The recent spate of globalisation-inspired mergers in every business Otherwise, you’ll be pointlessly efficient. activity from pharmaceuticals to accountancy is something of a mirage.
Both the deals themselves and the words from the executives driving them suggest that organisations have decided to stop being buffeted by the winds of change and attempt to take control of their own destinies.
And yet – for all the talk about visions and strategies – organisations still seem to be largely preoccupied with total quality, benchmarking, business process re-engineering and other internally focused activities.
Though such initiatives may make businesses more efficient, they are unlikely to bring them any closer to long-term survival on their own. This is not to denigrate such efforts. As David and Jim Matheson point out in their recently published book The Smart Organization (Harvard Business School Press), many companies – notably the US corporations Xerox, Motorola and General Electric – have reported benefits from such programmes over the past couple of decades. “In effect,” say these father and son consultants, “North American companies, and many in Europe, have passed through a revolution in operational improvement, just as their counterparts in Japan did before them. They have learned how to ‘do things right’.”
But, echoing an oft-voiced criticism of the quality movement, they stress that doing things right does not ensure that the right things will be done: a company can be highly efficient at producing top-quality widgets, fridges or computers that nobody wants. The most glaring case of this concerns Florida Power and Light, the first non-Japanese company to win the Deming Prize, which, soon after receiving the quality award in 1989, was in all kinds of trouble. With some glee, it is reported that the company had created a quality department that was not far short of 100-strong, nearly 2,000 quality teams and a rigorous system of quality review – but with little impact on the way that customers viewed the organisation.
“If anything, the details of the quality program shifted attention away from customers,” write the Mathesons.
But this is not the only such case. Tom Peters’s and Robert Waterman’s book In Search of Excellence is famous not just for being the first mega-selling business tome, but is renowned for being proved wrong almost as soon as it hit the shelves. Kodak, Digital and many of the other companies featured in what was basically a handbook of operational excellence were soon experiencing difficulties as mid-1980s corporate America came up against the full weight of the Japanese.
So, what are companies to do if just getting better at how they do what they do is not enough? The general view is: get a strategy. Hence the general resurgence of interest in scenario planning and other forms of strategic thinking. And the ever-rising profile of Professor Gary Hamel, co-author with CK Prahalad of Competing for the Future.
The problem with this, though, is that not just any old strategy will do. After all, the walls of company reception areas are littered with mission statements or visions that are either so trite as not to be worth printing or so close to the Holy Grail as to be doomed to failure.
Indeed, Michael de Kare-Silver, another consultant, suggests the difficulty arises because existing strategy theories are not up to the task in these increasingly turbulent times in which we find ourselves. Even such recently developed ideas as Hamel’s and Prahalad’s “core competencies” and the “parenting” concept of portfolio management within multibusiness companies espoused by Goold, Campbell and Alexander in Corporate-Level Strategy are found wanting. What is needed, he says in his book Strategy in Crisis (Macmillan), is “a new framework for strategy making” – and he proposes “The Market Commitment Model”, “built upon a deep-rooted understanding of markets and customers”.
Now, this sounds very grand, but it basically comes down to understanding how markets and customers are changing – qualities that just about every successful entrepreneur believes he or she has in abundance.
De Kare-Silver, a senior partner with the Kalchas Group, part of CSC Index, takes the idea further, of course, setting out three levels or dimensions: commitment; four prime axes of competitive advantage – price, emotion, performance and service hustle; and “the underlying sources of that competitive advantage”.
Indeed, the inclusion of emotion is arguably much more significant than the other two axes – performance and service hustle. The latter is basically an acknowledgement that customer service is no longer enough. But we all know that, and it could be claimed that even service hustle and – come to that – exemplary performance are “givens” for any company that is going to survive in the long term.
Which all seems to suggest that – while he makes a number of useful observations – de Kare-Silver is no closer to coming up with a fail-safe model of corporate strategy for the late 1990s than anybody else. Indeed, in implying that there is a model, he has fallen into the trap that has caught so many others.
Far more convincing is the Mathesons’ contention that what sorts the long-term survivors from those who enjoy merely fleeting success is an ability to make the right decisions at the right times. In keeping with their Silicon Valley background, their primary focus is companies with hefty research and development activities. But an approach that encourages businesses to take a mature view of risk and so see opportunities where others fear to tread or spot pitfalls while others are following the herd can be applied across all sectors. For it has the advantage of being not just “smart”, but also based on an attribute that is often overlooked – sound common sense.
Roger Trapp is management editor of The Independent and Independent On Sunday.
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