Saturday, July 26, 2014

Four things that annoy me with strategy.

On Disruptive Innovation.
There are two major forms of disruption.

The first form is disruption by unpredictable change such as product to product substitution. This is tough to defend against because of inertia that we might have to the change (due to past business success etc) and because the speed at which change happens. Such disruption is a classic case of Innovator's dilemma.

The second form is disruption by predictable change such as product to utility substitution (e.g. cloud). This is easy to defend against because of the timespan and because inertia is solvable given time. However, companies still get disrupted because executives often have poor situational awareness and can't protect against the clearly visible storm despite getting warning notes ten years before its arrival. Disruption here is not a classic case of the Innovator's dilemma but instead a classic case of "the CEO is a muppet". 

The two are not the same. Calling everything disruptive innovation might make the execs feel better but there are two forms - classic innovator's dilemma and the CEO is a muppet. Don't confuse the two.

CEOs Playing Chess.
We all know that activities evolve but you'd be horrified to discover how shockingly poor strategic gameplay is in some companies. Ok, I'll spill the beans - beyond UK & some other Govs, some high tech and other large organisations then I rarely see an organisation that has a clue what it is doing. Some don't even know their users' needs. Of course, a company will have a large strategy document but generally those documents are hopeless. Situational awareness? Forget it, why do you think so many companies are being disrupted by predictable changes like cloud? 

I usually laugh out loud every time I read HBR (Harvard Business Review, a hopeless rag IMHO) and someone proclaims that companies are moving beyond playing chess. It's utter tosh. Most companies can't even see the board. Why do you think someone like me can walk in, take over the entire cloud market for a couple of $100K and steal the future from a company worth billions. That's exactly what I did with Ubuntu vs RedHat and every other operating system out there. Oh, and by the way - RedHat is a much better player than most companies in their industry. CEOs Playing Chess? A few definitely but most aren't. 

I happen to use a mapping technique based on user needs to visualise the environment (a talk and slideshow on this from OSCON 2014 can be found here), though there are other techniques out there. It's almost a decade old (circa 2005) and I developed / refined it with a good friend of mine James Duncan.

Oh, people often say aren't I being rude to CEOs here? I created the technique when I was CEO of a high tech company (acquired by Canon) because I new full well that our strategy was just made up horseshit albeit with a lot of common memes for the time. We had no way of visualising the environment. We weren't playing chess. No-one was.

Most of my counter parts knew their strategies were just as bad. We've all listened to endless twaddle by strategy consultants and read endless gibberish on management strategy. The simple truth is that if you can't visualise the environment then you're not playing chess, you're simply shooting in the dark.

The mapping technique is all creative commons licensed and is being used in UK Gov and other places. Oh, if you want to know what a 'map' is, then I have a post for you.

Figure 1 - A Map


Have you heard about the new Platform play?
We all know that as activities evolve to more of a commodity they become suitable for provision as services as part of a platform play. Platforms are simply the tool by which you grow and exploit ecosystems and in certain industries it's no longer businesses that compete but ecosystems. There are many different methods of exploiting ecosystems from 2 factor markets to ILC methods and the use of ecosystems as future sensing engines. Oh, if you want to know what the diagram below means then I've a post on understanding ecosystems.

Figure 2 - ILC.

These games were being played pre 2003 but somehow the concept of 'Platform' is becoming 'new' again. Guessing there's a bunch of bored academics / consultants wanting to make a name for themselves. 

Ok, a piece of advice. If the following concepts :-

1) Using a platform to build and exploit an ecosystem in order to sense future changes.
2) Using open as a means to manipulate the market.
3) Using IT as a weapon

... don't fill you with boredom then get a broom and apply for a job as a janitor. If any of these concepts seem vaguely interesting or new, as opposed to well rehearsed, well repeated tactical plays then please don't attempt to do anything with the word strategy in it. Did you just decide fifteen years ago that you would stop learning? Because you're not a strategist, you're a laggard, a dinosaur and so far behind the curve that you should not endanger your company any more. 

We should be a composable enterprise.
If the idea of building an enterprise with components in a 'composable' fashion in any way seems new then please read more ... seriously, I mean read more books. If you've somehow missed this idea over the last twenty years then you've probably missed an awful lot of stuff. Switch off the TV, read more. However whilst the concept is old, the timing over the last five years is about right and so examples of good practice should start to emerge.
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