The Big Lie of Strategic Planning – II

Comfort Trap 3: Self-Referential Strategy Frameworks

Carrying forward from article The Big Lie of Strategic Planning by Roger L. Martin.  The author believes that the third trap is the most insidious of all. Because the major frameworks for articulating a strategy can lead managers to devise one around something under their control. It has to be understood that strategy is not about having complete control, but about adapting to environmental factors not under our control.  The author, therefore, quotes Mintzberg theory in highlighting the need to distinguish between deliberate strategy, which is intentional, and emergent strategy, which is about company’s response to unexpected events. According to the theory, managers overestimate their ability to predict future. So, he suggested they should concentrate on fine tuning their deliberate strategy in context of emerging trends in the external environment.

However there is a contradiction in this approach. If the future is that unpredictable, then how can managers be assured that it will become any less? Further, how will the managers realize that their environment has become predictable enough to make strategic choices? This realization has given credence to the belief that the concept of emergent strategy has become an excuse for avoiding difficult choices and prompts them to follow what others are doing.  But, following the competitors will not deliver unique results or deliver any advantage.

Mintzberg concept was further carried forward by Wernerfelt’s article, “A Resource-Based View of the Firm”.  According to the Resource-Based View (RBV), key to a firm’s competitive advantage would be some something which is valuable, rare, inimitable, and non-substitutable capabilities. This concept became very popular among managers as it gave them the idea that building “core competencies” or “strategic capabilities” was key to building strategy. Also, this is something that is knowable and controllable, and within reason can assure some success.  But, this approach is not as simple as it looks. A company may build its core competencies, but there is no guarantee that it will appeal to the customers. And customers’ choices are unknowable and uncontrollable. To strike a balance, some managers strive to focus on competencies that can be built with a degree of certainty.

So, rather than planning in every bit detail by just following a framework, it it is better to spend greater time in knowing the customer. And, based on that knowledge, focus on core competencies that can be built within the budget.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: