Invisible trajectories are a constant in the corporate leader’s life, yet little is known about them or the impact they have on corporate performance. Not all of them are strategic, it’s worth finding those that are and taking some notice. Subsequent observations could find that:
• some strategic decisions could be taking the corporation down the wrong pathway to the future,
• key factors of success such as culture, target markets and essential resource requirements will never materialise under the prevailing strategy, and,
• external forces beyond the corporation’s control could knock the current strategic trajectory off course, making planned strategy implementation unobtainable.
Strategic trajectories are readily detectable in the case study described in the strategy simulation tool, the CSOsandbox and the book, Corporate Strategy (Remastered) II.(1) The subject of the case study is the Security Printing and Packaging Division (SPPD) of the fictitious company, Third Wave Industries (T-wI). The case describes how newly appointed Managing Director, Jenny Wong, applied Third Wave Strategy concepts to evolve a strategy of transformation designed to turn an ailing, mature business into a dynamic, technology rich powerhouse. Third Wave Strategy is described in the book as an approach to corporate strategic management that is best suited to the management of systemic, dynamic, strategising activities are made within a fast moving commercial environment filled with ambiguity, uncertainty, and volatility.
Upon her elevation to the leadership role, and before she became aware of the power of Third Wave Strategy practices, Jenny’s first major task was to announce her decision to launch a program of restructuring. It would be overseen she noted, by newly appointed Chief Strategy Officer, Alicia Manning. Jenny’s initial reaction following her appointment was to announce a program of restructuring, downsizing, and cost reduction. Representing what she hoped would be the launch of a new, more sustainable Strategic Trajectory for SPPD her objective was to improve the efficiency and effectiveness of SPPD’s core business using existing capabilities, but updated technology. Although she recognised the need to update the resource based overall, and improve its agility, its focus was well and truly on cost reduction, downsizing and modernisation.
Expectations were high at SPPD as Jenny announced their new strategic trajectory would see the business emerge as a leaner, and more profitable entity; or so they expected. As with all strategic decisions however, assumptions and gut feel took precedence over reasonable environmental scanning and trend analysis. Not overly experienced in strategy, Alicia’s diligence paid dividends early in her career. Having analysed high level internal and external forces of change and conducted some scenario analysis a different perspective to the proposed SPPD transformation story emerged. It was one that confirmed her fears that their initial strategic trajectory was far from ideal and would most likely:
• entrap the business in a state of inertia,
• contribute little to a philosophy of renewal,
• offer only limited scope to improve their competitive advantage.
In response, SPPD's leadership team decided to adopt a develop aggressive approach to transformation; with a strategic trajectory grounded in a clearer and longer-term outlook.
The Notion of Strategic Trajectories
In 2017 the Strategic Management Institute held Conferences in Melbourne and London on the topic of Strategy as the Enabler of change in an Era of Unbounded Disruption. Many common themes and observations emerged from the dialogue that took place. Perhaps one of the most salient was a simple observation that a digitalisation trajectory had been launched some 12 years prior to the conference; and that it was now an industry in its own right. A warning was sounded that its appearance was imminent, so corporations should be alert to both the threats and opportunities that would become apparent from its arrival. Some corporations were already working on its adoption of digitalised technology. Amazon.com for example was one of the first to use advanced technology, digital or otherwise, to deliver excellence in operational effectiveness and customer service. Others were planning transformation programs in response to the inevitable changes that would arise, while others, probably the majority, were floundering. Ford Motor company is an example of a corporation that had recognised the enormity and value of the digitalised transformative trajectory that was underway. As discussed in the book Corporate Strategy (Remastered) I, (2) Ford took a very brave decision in 2018 to cease production of its previous mainstay, passenger sedans, while launching a new digitally enabled electric vehicle division that is still under development today. The leader of that decision was new CEO, Jim Hackett who declared that under its new manifesto, Ford saw itself transforming from a product-focused car company to that of an integrated mobility systems company.
Strategic Trajectories as Influencers of Organisational Change
Profit is one of many Key Performance Indicators used by senior leaders to exercise the financial control of the business, but it can only be an outcome from entrepreneurial endeavour; not an objective in itself. Similarly, a strategic trajectory is a result of a number of forces that will result in a momentum for change, but not be the change itself. Strategic trajectories are therefore influencers, rather than drivers of strategic change. An example is the trajectory that is exhibited in the massive growth of Tesla, a pioneer in the manufacturer of electric powered cars (Electric Vehicles (EV’s)). The decision to invest in that technology was both brave and bold, it was influenced by many external and internal strategic trajectories. Examples include a societal trajectory driven by increasing demands to reduce carbon emissions (a change that originated from the adverse trajectory of climate change). Another is a trajectory that arose from the sudden drop in market share experienced by competitors forced to not only enter the EV market, but to also exit markets they had previously had (Ford and General Motors both elected to cease production of sedans for example). Another is the trajectory associated with the swing towards the (digital) technology that attracted consumers to Tesla. This took place in the form of self-driving capabilities, subscription-based options such as in car entertainment and a unique customer supply chain that saw vehicles being sold in shopping malls instead of car yards.
How to identify Strategic Trajectories
The number of trajectories that prevail in any organisation could be overwhelming, a fact that may lead to a conclusion that they should not be considered a focus of attention. This is not the case, although it would be wise to focus on dominant trajectories as a priority. The effective management of strategic trajectories therefore involves categorising them into relevant groups and here, the research arm of PHSANDL, the Strategic Management Institute (SMI) has identified the main two. They are control (low vs high) and impact (negative vs positive). A matrix depicting examples of variations of each are illustrated in Figure 1. Each are described as follows:
1. Control: The degree to which a trajectory can be controlled (from low to high) within three different levels which were previously identified and discussed in Corporate Strategy (Remastered) I and II (1, 2) as follows:
• Level 1: Outside In, external indirect force of change. Universally focused environmental change that occurs beyond the control of the organisation.
• Level 2: Outside In, external, direct force of change: Industry and market-level trajectories that occur within, or beyond the control of the organisation.
• Level 3: Inside Out, internal forces of change: Resource and core competence change that occurs mostly within the control of the organisation.
2. Impact: The extent of impact and resultant consequences. These impacts carry positive or negative consequences for the affected corporation.
Figure 1: Strategic Trajectory matrix
Tesla is an example of a corporation that illustrates how the Strategic Trajectory matrix can be applied to identify key forces that appear as Strategic Trajectories of significance. Founded in 2003 Tesla saw the opportunity to respond to a Level 1 need to address the adverse impact of rising industrial pollution in its early years. This was a trajectory that was so persistent it morphed into a global awareness of the lethal trajectory of climate change. Leaders of Tesla at that time, Martin Eberhard and Marc Tarpenning grasped the opportunity with relish. These founders were also aware of the Level 2 opportunity to fill a market position where existing players were absent. For Tesla, EV’s were an obvious opportunity to launch a vehicle in an uncontested market space. Although the trajectory took a while to become mainstream, the leaders were persuasive enough to exert sufficient influence to amass a leading market share. Their problem however was that as the only company engaging in the assembly and supply of EV’s, the company was forced to build a competency in the manufacture of cars from scratch. To do so, they needed to tap into the Level 3 ‘know how’ that existed as a result of a learning trajectory owned by all other car manufacturers and parts providers. Tesla’s response was to rapidly acquire individuals and some automotive parts companies with experience in the industry. They then had to manage the downside while staying prepared to profit from the upside when the time was right. All they had to do was invest, recruit, work hard and wait.
Strategic Trajectories and Strategy Alignment
Strategic Trajectories are conceptual in nature, but very real in practice, both in controllability and impact. This issue was recognised by Jenny and Alicia and can be readily identified by readers of the SPPD case study. Taking a cautious approach to the introduction of a new strategy, Jenny and the team go through a few iterations of what they thought the future SPPD would hold. As an outcome they had a better picture each time of what they thought their long-term strategy should be. More importantly, Alicia especially was conscious of the fact that few organisations are successful in aligning strategy content with programs of strategy implementation. In an absence of such alignment, strategic objectives may never come to fruition. Fortunately, as an integrated strategy system, Third Wave Strategy ensures alignment is both recognised and managed, as demonstrated in the high level Third Wave Strategy Framework illustrated in Figure 2.
Figure 2: Fully integrated, Third Wave Strategy framework
As demonstrated by the red line in Figure 2, the natural flow of content in strategy meanders through the framework in a logical sequence, which would be fine if nothing changed. Strategy is about the future, but the future is unknown, practitioners must therefore expect things to change in different ways and at different times. When things do change, strategy often has to change also, this means that changes in a strategic trajectory will naturally follow suit. That is the value of the integrated nature of the Third Wave Strategy framework. Continual evaluation and re-evaluation ensures strategy remains relevant. When things do change, the strategy system will automatically respond. Changes in strategy content are readily reflected in the long-term Strategic Architecture, the short-term Strategy Narrative, and associated Strategy Blueprint, and as a result, the system prompts practitioners to make adjustments to the Program of Continual Strategy Renewal, the primary driver of strategy implementation. When projects relating to implementation change, so too will trajectories and these in turn will influence strategic outcomes.
Strategic Trajectories at SPPD
Although it was not stipulated in the case study, SPPD is rich with examples illustrating the management of trajectories beyond the constraints mentioned previously. Examples follow:
1. Trajectory sustainability, weak vs strong life cycles: The primary issue being address by CEO Jenny Wong was the challenge to wean the organisation off a weak trajectory characterised by poor performance and then set it on a far more sustainable trajectory of value laden growth.
2. Trajectory strength, short vs. long life cycle: The key feature of the SPPD transformation journey is the juggling act that takes place between the need to cut short the prevailing trajectory, introduce a new, short-term trajectory to nurture the birth of the new business which in turn, will become the new long term trajectory.
3. Trajectory momentum, slow vs. fast: The longer the delay in introducing change at SPPD, the longer the cash flow was being restricted and viability of the organisation lost. Jenny and Alicia had no time to lose and yet, they successfully used the momentum of the prevailing trajectory to successfully transform the business.
Observations
The primary feature of Third Wave Strategy is not just that it introduces new concepts, it also introduces comprehensive ways to integrate a myriad of otherwise vague strategy concepts into one system. On its own, the idea of trajectories is not startling, when viewed as subtle flows similar to the red line that can be seen to flow through the Third Wave Strategy their presence adds a more transparency to an otherwise opaque strategic management function. The subtlety of Strategic Trajectories is also appreciated more when they are related to other constructs in the system, thereby providing a degree of visibility and structure to all strategy content. Such constructs include a depiction of long-term strategy in the form of a Strategic Architecture, short-term plans in as a Strategy Blueprint and implementation organised within a Program of Continual Strategy Renewal. All are explored and illustrated within Corporate Strategy (Remastered) II and the CSOsandbox.
References:
1. CSOsandbox: https://www.csosandbox.com
2. Hunter, P., Corporate Strategy (Remastered) II: A Fieldbook, Implementing High Performance Strategy and Leadership, Routledge, Oxford, UK, 2020
3. Hunter, P., Corporate Strategy (Remastered) I: High Performance Strategy and Leadership in a Volatile, Disrupted World, Routledge, Oxford, UK, 2020
Comentários