260Managing the Business
Step 1: Look outside to identify threats and opportunities
There are always threats in your organization’s outer environment: new
entrants, demographic changes, suppliers who might cut you off, substitute
products that could undermine your business, and macroeconomic trends
that may reduce the ability of your customers to pay. Opportunity also
lurks in a new-to-the-world technology, an unserved market, and so forth.
Deepen your understanding of this landscape by gathering the views
of customers, suppliers, and industry experts you may interact with in your
role. Have conversations with others in the organization to identify current
threats and opportunities. Some fi rms, particularly in technological fi elds,
enlist teams of scientists and engineers to analyze markets, competitors,
and technical developments. It’s their job to look for anything that could
threaten their current business or point toward new directions that their
business should follow. Gain exposure to this work if possible.
Whether you’re contributing directly to strategy development in your
role or simply trying to understand the environment in which you operate,
consider the following questions:
• What is the economic environment in which we must operate?
How is it changing?
• What will our customers want/expect from us in fi ve to ten years?
How will the world have changed?
• What major threats do we face now or are we likely to face soon?
What aspects of the current environment are our competitors
struggling to adapt to?
• What opportunities for profi table action lay before us? What are
the risks associated with different opportunities and potential
courses of action?
Step 2: Look inside at resources, capabilities, and practices
Internal resources and capabilities can either frame and support or con-
strain your company’s strategy, especially for a larger company with many
Strategy: A Primer261
employees and fi xed assets. And rightly so. A strategy to exploit an un-
served market in the electronics industry might not be feasible if your fi rm
lacks the fi nancial capital and human knowledge to carry it off. Likewise,
a strategy that requires entrepreneurialism from your employees probably
won’t get off the ground if your company’s management practices reward
years of service over individual performance.
These internal capabilities—especially the human ones— matter
greatly, but strategists often overlook them. To whatever degree you par-
tici pate in organizational or team strategy development, consider ques-
tions like:
• What are our competencies as an organization or team? How do
these give us an advantage relative to competitors?
• What resources support or limit our actions?
• What attitudes and behaviors do our employment practices
encourage?
• What is our workforce good at, and what does it struggle to
accomplish?
• What does it take to implement real change here?
Step 3: Consider strategies for change
Once you have a picture of how the changing external world affects your
business and what the company or your team looks like right now from the
inside, it’s time to think about directions for change. Christensen has advo-
cated that strategy teams fi rst prioritize the threats and opportunities they
fi nd (he calls them “driving forces” of competition) and then discuss each
one in broad strokes. Like all idea-generation sessions, these conversations
will be most successful if you push your team to create many alternatives
(see more on brainstorming in the section “Tools for generating ideas” in
chapter 13). There is seldom one way to do things, and in some cases, the
best parts of two different strategies can be combined to make a stronger,
third option.
262Managing the Business
As you’re working with your boss, your peers, or your own team, don’t
be too attached to your new ideas at this stage. Check your facts and ques-
tion your assumptions. Some information is bound to be missing, so deter-
mine where your knowledge gaps are and how to fi ll them. As your options
start to take shape, vet the leading strategy choices with others, including
longtime employees, subject-matter experts, and other industry players in
your network. (You’ll have to be careful how much information you share
with each person, of course.) Collecting a wide range of reactions will help
you counter groupthink.
Step 4: Build a good fi t among
strategy-supporting activities
Good business strategies, according to Porter, combine activities into a
chain whose links are mutually supporting and lock out imitators. Take
the rise of Southwest Airlines as an example: as Porter describes, the com-
pany’s breakthrough strategy was based on rapid gate turnaround that al-
lowed Southwest to make frequent departures and get the most out of its
expensive aircraft assets. The emphasis on gate turnaround also dovetailed
with the low-cost, high-convenience proposition the airline offered its cus-
tomers. Critical activities across the company’s operations supported these
goals: the highly motivated and effective gate personnel and ground crews,
a no-meals policy, and no interline baggage transfers. All made rapid turn-
arounds possible. “Southwest’s strategy,” wrote Porter, “involves a whole
system of activities, not a collection of parts. Its competitive advantage
comes from the way its activities fi t and reinforce each other.”
To systematize the strategy in your own organization, focus on these
issues:
• What activities and processes are involved in carrying out our
strategy? Which are most (and least) important to the success of
the strategy?
• How could we modify each activity and process to better support
the strategy? How can we organize these changes to compound
our advantages?
Strategy: A Primer263
• What resources and constraints should we plan for? How will we
implement the highest-priority and highest-impact changes?
Step 5: Create alignment
Once you’ve developed a satisfactory strategy, your job is only half done.
The other half is implementation. You’ll need to create alignment between
your people and operations, and your strategy. This is critical for manag-
ers at any level. Ideally, employees at every level in your company will un-
derstand (1) what the strategy is; (2) what their role is in making it work;
and (3) what the benefi ts of the strategy will be to the organization and to
them as individuals. Only when your people have a strong grasp of all three
points will they be able—and willing—to carry out their work.
Managers like you play two roles in this process. As a coordinator, you
must organize work in your department so that those everyday efforts sup-
port the business’s strategic intentions. That means drafting assignments,
streamlining processes, and reshaping roles so that no one’s time is wasted
and everyone feels connected to the shared sense of purpose. And as a com-
municator, you must help people understand the strategy and how their
jobs contribute to it. Even your entry-level employees should be able to ar-
ticulate the goals of the organization and explain how their efforts every
day fi t in.
It’s important for you as a leader to ensure that your employees understand
your strategy and instinctively agree that it’s in their interests to support
it. Sometimes this comes easy, but at other times, organizational change
requires a more deliberate effort on your part.
Leading change and transitions
If you’re leading your team through strategic change, you’ll likely get a
range of responses, from “This is exactly what we need! I’m on board!”
to quizzical stares and tight-lipped smiles. Some employees may respond
with open doubt, fear, or anger. Too often, these reactions take managers
264Managing the Business
by surprise. To overcome resistance, you must actively seek buy-in through-
out the process. You’ve learned how to do this generally in chapter 5, “Be-
coming a Person of Infl uence,” but let’s discuss how to approach strategic
change specifi cally.
Articulating a vision that others will follow
David Bradford and Allen Cohen, both scholars of business leadership,
have observed that signifi cant change only happens when someone pres-
ents a compelling vision to draw out and channel the group’s energy. “Peo-
ple need to see that change will be worth all the effort,” they write. “It is
diffi cult to visualize interactive changes in the abstract.” Think of a vision
as a picture of the hoped-for end result of your new strategy: what it will
look like, how it will function, what it will produce. It also helps to tie into
something your followers already innately care about.
To share that vision in a way that encourages buy-in:
Focus on people.
“A vision always goes beyond the numbers that are typically found in fi ve-
year plans,” says John Kotter, a professor at Harvard Business School and
author of the classic book Leading Change: Why Transformation Efforts
Fail. To connect with your team at an emotional level, he suggests, tell a
story about how the change you’re seeking will affect real people connected
with your company—customers and employees. Draw this picture in some
detail: For example, what will an improved customer interaction look like?
How will the customer and the employee feel during these interactions,
and how will it make their lives better?
Practice, practice, practice.
You probably won’t get your vision statement right the fi rst time. As you
gain more experience with the change process and learn about your peo-
ple’s responses, modulate your pitch. Kotter offers this benchmark: “If
you can’t communicate the vision to someone in fi ve minutes or less and
get a reaction that signifi es both understanding and interest, you are not
yet done.”
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