Every firm has two strategies, we learn early on in the pages of One Strategy: Organization, Planning, and Decision Making. "Explicit" strategy is the one you read about in your company's planning memos and PowerPoint slides. The second, "implicit" strategy, is what emerges when middle managers and line employees attempt to execute the explicit strategy.
Unfortunately, these strategies often diverge. They are not aligned. And so the potential of the enterprise becomes unrealized. "Strategy therefore becomes the product of the firm's incentives, structures, and patterns of behavior, not the other way around," writes Harvard Business School professor Marco Iansiti, an expert on innovation, entrepreneurship, and operations.
This happened at computer maker Dell, says Iansiti. Ossified in a deep culture of direct sales to corporate customers, the company was slow to take advantage of a rapidly emerging consumer market—at least until founder Michael Dell returned to shake things up.
"Our past is littered with firms that failed to adapt to competitive changes," Iansiti says in an interview with HBS Working Knowledge. "Obtaining One Strategy in times of change means the organization will respond in a holistic fashion to new challenges, staying aligned for maximum competitive impact."
The book follows Microsoft's Windows 7 development team, headed by Steven Sinofsky, as it encounters and overcomes many of these same challenges. Sinofsky's blog posts to his team provide a behind-the-scenes look at how the One Strategy approach works in practice.
Sean Silverthorne: How did you get the idea for this book?
Marco Iansiti: Steven Sinofsky and I have known each other for more than 10 years, and have often worked together on projects such as cases and articles. After spending over a decade with the Microsoft Office team, Steven was asked to manage Windows development in May 2006, as Windows Vista development was winding down. During his time with Windows, Steven wrote over 1,000 pages of blogs to communicate with his team. This provided an incredible wealth of information from which to draw and synthesize what we now believe are some pretty interesting insights. The book combines a selection of Steven's blogs with practical conceptual frameworks on how to develop strategies that are aligned with execution in a rapidly changing competitive environment.
Q: Who will benefit from reading it?
A: Our audience is senior managers in any industry. Specialists in the high-tech sector will find it particularly interesting because it reflects on crucial competitive dynamics in their space. However, managers outside the tech sector will still appreciate the general management lessons throughout the book.
Q: What is strategic integrity, and why is it important?
A: Every firm has two strategies. The first is top-down, "directed" strategy—what the CEO and the senior management team believe the firm should focus on. The second is bottom-up, "emergent" strategy, which is established by the actual decisions and behaviors in the organization.
Directed strategy is what management believes needs to get done, while emergent strategy represents what actually gets done. Strategic integrity is when emergent and directed strategies are one and the same thing: when the strategy executes with the full, aligned backing of the organization for maximum impact. When a strategy lacks integrity it's like those war movie spoofs when the cavalry general goes on the attack, only to find that none of his troops actually follow him.
The book provides a very pragmatic (and detailed) look at how to achieve strategic integrity. This is not a theory book, but a book that offers insights and tools one can put into practice. Steven and I describe in detail how to build organizational capabilities, set up a good structure, implement the right processes, and adopt an effective management style.
Achieving strategic integrity is always important since managers naturally wish to maximize the impact of their strategies. However, the notion of strategic integrity is particularly important in times of change. Our past is littered with firms that failed to adapt to competitive changes. Obtaining One Strategy in times of change means the organization will respond in a holistic fashion to new challenges, staying aligned for maximum competitive impact.
Q: What are the chief impediments to strategy execution?
A: The chief impediment is inertia. Over time, organizations tend to optimize the efficiency of their operating model. Dell's direct model, during the 1995-2005 time frame, is the perfect example. Every process, every incentive, every cultural norm was optimized to deliver efficiently, bypassing the retail channel. When the strategy changed, the organization simply did not follow. Execution continued along the old inertial path, and the organization failed to adapt, despite the intentions of senior management. The structures, processes, and behaviors defined in the book are designed to break inertia, and maintain strategic alignment in times of change.
Q: To plan or not to plan? Your own research sheds some light on the question of whether top-down project planning has become outdated in today's fast-moving environments. What did you discover, and how did Microsoft do it?
A: Planning is key. Planning is the glue that holds the organization together, providing a way to test the strategy, determine its feasibility, improve it through collective feedback, and align capabilities to drive its execution.
Planning is central to the One Strategy approach. But the planning process we describe is going to surprise many executives. It's not the usual top-down, rigid, budget-style race for resources, or a "brain trust"—driven process developed by a select set of the "top people."
Planning for One Strategy is iterative and collaborative, defining a framework for executing on the strategic priorities, while refining the strategy and aligning the organization around its features. Planning is the process that more than any other activity works to align the organization around one set of goals, top-down, bottom-up, and "middle-out." By necessity, planning is a process that involves many people and empowers those closest to the knowledge and the work.
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