline, from the bottom up. Their role is to collect real time data and make decisions about which initiatives to invest in, based - wherever possible - not on opinion or models but on facts.

Other commentators point to similar new strategic imperatives. Based at Insead, the international business school located outside of Paris, the Korean academic W Chan Kim and Renée Mauborgne are responsible for some of the most interesting work on strategy of recent years.

Their research indicates that a key difference between companies that achieved sustained high growth and those that did not lies in the way the two groups approached strategy. Rather like Christensen, they advocate a switch from thinking about strategy in terms of existing competitors to thinking in terms of creating entirely new markets, or redefining existing markets.

According to Chan Kim and Mauborgne, value innovators typically challenge conventional competitive thinking. They identify new market space and position themselves to exploit it, even if this means moving beyond the traditional boundaries of their business.

Another academic, Lynda Gratton at London Business School, argues that "in this decade it is only people who can sustain the competitive advantage of a company [through] the ability to create rarity, value and inimitability".

But she is also as concerned with how businesses can align human resource strategy with business strategy.

All this is a long way from the traditional view of strategy promulgated by Igor Ansoff in his 1965 book Corporate Strategy, which for the first time codified the role of strategic decision-making by senior management.

Modern strategy is no longer an overarching guiding principle that can be used to steer an organisation and guide its marshalling of resources. Rather it is becoming much more a quick-fix solution. And is that really strategy?