WHAT IS MEANT BY STRATEGIC INTENT
To develop an effective strategy – you need to have strategic intent. Invariably – companies look at competition traditionally – i.e. focus on existing position & resources, rather than at the resourcefulness of competition and their pace at which they are building competencies. Accessing the current tactical advantages of known competitors will not help to understand the resolution, stamina and inventiveness of potential competitors.
Strategic intent envisions a desired leadership position and establishes the criterion the organization will chart its progress – it is simply something more than just unfettered ambition. It captures the essence of winning and is stable over time. It sets a target that requires personal effort and commitment and also a bit of luck – it is not a soft target. The important question that companies ask is not “How will next year be different?” – but they ask, “What must we do differently next year to get closer to our Strategic Intent?” Most companies look at change and innovation in isolation – i.e. try and keep a few people isolated and let them free – but real innovation comes from everywhere – top management role is to add value.
Strategic intent is clear about the ends, but flexible about the means – it leaves room for improvisation and creativity and the top management gives the direction. The difference is resource as a constraint versus resources as leverage. In both, it is implicit that there must be balance in the scope so as to reduce risk. In the first you do it through building a balanced portfolio of cash generating and cash consuming business, in the other you ensure a well balanced and sufficiently broad portfolio of advantages.
Strategic intent implies a sizeable stretch for an organization. Current capabilities and resources will not suffice. This will force inventiveness to make the most of existing resources. It will create a sense of urgency and force a competitor focus at all levels through widespread use of competitive intelligence. The companies will invest and train employees with the skills they need to work effectively. The management will keep on invoking challenges, but also not overwhelm the employees with unreasonable pressures and demands. They give the organization time to digest one challenge before launching another challenge. There are clear milestones, which are communicated without any ambiguity and also review mechanisms to monitor the milestones.
One important parameter is reciprocal responsibility. Invariably in bad times, the blame is put at the operating levels – i.e. the workers and junior managers would lose their jobs, take pay cuts, etc., but in the good times it is the top management which would take the credit and reward themselves with hefty bonuses, increased salaries, etc. But reciprocal responsibility means equal blame and credit. It goes a long way in building credibility and motivation. Instead of attacking competitors blindly and taking them head-on, companies must leverage their resources.
Thus they look for ways to build competitive innovation. The first common way is to build layers of advantage – i.e. to build on strengths and apply them to the next / adjoining process and improve the links and keep on extending it. The next way is to search for loose bricks – clusters of business, groups of customers that competition has ignored / not noticed - gap in the market waiting to be exploited that gives you a foothold in the market. Quite often changing the rules of engagement help, as it puts the entire way of doing business into a fresh perspective. You can start on relatively equal footing rather than being at a disadvantage. Sometimes you compete with collaborations, instead of a straight fight. There is a similarity like in judo – you may be small – but you can use the size of your rivals against them. This mapping implies a new view of strategy. It ensures consistency in resource allocation in the long run, focuses efforts in the medium term and reduces risk in the short run. Quite often blindly following the leader or playing by the industry leader’s rule is competitive suicide.
Companies with good strategic intent know the importance of documenting failure – but instead of blame fixing and nailing people – they are more interested in the management reasons and the orthodoxy that may have led to the failure. Sounds simple, but somehow not practiced. In bad times the simplest way is to sell a business doing badly. This is the common method, but then you hand over markets and profits on a platter to the competition. The challenge is to survive and turn around and also to find niches within the market and create new spaces uniquely suited to the strengths, space that quite often off the map.
Today for practically all companies, the threat is global and diverse, even industry boundaries are becoming blurred. Typical competition as understood is being redefined and unlikely competitors are coming up. But this also has the positive spill off – in the sense that even opportunities are larger and global. Typical SBU structure though helpful may prove to be a constraint in such conditions. The reasons are that it could narrowly divide resources and thus loose their leverage and flexibility.
One of the dangers that companies impose on themselves is a belief that, if an executive is put through a lot of career moves fast – it would help him to be better person. But in the industry where the amount of knowledge and expertise required is very vast – this may be counterproductive. The managers may lack the deep strength required in their areas. Thus there could be tendency for “denominator management”. Most companies would appraise their managers on the basis of some ratios and financials. These measures would have a numerator – typically turnover / sales – i.e. the figures showing the position externally. The denominator would be costs, profits, and mainly internal parameters. To show better results – there is a short cut available which is tempting – i.e. focus on the internal parameters – so restructure – cut costs – and do things that may hurt a company.
Looking at the denominator may bring short-term results, but there may be serious long-term sacrifices. So unless a company does both simultaneously – focus on increasing the numerator and also focus on reducing the denominator, there could be a serious problem in the future. It would lead to a downward spiral, as again when the next problem occurs, you look inward and shrink again and again till finally somebody else gobbles you up. Thus in many situations, managers follow a code of silence, ignoring the signals seen and keeping silent. It is better to bring the problems to the surface and discuss them, rather than increase the level of anxiety, which everybody knows of.
Thus Strategic intent is what the organization strives for. Komatsu wanted to “Encircle Caterpillar” in the earthmoving business. Canon wanted to “Beat Xerox”. These are some of the strategic intents. It is an obsession with an organization – an obsession with having ambitions that may even be out of proportion to their existing resources and capabilities. This obsession is to win at all levels of the organization which sustaining that obsession in the quest for global leadership.
Strategic intent envisions a desired leadership position and establishes the criterion the organization will chart its progress – it is simply something more than just unfettered ambition. It captures the essence of winning and is stable over time. It sets a target that requires personal effort and commitment and also a bit of luck – it is not a soft target. The important question that companies ask is not “How will next year be different?” – but they ask, “What must we do differently next year to get closer to our Strategic Intent?” Most companies look at change and innovation in isolation – i.e. try and keep a few people isolated and let them free – but real innovation comes from everywhere – top management role is to add value.
Strategic intent is clear about the ends, but flexible about the means – it leaves room for improvisation and creativity and the top management gives the direction. The difference is resource as a constraint versus resources as leverage. In both, it is implicit that there must be balance in the scope so as to reduce risk. In the first you do it through building a balanced portfolio of cash generating and cash consuming business, in the other you ensure a well balanced and sufficiently broad portfolio of advantages.
Strategic intent implies a sizeable stretch for an organization. Current capabilities and resources will not suffice. This will force inventiveness to make the most of existing resources. It will create a sense of urgency and force a competitor focus at all levels through widespread use of competitive intelligence. The companies will invest and train employees with the skills they need to work effectively. The management will keep on invoking challenges, but also not overwhelm the employees with unreasonable pressures and demands. They give the organization time to digest one challenge before launching another challenge. There are clear milestones, which are communicated without any ambiguity and also review mechanisms to monitor the milestones.
One important parameter is reciprocal responsibility. Invariably in bad times, the blame is put at the operating levels – i.e. the workers and junior managers would lose their jobs, take pay cuts, etc., but in the good times it is the top management which would take the credit and reward themselves with hefty bonuses, increased salaries, etc. But reciprocal responsibility means equal blame and credit. It goes a long way in building credibility and motivation. Instead of attacking competitors blindly and taking them head-on, companies must leverage their resources.
Thus they look for ways to build competitive innovation. The first common way is to build layers of advantage – i.e. to build on strengths and apply them to the next / adjoining process and improve the links and keep on extending it. The next way is to search for loose bricks – clusters of business, groups of customers that competition has ignored / not noticed - gap in the market waiting to be exploited that gives you a foothold in the market. Quite often changing the rules of engagement help, as it puts the entire way of doing business into a fresh perspective. You can start on relatively equal footing rather than being at a disadvantage. Sometimes you compete with collaborations, instead of a straight fight. There is a similarity like in judo – you may be small – but you can use the size of your rivals against them. This mapping implies a new view of strategy. It ensures consistency in resource allocation in the long run, focuses efforts in the medium term and reduces risk in the short run. Quite often blindly following the leader or playing by the industry leader’s rule is competitive suicide.
Companies with good strategic intent know the importance of documenting failure – but instead of blame fixing and nailing people – they are more interested in the management reasons and the orthodoxy that may have led to the failure. Sounds simple, but somehow not practiced. In bad times the simplest way is to sell a business doing badly. This is the common method, but then you hand over markets and profits on a platter to the competition. The challenge is to survive and turn around and also to find niches within the market and create new spaces uniquely suited to the strengths, space that quite often off the map.
Today for practically all companies, the threat is global and diverse, even industry boundaries are becoming blurred. Typical competition as understood is being redefined and unlikely competitors are coming up. But this also has the positive spill off – in the sense that even opportunities are larger and global. Typical SBU structure though helpful may prove to be a constraint in such conditions. The reasons are that it could narrowly divide resources and thus loose their leverage and flexibility.
One of the dangers that companies impose on themselves is a belief that, if an executive is put through a lot of career moves fast – it would help him to be better person. But in the industry where the amount of knowledge and expertise required is very vast – this may be counterproductive. The managers may lack the deep strength required in their areas. Thus there could be tendency for “denominator management”. Most companies would appraise their managers on the basis of some ratios and financials. These measures would have a numerator – typically turnover / sales – i.e. the figures showing the position externally. The denominator would be costs, profits, and mainly internal parameters. To show better results – there is a short cut available which is tempting – i.e. focus on the internal parameters – so restructure – cut costs – and do things that may hurt a company.
Looking at the denominator may bring short-term results, but there may be serious long-term sacrifices. So unless a company does both simultaneously – focus on increasing the numerator and also focus on reducing the denominator, there could be a serious problem in the future. It would lead to a downward spiral, as again when the next problem occurs, you look inward and shrink again and again till finally somebody else gobbles you up. Thus in many situations, managers follow a code of silence, ignoring the signals seen and keeping silent. It is better to bring the problems to the surface and discuss them, rather than increase the level of anxiety, which everybody knows of.
Thus Strategic intent is what the organization strives for. Komatsu wanted to “Encircle Caterpillar” in the earthmoving business. Canon wanted to “Beat Xerox”. These are some of the strategic intents. It is an obsession with an organization – an obsession with having ambitions that may even be out of proportion to their existing resources and capabilities. This obsession is to win at all levels of the organization which sustaining that obsession in the quest for global leadership.