The New Strategic Thinking

Pure & Simple

by Michel Robert
McGraw-Hill © 2005
352 pages

Focus Take-Aways
Leadership & Mgt. • A CEO should not keep the company's strategy secret or develop strategy in
Strategy isolation from subordinates. A successful strategy requires stakeholder support.
Sales & Marketing
Finance • The CEO should develop a future-oriented vision for the company.
Human Resources
• This vision unites employees around the company's goals.
IT, Production & Logistics
Career Development • Strategic thinking synthesizes vision and strategy.
Small Business
Economics & Politics • Focus on strategy in both good times and bad.
Industries
Regions
• A properly formulated strategy will serve your company over the long term.
Concepts & Trends
• Current information can enlighten your expectations and future projections.

• Identify your organization's "driving force:" the fundamental concept that

differentiates it and propels it strategically.

• Use strategy to assess new opportunities and business propositions.

• Introduce new products strategically to fuel growth.

Rating (10 is best)

Overall Applicability Innovation Style

7 7 8 7

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 Relevance

What You Will Learn

In this Abstract, you will learn: 1) How to develop a sustainable corporate strategy; 2)
How to anticipate the future; 3) How to avoid common strategic pitfalls; and 4) How to
employ “strategic filters” to decide which opportunities to pursue.

Recommendation
Author and consultant Michel Robert has tested his process for strategy development over
the course of two decades of business experience. His method involves taking advantage
of the overall knowledge of your company’s executives and involving them in developing
strategy, turning them into stakeholders in the company’s future. His book is both a guide
to the process and a collection of case studies of companies that have used this approach,
ranging from insurance providers to heavy equipment manufacturers and developers of
advanced weapons systems. Not surprisingly, Robert champions his proprietary process
and often crosses the line into selling rather than teaching. Nevertheless, getAbstract
finds that this can be a valuable handbook for the CEO who is considering how to set a
strategic direction for growth.

Abstract

Projecting the Future, in Five Varieties

“Companies that Companies such as Caterpillar, Johnson & Johnson, GE and IBM, as well as newer
attain long-term entrants such as FedEx, Microsoft and Southwest, have succeeded in creating value over
success…have many years because their boards and senior executives have developed solid conceptual
a clear, coherent
strategy that frameworks for making business decisions. They are simply more accomplished at
they pursue thinking strategically than executives at companies that do not endure as long. Such
with singularity successful strategic thinkers use a deliberate process that leaders can apply to any
of purpose;
they have total
business in any industry. Utilizing this process requires you to assess the future and to
dedication to it discern what sorts of events could affect your business in the coming months, years and
and no deviation even decades.
from it.”
Five types of projections can give you a sense of what the future landscape will look like:
1. “The future ahead” – A projection based on your present circumstances.
2. “The future beyond” – A projection of how the business environment may change
within certain easily “predictable boundaries.”
3. “The future behind” – A projection based on historical patterns.
“A successful
strategy works
4. “The future around” – A projection based on circumstances in the industry landscape
to the benefit of that you can currently discern but that have not yet had their full impact on your
a company over particular business.
a long period
of time. In fact,
5. “The future beside” – A projection based on events or trends in other industries or
the litmus test businesses that are potentially instructive, even if they don’t currently affect your
of a successful business. For example, the head of a liquor company should follow the political and
strategy is its regulatory developments that have affected the tobacco industry.
longevity.”
Most companies possess hidden information that can help them predict the future. Ray
Kumar, CEO of Raster Graphics in California, found that strategic thinking enabled him to
make some projections about his competitors that proved to be true over a five-year span.
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 The “10 Deadly Sins” of Strategy
Developing a strategy that sets the proper conceptual framework to confront each of
“Companies that those five futures is critical to your business’s survival. At the same time, be sure you
are successful avoid these ten deadly strategic sins:
over long periods
of time outperform 1. “Strategy by osmosis” – Only the boss or, at most, a few senior executives understand
their competitors the strategy. If other managers and decision-makers do not get the strategy, they will
by outthinking
them in the
never implement it.
boardroom, not 2. Strategy by the boss – If the CEO develops the strategy alone, without input from senior
outmuscling management and other decision-makers, no one other than the CEO has a stake in it.
them in the
Even if the CEO is an excellent communicator, no one will implement the strategy.
marketplace.”
3. Strategy by a consultant – Even worse than developing a strategy in isolation with
no input from subordinates is hiring a consultant to piece together your strategy.
Strategies that consultants develop by themselves are easy for operational managers
to disregard, because they typically lack the sort of detailed, “intimate knowledge of
the company, business or industry” that operational managers possess.
4. Strategy by the unstrategic – Most managers are not strategic thinkers; they are
“Supremacy, not
adequacy, is the operational thinkers with tactical responsibilities. Still, input from line managers
sole objective is invaluable when you’re developing strategy. Help them develop their strategic
of long-term insights by providing the proper framework.
strategy.”
5. Strategy by the numbers – Don’t confuse “long-range operational planning” with
“strategy formulation.” They are two distinct processes, and you should keep them
completely separate.
6. Strategy by meaningless mission statement – Mission statements that do not help
managers discern among business choices are useless. A successful mission state-
ment can be a guideline for decision-making.
“Strategic
7. Strategy by crisis – When times are good and profits are trending in the right direction
supremacy
is highly you may feel tempted to take your eyes off the future. But strategy is as important
dependent on the when the market is up as it is when the market is down.
organization’s 8. Strategy by generalization – A well-articulated strategy has implications for your
ability to create
and bring to company’s “products, markets, customers, organization structure, systems, processes,
market new personnel and culture.” Consider business implications when developing strategy.
products more 9. Strategy by the details – Focusing too much on content – the day-to-day operation of
often and more
quickly than its the business – can distract you from the process-based work you should be doing in
competitors.” productive strategic-thinking exercises.
10. Strategy by the experts – If you use firms that provide industry or business expertise to
provide your “strategic content,” you’ll end up with a business that is undifferentiated,
generic and, ultimately, not competitive.
“The Vision Thing”
Vision is management’s picture of the company’s future. Strategy is how you realize
“A strategic plan
is one that will
that future. Vision is particularly important when you’re engaged in long-term planning,
alter the “look” of because it is the platform on which you build a strong strategy.
an organization
in the future. The Your vision should bring employees together and motivate them to achieve the company’s
key elements…are goals. A successful vision steadies the organization in both good times and bad. It is a
new products, new “competitive tool” that differentiates your organization in the market. A successful vision
customers and
new markets.”
has the following characteristics:
• It is clear, and everyone in the company understands and endorses it.
• It is compelling. It moves the organization to action.
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 • It distinguishes the company from the competition.
“In too many • It is consistent over the course of years.
organizations,
the strategy of “Strategic thinking” is the way you realize your vision. Use strategic thinking to develop
the company a "strategic profile," which enables you to make decisions over the long term, including
is implicit and decisions about which resources to commit to particular areas of activity, and which
resides solely in
the head of the business opportunities to pass up or pursue.
chief executive.”
May the “Driving Force” Be with You
Your “single differentiating factor” – the concept at the root of your business that propels
the business strategically – is its “driving force.” Determining your company’s driving
force is the first and most important part of developing a tight strategy. Usually, you
can get a clear picture of your company’s driving force if you inspect past decisions,
investments and other historical elements. They will all point to a single business priority.
Driving forces come in four varieties:
“The worst of all
strategic crimes 1. “Product-driven.”
and the ‘kiss of
death’ for any 2. “Market category/user class-driven.”
strategy – even a
3. “Production capacity/capability-driven.”
good one – is to
have an outside 4. “Technology/know-how-driven.”
consultant develop
your strategy.” Determining your company’s category can help you to make strategic decisions about
its future. For example, Land America, a title insurance company, decided to move from
using a product-driven strategy of selling insurance policies to using a market category/
user class-driven strategy in which it began offering different services connected to the
real-estate transaction market. Discovering and changing its driving force enabled the
company to grow beyond previous expectations.
In another example, Juvena/La Prairie changed its cosmetics product-driven strategy to
“‘Supremacy’ is a technology/know-how-driven approach based on developing and launching original
not an absolute products. The change in focus enabled it to compete successfully with much larger
numeric
advantage over companies, such as L’Oréal.
competitors but
rather the degree Using a Strategic Filter for Decision-Making
of control a
company has of Once you’ve determined your company’s driving force, you can develop a “business
its competitors concept,” which you should be able to express in a brief “strategy statement.” This
over the long statement should articulate your company’s driving force, delineate which products,
period of time.”
customers, market segments and geographic markets the company will pursue, and
orient the company to future areas of growth. The strategy statement gives managers a
solid sense of direction and provides them with a rubric they can use to filter business
decisions. It translates the company’s general “theory of business” into specific actions.
In the words of Walt Havenstein, president of a unit of BAE Systems, this will give you
“a ready template for quick assessments” of the opportunities that confront you in your
business.
“Most changes
that will impact
Harold Stolzenberg, president of Juvena/La Prairie, puts all his decisions through a
your business 10 strategic filter. Often, he finds he decides against pursuing projects that otherwise might
years from now have drawn him to get involved. The strategic filter can tell managers “not what to do,
are in place in
but rather what not to do anymore.”
some form today.”

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 “Strategic Product Innovation”
Once your strategy and strategic filters are in place, your company can get on with the
important business of introducing new products – the “fuel of corporate longevity.”
However, avoid the four common mistakes that often stand in the way of strategic
product innovation:
1. “Too much focus on current customers” – Current customers may be able to tell you
about the good and bad points of your current product, but they are not good at telling
you what they will need or want in the future.
2. “The Cash Cow mentality” – Cash-cow products can make your company lethargic,
“With…strategic
thinking…you overly focused on maintaining the market for a current product rather than on
get conviction introducing innovative new products.
because you very
3. “The Mature Market syndrome” – Mature markets do not exist. You can always find
carefully select
the mountain you opportunities to innovate and change the rules of the competition.
want to climb 4. “The Commodity Product fallacy” – You need look no farther than the example
together, and
everyone knows
of branded water to realize that products become “commodities when management
the reason you convinces itself that they are.”
want to climb
that mountain.” Develop new products in a three-step process. The first step is “creation,” in which
you monitor the ten sources of innovative new product concepts. A strong, articulated
strategy enables you to evaluate the “surplus of opportunities” and pick the winners
among them. These openings include:
1. “Unexpected successes.”
2. “Unexpected failures.”
3. “Unexpected external events.”
4. “Process weaknesses.”
5. “Industry/structural changes.”
6. “High-growth areas.”
7. “Converging technologies.”
“You cannot 8. “Demographic shifts.”
predict the future,
but you can 9. “Perception shifts.”
prepare for and 10. “New knowledge.”
control the future.”
Second, assess new products in terms of their “cost,” “benefit,” “strategic fit” and
“difficulty of implementation.” “Strategic fit” is especially important: attempts to launch
products that are not aligned with your strategy usually fail. Examples of such failures
are, unfortunately, abundant. They include Exxon’s launch of an office information
business, QXL, and Caterpillar’s acquisition of Towmotor, a manufacturer of forklifts.
Finally, formulate a plan to introduce the new product.
Neil McDonough, CEO of FLEXcon, followed the three-step strategic product innovation
process, and increased his company’s percentage of new product sales to 30% of total
product sales in just 18 months.

About The Author

Michel Robert is a strategy consultant and founding partner of an international consulting
firm. He is the author of Product Innovation and Strategy Pure & Simple: How Winning
Companies Outpace Their Competitors.
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