"You can't discuss changing strategy unless you are ready to discuss what makes people resist change and what part people could potentially play in creating more adaptability in an organization."
This morning while reading the weekly HBS Digest, I paused on the above quote by Harvard Business School Professor, John Wells, who was interviewed for "Strategic Intelligence: Adapt or Die" about his book, Strategic IQ: Creating Smarter Corporations. While he cites case studies of larger businesses, much of what he presents is relevant to small businesses, too.
Wells defines "strategic intelligence" primarily by the ability for an organization to adapt to ever changing circumstances. He gives an excellent example of how Circuit City grew 20+% over a period of years in the 1980's to the detriment of then little known Best Buy. When Best Buy adapted by changing its strategy to lead in pricing by reducing inventory, storage and labor costs, Circuit City ignored this competitive landscape change for a decade and ultimately filed for bankruptcy. (I just bought a projector at Best Buy, not Circuit City, and there's a reason for that.)
Change is tough. And when sales and profits are growing, it is perhaps easier to ignore the need to continually hone a competitive strategy. This may be the most dangerous point, though, as it leads to the complacency that allows the competition to move in.
Resistance to change is something we look for at Trellis Wine Consulting starting with the first phone call with a potential client. In our primary meetings and before there is even an agreement to write a proposal, we probe for change resistance because we know that this will create an impasse. There is a tremendous difference to being concerned about change -- yet open to it, and being resistant. When we find the latter, we know it will not be a fit since our process is all about creating an effective and efficient path to enhanced sales and profitability. Which almost always means change.
This doesn't mean we are dictating strategy -- far from it. Developing it is a process within our engagement. It is worth noting that Wells recommends that consultants be involved in the strategy development process, but that companies take care not to delegate this function. We couldn't agree more; in fact, it is critical that our clients are involved because it is their vision that leads the process. We are in a position of asking probing questions, providing recommendations based on past experience, and challenging status quo.
Strategic intelligence is a skill that must be ever present in a company; it is a mindset. When we work with clients, we are in a position of helping them think differently about their businesses. We translate the common complaint, "I don't have time for planning" as "I don't value it (or understand its potential value to my business) so do not make the time" to strategize.
The how is as important as the what. A chosen path is not an accident; it can and often does lead to a specific outcome. One of the most interesting things about strategy you don't have to have one to operate. There are profitable companies without them. The right question to ask though, is what might you be leaving on the table without one -- is there an opportunity cost to ignoring strategy? The problem with not having one or engaging in the process is that you'll never know.