Strategic IQ E-Book

John Wells

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Sprache: Englisch

Seitenzahl: 521

Veröffentlichungsjahr: 2012

Beschreibung

In today's world, only the smartest survive. The competitive landscape is littered with graves of well-known firms whose revenues, profits and stock prices rose for decades until they suddenly imploded. In fast-changing business environments, firms must adapt their strategies and innovate to remain at the top. But many successful firms fail to do so. Instead, they succumb to inertia, hesitate, or stick blindly to their old strategies, until it is too late. The ability to adapt to change is a measure of intelligence; so why do firms demonstrate such low Strategic IQ? What causes inertia and why is it so deadly? How can leaders help their firms to act more intelligently? This book identifies the key sources of inertia - strategic, structural and huma - and provides practical advice on how they can be overcome to create smarter corporations. It is both a wake-up call for successful firms and a lifeline for firms struggling to succeed. To successful firms - beware! You may already be dead! To struggling firms - have hope! It is possible to pass powerful competitors by raising your strategic, structural and human IQ. Praise for Strategic IQ "Hard-hitting and stimulating, Wells' thesis carries a robust message that should make business leaders the world over sit up and think." --Archie Norman, Chairman of ITV, UK "Wells makes a compelling case for dramatic change." --Ron Sargent, CEO of Staples, USA

Leseprobe

Contents

Cover

Perspectives on Strategic IQ from Practitioners and Scholars Around the Globe

Title Page

Copyright

Preface

Introduction

Why do Successful Companies Fail?

Inertia – A Fatal Disease

In Search of Strategic Intelligence

Smart Strategy

Smart Structure

Smart Minds

The Holistic View

Part One: Smart Strategy

Chapter 1.1: The Need for Smart Strategy

Why Strategy?

Why Smart Strategy?

Low Strategic Intelligence

What is Strategy?

Moderate Strategic Intelligence

High Strategic Intelligence

Chapter 1.2: Low Strategic Intelligence

Level One: The Strategically Blind

Level Two: Strategic Denial

Level Three: Strategic Incompetence

Summary

Chapter 1.3: What is Strategy?

External Scope

Competitive Advantage

Internal Scope, Assets and Architecture

System Causal Logic

Strategic Scorecard

Crucial Assumptions

Extending the Strategic Business Model to Competitors

Chapter 1.4: Moderate Strategic Intelligence

External Strategic Review

Internal Strategic Review

Defining Strategic Options

Making Strategic Choices

Sharing and Declaring

Strategy Execution and Change

Strategic Scorecard

Aligning Rewards

Rigorous Revision Cycle

Prepared for Change

Challenges of Maintaining Competence

Summary

Chapter 1.5: High Strategic Intelligence

A Mind-Set of Change

Creating Problems – Systematically Dissatisfied

Creating Problems – Creative Destruction

The Problems with Creating Problems

Smart Vision

Capacity for Change – Distributed Intelligence

Funding Strategic Innovation

Driven to Strategic Success

Strategy as Learning

Perspectives on Leading Highly Intelligent Firms

Summary

Part Two: Smart Structure

Chapter 2.1: The Need for Smart Structure

The Stop–Start Cycle of Change

Smart Structure

Smart Asset Management

Formal Architecture – Navigating the Architecture Labyrinth

Informal Architecture – Leveraging Social Mechanics

Towards Smarter Structure

Chapter 2.2: Smart Asset Management

Introduction

The Nature of Assets

Accounting for Assets

Nurturing Strategic Assets

Trapped by Past Decisions

Playing Asset-Lite – Smart Fashion

Playing Asset-Flexible

Working Capital Lite

Financial Assets

Human Assets

Knowledge Assets

Relationship Assets

Reputation Assets

Declaring War on Fixed Costs

Turning Asset Traps into Opportunities

Summary

Chapter 2.3: Formal Architecture – Navigating the Architecture Labyrinth

Introduction

Roles, Responsibilities and Reporting Relationships – The Three Rs

Business Processes

Human Asset Development

Measurement Systems – The Strategic Scorecard

Reward Systems

Communication

Information Systems

Summary

Chapter 2.4: Informal Architecture – Leveraging Social Mechanics

Introduction

Social Mechanics and the Evolution of the Brain

Networking between Large Groups – Intergroup Social Mechanics

The Formation of Informal Architecture

Integrating Across Social Components – From Tribes to Nations

Aligning the Informal and Formal Organization

Turbocharging Informal Architecture – The Promise of Social Networking Technology (SNT)

Progress in Applying SNT

Summary

Chapter 2.5: Towards Smarter Structure

Introduction

Low Structural IQ

Moderate Structural IQ

High Structural IQ

Smarter Informal Architecture

Part Three: Smart Minds

Chapter 3.1: The Need for Smart Minds

Introduction

What is a Mind?

Hiring Smart Minds

Addressing Basic Human Needs

Harnessing Insatiable Human Needs

Chapter 3.2: What is a Mind?

The Evolution of the Brain

Neuroscience and Behavioural Psychology – The Individual Mind

Neuroscience and Social Psychology – The Collective Mind

The Brain as a Learning Machine

Summary

Chapter 3.3: Hiring Smart Minds

Recruiting Raw Talent

Selecting for Practical Intelligence

Encouraging Smarter Behaviour

Recruiting Senior Executives

Summary

Chapter 3.4: Addressing Basic Human Needs

Introduction

Basic Human Needs in Business and Society

Employment

Teamwork

Object-Oriented Architecture

Rewarding Change-Makers Rather than Positions

Summary

Chapter 3.5: Harnessing Insatiable Human Needs

Introduction

Maslow's Higher Needs

Learning

Self-Fulfilment – Delivering Our Personal Best

Mission – Vision and Values

Teaching

Teaching Organizations to Learn – Leadership Behaviour

Summary

Bibliography

Index

Perspectives on Strategic IQ from Practitioners and Scholars Around the Globe

“Terrifying but true! Wells zeroes in with supreme intellectual precision on the heavy price firms pay for moving too slowly on the business battlefield.”

Bill Roedy, ex Chairman & CEO, MTV Networks International, USA

“Wells makes a compelling case for dramatic change for those at the helm – and suggests ways to push beyond the limits of traditional thinking and behaviours that can stand in the way of innovation.”

Ron Sargent, Chairman & CEO, Staples Inc., USA

“A comprehensive compendium for any CEO trying to drive excellence in their company. John Wells masterfully links the need for a winning strategy, a smart structure and business model for flawless execution, and the kind of human capital and culture needed to sustain excellence through wrenching change. A must read for any CEO looking to jumpshift their company's performance.”

Michael White, Chairman & CEO, DIRECTV, USA

“Our people, strategy and culture are what make us special. Wells offers insightful research into how these factors influence strategic intelligence and offers real world, practical advice to raise your company's Strategic IQ.”

Glenn Renwick, CEO, Progressive Corporation, USA

“John Wells has created the next strategic classic. He brings the strategic, structural and human capital challenges together into a holistic view of the challenges of change and survival in an increasingly complex changing world.”

Saul Berman, Global leader of Strategy and Change, IBM, USA

“The Danaher Business System is about ‘doing the right things, well.’ Wells' compelling book makes the case for tightly weaving a firm's strategic, operational and organizational initiatives into whole cloth before well-meaning but fractured, functional efforts cause even the most successful company to unwind.”

Larry Culp, CEO, Danaher, USA

“John Wells does an enormous service to the science of strategy by categorizing and describing simple and practical measures and mental models that distinguish great firms from the rest.”

John Pittenger, Senior Vice President, Koch Industries Inc., USA

“Profound and objective thoughts for all firms focused on long term success. Wells examines rigorously the role of structure and people in shaping successful cultures for long term survival.”

Marcelo Odebrecht, CEO, Odebrecht S.A., Brazil

“An essential read for leaders of any organization in these turbulent times.”

Charles Gurassa, Deputy Chairman, easyJet plc, UK

“Hard-hitting and stimulating, Wells' thesis carries a robust message that should make business leaders the world over sit up and think. From the sociology of wolves to the demise of Circuit City, this book is at one a diverting read and at the same time a brutal wake up call for the business establishment.”

Archie Norman, Chairman, ITV, UK

“John Wells is one of the world's finest strategic thinkers. Especially during these tumultuous times, every business leader should read Strategic IQ.”

David Soskin, Chairman, mySupermarket.co.uk

“As always, Wells gets to the heart of outstanding performance. Neither leadership nor analysis by themselves is enough. It's the combination that is potent. This is a must-read for anyone in a position of authority.”

Gerald Corbett, Chairman, Supermarketmoney.com; Chairman, Betfair; Chairman, Britvic plc, UK

“Wells brings his famously sharp mind and uncompromising approach to a brilliant new book. Deeply researched and beautifully crafted, you will enjoy the read, but flinch at the implications.”

Dan Cobley, Managing Director, Google, UK

“Always stimulating, John Wells will challenge your mindset and stretch your ambition. Strategic IQ is a powerful antidote to organizational complacency.”

Luke Mayhew, Chairman, British Retail Consortium, UK

“A masterclass on strategy from a master strategist – Wells has devoted his professional life to understanding what makes successful organizations and successful managers tick; this book brings together theory and practice in a highly readable format that CEOs and senior executives will be able to apply directly to their companies. If you can only read one business book this year, Strategic IQ is the one. Wells provides busy executives with the insights and the practical ‘how to’ playbook that will allow them to compete in today's ever more challenging business environment.”

Rick Mills, Group Director, Strategy Innovation, Alliance Boots, UK

“John Wells brings his much appreciated experience to bear on the challenges facing all leaders of businesses in today's world grappling with extraordinary times of change.”

Duncan Weston, Managing Partner, Cameron McKenna, UK

“The time to read this book is before you realise that you need to! John Wells blends the fundamentals with bleeding edge insight to produce a handbook that will provoke any manager to ask searching questions about the strategic direction of their enterprise. When it comes to scrutinising a strategy, John Wells is a hard taskmaster, but in the current economic environment, that is just what most companies need.”

Rupert Morley, CEO, Sterling Ltd, UK

“John marvellously combines the realms of strategy and psychology – providing fresh insights and making us immediately want to rethink how we run our companies. Just wish we had had this book when we started out.”

Charles Mindenhall and Manoj Badale, Co-Founders, Agilisys Ltd, UK

“A scintillating, stimulating and thought-provoking perspective on strategy. It is a must-read for business leaders; ignore it at your own peril!”

Dr Nahed Taher, CEO, Gulf One Bank, Saudi Arabia

“With the proliferation of off-the-shelf strategy guides, John Wells provides a welcome relief by going back to the basics. Wells breaks down common misconceptions about strategy and its problematic uses in corporations, with the sensible message that there are no shortcuts to good strategy: high strategic intelligence must be earned. This book provides an excellent guide.”

Victor Fung, Chairman, Li & Fung, Hong Kong

“We live in a challenging quick-change, dynamic, economic world; we need smarter corporations with smarter strategies and structures, and we must keep our minds in tone; this book helps lead the way.”

Douglas Tong Hsu, Chairman & CEO, Far Eastern Group, Taiwan

“John Wells brings together in this book the understanding of business strategy, human capital and the process of change and adaptation inside large organizations.”

Daniel Vasella, M.D., Chairman, Novartis AG, Switzerland

“John Wells teaches us that one must always be the First, Unique and Different. But once you have achieved this, he tells us how much you need to fight for these three elements as they are constantly being challenged by your competitors. In business there is no rest, no weekends and no holidays.”

Jean-Claude Biver, Chairman, Hublot, Switzerland

“This highly readable and enjoyable book provides deep practical business insight by asking the right fundamental questions for any company.”

Alain Caparros, CEO, REWE Group, Germany

“CEO, does your organization want to attract and keep smart minds? If you do, read this book. Carefully! It makes the difference.”

Markus Nordberg, CFO, CERN, the nuclear research establishment in search of the “God Particle”, Switzerland

“In a world of flux, the idea of practical intelligence resonates. It's not only one's capacity for learning but as important is the commitment to lifelong learning.”

Jean-Francois van Boxmeer, Chairman & CEO, Heineken, The Netherlands

“Wells' search for Strategic Intelligence not only provides breakthrough thinking in how we each contribute to the eventual collapse of companies; it makes a compelling case in my view for the role of wisdom and diversity to broaden the range of strategic capabilities and competencies that will enable companies to both navigate and shape their future. Finally, while it highlights the contribution of IRRESPONSIBLE Leadership towards the state of the world today so brilliantly, it provides strategic tools for all of us to overcome chronic inertia. It is a timely book for a world in crisis and desperate for leadership that is able to shape a sustainable future and align strategy to current reality through intelligent thinking and action at the same time.”

Wendy Luhabe, Chancellor, University of Johannesburg, Social Entrepreneur, South Africa

“Hats off to John Wells! He combines practical wisdom and intellectual insight to convince us that a smart leader has to wear three hats – that of a strategist, an organizational designer, and a social psychologist – all at the same time.”

Hirotaka Takeuchi, Professor of Management Practice, Harvard Business School, USA (former Dean, Hitotsubashi Business School, Japan)

“When companies achieve success, managers inexorably create processes and make hiring decisions that sow the seeds of self-destruction. John Wells has written an insightful and engaging description of the phenomenon and a roadmap for preserving the strategy, processes and people that made the company successful in the first place. This is must reading for all those eager to avoid being caught in the trap of managerial inertia that is pervasive.”

Bill Sahlman, Dimitri V. D'Arbeloff Professor of Business Administration, Harvard Business School, USA

“Wells' book explores a powerful formula for sustained corporate high performance as an inextricable mix of smart strategy, smart structure and smart minds. He brings an urgent and critical wake-up call to successful companies to adapt to present realities and to prevent failure through inertia to change. This book offers a practical, hands-on structure for long-term success. This is a must read book for all leaders. It will inspire your brain for a new way of thinking about strategy and execution.”

George Kohlreiser, Professor of Leadership and Organizational Behaviour, IMD, Switzerland, author of best-seller Hostage at the Table

“A tour de force...it covers all the key issues, has great examples, and is easily readable! A must read for all leaders...Wells presents the most approachable, practical, and comprehensive strategy guide to formulating and executing strategy ever!”

Bruce Harreld, Senior Lecturer, Harvard Business School (ex-Head of Strategy, IBM, USA)

“In evolutionary systems, sustainable competitive advantage does not exist; there is only a never ending race to create new sources of temporary advantage.”

Eric D. Beinhocker

The Origin of Wealth (p. 332)

This edition first published 2012

© 2012 John Wiley & Sons, Ltd

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Library of Congress Cataloging-in-Publication Data

Wells, John R.

Strategic IQ : creating smarter corporations / John R. Wells.

p. cm.

Includes bibliographical references and index.

ISBN 978-0-470-97828-3 (hardback)

1. Strategic planning. 2. Organizational effectiveness—Management. 3. Organizational change. 4. Success in business. I. Title.

HD30.28.W383 2012

658.4'012—dc23

2012003409

A catalogue record for this book is available from the British Library.

ISBN 978-0-470-97828-3 (hardback) ISBN 978-1-119-94278-8 (ebk)

ISBN 978-1-119-94279-5 (ebk) ISBN 978-1-119-94280-1 (ebk)

Set in 11/13pt Calibri by Thomson Press

Printed in Great Britain by TJ International Ltd, Padstow, Cornwall, UK

Preface

This book reflects my 35 year intellectual journey in search of strategy. Along the path whenever I reached a crossroads, I turned in whatever direction interested me most, and so my route has been a diverse and varied one.

In total, I have spent 15 years in academia, studying, researching case examples and teaching. In developing cases, the focus of attention is typically on successful companies since few failures wish to lift the corporate veil on their problems for public consumption . . . and so, in the process, I became a student of success.

In contrast, for ten years I was a strategy consultant and the reverse held true. Few companies hire strategy consultants when things are going well – it is normally to address major challenges . . . and so I became a student of failure.

And I spent ten years in management practice myself, running large firms and small, making strategy happen and, in the process, generating my own personal set of successes and failures.

And along the way, I always promised myself that I would one day sit back and reflect on what I have learned and share it broadly with practitioners. I wrote this book not in the hope of generating something stunningly new . . . the latest intellectual insight or quick fix. Indeed, many of the fundamental principles of good business practice have been around for generations. Rather, I wanted to collect my thoughts and integrate them in a useful way in the hope that leaders might gain these insights more quickly and at lower cost than I incurred on my journey. If not, I hope at least that it makes an interesting read.

I have many to thank for this work and only myself to blame for its shortcomings. I would like to mention my colleagues at Boston Consulting Group who revealed to me nearly 35 years ago how rigorous economic analysis can help make strategic choices; my colleagues at Monitor Company who demonstrated how to turn choices into action; my colleagues at Unilever, PepsiCo, Thomson Travel Group, Energis and IMD who helped me to change and execute strategy in the real world; and my colleagues at Harvard Business School who patiently provided feedback on my work. During my three teaching stints at Harvard, several thousand MBA students and over a thousand experienced executives have provided me with insights and feedback on my work. It was a privilege to work with them; there is no better way to really understand something than to try to teach it. I have also worked with executive teams at nearly 100 companies to solve business problems, and learnt much myself in the process. I thank them for the opportunity. I must also pay tribute to the rich literature that has inspired my work; I list a few examples in the bibliography that have consciously influenced me. I apologize profusely to any I have inadvertently left out.

Nor do I mean to offend when I give special thanks to a few. To Michael Porter, my thesis supervisor, who first invited me to teach at Harvard Business School and work with him on Competitive Advantage. To Chris Argyris, the most profound influence on me, both professionally and personally, who opened my eyes to the impediments to individual and organizational learning and how to overcome them. To John Clippinger who introduced me to social mechanics. And finally to Manoj Badale and Charles Mindenhall, founders and owners of Agilisys, a fast-growing UK-based, IT services and outsourcing company. As the company name suggests, they live by the principles I espouse in this book. They inspired me to write it and helped fund my early research.

I also want to thank my research and editorial team. Travis Haglock, Elizabeth Raabe and Carole Winkler worked with me on many of the cases; Rob Wiseman was a knowledgeable and expert editor; and Carole Winkler provided research and editorial support throughout. Together, they added tremendous value to both the text and my thinking; indeed, they helped me to rediscover the pleasure of writing which is so easily lost in today's tweet and SMS-driven world. Finally, a very special thank-you to Rosemary Nixon of Wiley and her team. A year ago, she reviewed my first 500 page draft and told me frankly that I would have to cut it by half. I hope that the latest version is more acceptable, in no small measure to all the help I have received. To the extent that it falls short, the fault is mine alone.

My research for this book would not have been possible without the generous financial support of the Division of Research at the Harvard Business School and the Research Department at the International Institute for Management Development (IMD). I am deeply grateful.

As I sit writing this, I know my intellectual journey is incomplete. The more I learn, the more I realize I do not know. Had I discovered this many years ago, I might not have had the courage to continue, but now the prospect excites me. My career has been very varied because I have always followed the most exciting intellectual path, and I will continue to do the same, even though I now know there is no end.

But as I reflect, I must also look at the cost of this journey. I have always been consumed by my work, and this has been a great strain on my family; I was not always there for them. My eldest son is recovering from a near-fatal illness which struck him just before the holidays. I need to take note. I do not need to travel so fast because there is no end to the journey. Instead, I must make sure I take time to enjoy the precious fruits along the way, and there are none so precious as my three sons. And so, I dedicate this book to them.

To Charles, James and MatthewWollerau, Switzerland, January 2012

Introduction

Why do Successful Companies Fail?

No financially successful firm wants to believe that failure could just be around the corner. But successful firms fail all the time and they fail dramatically. It is a common pattern: years of stellar profit growth and then sudden collapse.1 It does not appear to be confined to particular sectors or geographies. It happens to high-tech firms and low-tech firms, manufacturing businesses and service businesses, across all sectors of the economy and all around the world. It seems to be part of the price paid for success.

Once firms hit the wall, it is difficult to recover. Turning round a large corporation takes great leadership, huge resources and a good deal of serendipity. A few, like technology leaders IBM2 and Hewlett Packard, come back from the brink and re-establish their leadership. But many, such as word processing pioneer Wang Laboratories, instant photography king Polaroid and minicomputer pioneer Digital Equipment Company, quickly disappear, going bankrupt or being absorbed into more successful enterprises. Some try hard to turn round but finally succumb: Circuit City and Kmart, both leaders in their retail sectors, went bankrupt seven years after their first major profit declines. Others limp along for decades. Photography giant Kodak3 and fashion supremo Gap4 both suffered material profit declines during the 2000–2002 recession. Kodak finally failed in early 2012, a decade later, while Gap continued to struggle.

Why does this happen? It is tempting to blame major external events like the financial collapse of 2008. Sometimes it's true. Northern Rock in the UK was a well-run company that perished when its access to capital markets was choked off. But for many the financial meltdown compounded their existing problems and accelerated a decline that had begun long before. General Motors had been in trouble for decades before it went bankrupt in 2009. English retailer Woolworths drifted along for years with no clear strategy until it was forced into administration in 2008. Circuit City had long wrestled with change after losing its leadership position to Best Buy in discount consumer electronics. These companies went bankrupt during the economic meltdown, but the crisis merely hastened their demise.