Fast Strategy:
How Strategic Agility will help
you stay ahead of the game
Wharton West, San Fransisco
February 7, 2008
Yves Doz
The Timken Chaired Professor
of Global Technology & Innovation
Professor of Business Strategy
INSEAD
Mikko Kosonen
Executive Vice President
Finnish Innovation Fund,
ex-Chief Strategy and
Information Officer, Nokia
© Yves Doz and Mikko Kosonen, Fast Strategy, Wharton School Publishing, 2007
Sources of Sustained Growth and High Performance
Clear Direction and focus
• We should have a clear vision for the future of our core business
• We should have a sustained effort at maximally leveraging our core business
• We should have a tight focus on continuous improvement
• We should have a leadership position in everything we do
• We should have self-confidence and an action orientation
High Efficiency
• We should have strong business units with sufficient autonomy as they grow
• We should have highly efficient business systems and processes
• We should have deep collaborative relationships with our key customers and partners
• We should learn by doing and build on our experience
Quick Decisions
• We should have clear charters for all organizational units
• We should have strong and experienced leaders with proven track record
• We should make decisions fast
• We should promote successful leaders
© Yves Doz and Mikko Kosonen, Fast Strategy, Wharton School Publishing, 2007
Single-minded attention to
‘clear’ direction and focus leads to…
Driver
Consequence
Toxic side-effect
•Clear vision for the future
of our core business
•Considering everything
outside the core as nonrelevant
•Sustained effort at
maximally leveraging our
core business
•Framing everything in the
light of the core business
•Tight focus on continuous
improvement
•Short term internal
orientation
•Strategic myopia
•Leadership position in
everything we do
•Reluctance to open
collaboration and
experimentation
•Dominance mindset
•High action orientation
and self-confidence
•Action hero syndrome,
no time and interest for
alternatives
•Tunnel vision
•Tyranny of the core
business
•Snap judgment
and
intellectual laziness
© Yves Doz and Mikko Kosonen, Fast Strategy, Wharton School Publishing, 2007
Single-minded attention to
High Efficiency leads to…
Driver
Consequence
Toxic side-effect
•Strong business units
with sufficient autonomy
as they grow
•Core business managers
‘sitting on their resources’
•Resource
imprisonment
•Highly efficient business
systems and processes
•Increasingly differentiated
and specialized (‘fit for
purpose’) activity systems
•Activity system
rigidification
•Deep collaborative
relationships with key
customers and partners
•Customer & partner ‘lock
in’ and decreasing
strategic freedom
•Ties that Bind
•Learning by doing and
building on experience
•Forgiven and hidden
misbehavior and
shortcomings
•Management mediocrity
and competence
gaps
© Yves Doz and Mikko Kosonen, Fast Strategy, Wharton School Publishing, 2007
Single-minded attention to
quick decisions leads to…
Driver
Consequence
Toxic side-effect
•Clear charters for all
organizational units
•Declining intensity of
dialogue and decreasing
need for collective
commitments
•Management
divergence
•Strong leaders with
proven track-record
•Inflated egos, overly bold
commitments, implicit
pecking order
•Heady charm of fame
and power
•Preference for fast
decision making
•Decisions elevating to the
top team; decisions made
by the ‘same’ leaders
•Expert
management
•Tired hero syndrome;
future opportunities
looking less thrilling than
past experiences
•Emotional apathy
•Successful leaders
© Yves Doz and Mikko Kosonen, Fast Strategy, Wharton School Publishing, 2007
The Curse of Success
Strategic Agility easily Turns into Strategic Paralysis Over Time …
Strategic Sensitivity
• Tunnel Vision
• Tyranny of the core business
• Strategic Myopia
• Dominance mindset
• Snap judgment and intellectual laziness
• Management divergence
• Heady charm of fame and power
• ‘Expert’ management
• Emotional apathy
Resource Fluidity
• Imprisoned resources
• Business system rigidity
• Ties that bind
• Management mediocrity and competence traps
Leadership
Unity
© Yves Doz and Mikko Kosonen, Fast Strategy, Wharton School Publishing, 2007
Where is Strategic Agility most needed?
Strategic
Agility
Growth
Strategic
Rigidity
Operational
Excellence
Entrepreneurial
Insight and Flexibility
Time
04-04-06
© Yves Doz and Mikko Kosonen, Fast Strategy, Wharton School Publishing,
2007
Strategic Agility imperative
Most companies die not because they do the wrong things,
but because they keep doing what used to be the right things
for too long…
© Yves Doz and Mikko Kosonen, Fast Strategy, Wharton School Publishing, 2007
Why Strategic Agility Now?
Why so hard ?
Fast
Corporate
Entrepreneurship
al
tio
n
ra
Pe
rfo
rm
an
ce
O
pe
Speed
of Change
Strategic
Agility
Slow
Simple/
Linear
Focus on
Operational
Excellence
Strategic
Planning
Nature
of Change
Complex/
Systemic
© Yves Doz and Mikko Kosonen, Fast Strategy, Wharton School Publishing, 2007
Strategic Agility requires increasing integration
-without loosing speed!
Value from
Autonomy
Value from
Integration
Performance
Danger Zone
Single business
company
Portfolio of
Businesses
© Yves Doz and Mikko Kosonen, Fast Strategy, Wharton School Publishing, 2007
Key Capabilities enabling Strategic Agility
Strategic Sensitivity
• Open Strategy Process
• Heightened Strategic Alertness
• High Quality Internal Dialogue
• Cabinet responsibility
• Top team collaboration
Resource Fluidity
• Leadership style and
capabilities of the CEO
• Fluid re-allocation and utilization of capital resources
• Mobility of people and knowledge
• Modular structures
Leadership
Unity
© Yves Doz and Mikko Kosonen, Fast Strategy, Wharton School Publishing, 2007
Drivers of Strategic Sensitivity
Co-strategizingwith
with
Co-strategizing
multiplestakeholders
stakeholders
multiple
Open Strategy process
Experimentation
Experimentation
Stretchedvision
vision
Stretched
Contradictorygoals
goals
Contradictory
Heightened
Strategic Alertness
Openbusiness
businessdefinition
definition
Open
STRATEGIC
SENSITIVITY
Factual and conceptual
richness
Cognitivediversity
diversity
Cognitive
High Quality
Internal Dialogue
© Yves Doz and Mikko Kosonen, Fast Strategy, Wharton School Publishing, 2007
A peek into the microscope… Comparison of the approaches and methods used to foster
Strategic Sensitivity
INTEL
CISCO
SAP
NOKIA
IBM
HP
Open
Strategy
Process
- Studies end-user future
behaviour and usage
models driving the demand
for its products and
services.
- Shares its future product
and technology roadmaps
with all major value chain
members to secure
alignment for R&D efforts.
- Active ecosystem
building.
- Intel Software Solution
Group, responsible for
promoting Intel technology
- across all IT domains,
has people continuously
working in its customers
premises.
- Systematic online
interaction with all
customers.
- Active participation on
key industry forums.
- Joint experimentation
and shared “roadmaps”
with strategic partners.
- Dedicated consultant unit
(IBSG) focusing on
customer understanding
and business consulting
(mainly but not exclusively
external).
- All senior managers
expected to meet with
external stakeholders
every two weeks and
report their learnings.
- War rooms and
competitive action scenarios
(“Sun Tzu” reports).
- Corporate Strategy Group
actively conducting and
facilitation dialogue with
multiple stakeholders,
including new partners.
- Extensive strategic
collaboration with key global
customers (in the core
business domain).
- Assigned designated
corporate and business
level strategists to drive
and facilitate corporatewide strategic
collaboration with key
partners.
- Active co-strategizing
with key global
customers (in core
business).
- Systematic, process for
continuously screening
new business ideas.
- Active co-strategizing with
Key Global Customers.
-Global Innovation Outlooks
- “Engineering & Technology
Services” (ETS) unit to
directly interface with R&D in
different companies across
industries.
- Teams of scientists and
management consultants to
work on client problems.
- Meetings with CEOs of
client companies.
- Teams Strategy +techn.
- Emerging Business
Opportunities
- Innovation Jams with whole
personnel and key partners.
- Active co-strategizing
with Key Global
Customers.
- HP Labs as ‘platform’
for learning from the
‘periphery’ and ‘open
innovation’.
- Global ‘innovation fair’
where the best business
ideas are presented and
evaluated.
Heightened
Strategic
Alertness
- Multidimensional
organization with global
businesses and shared
resources.
- Stretched goals/
CEO promises.
- Multidimensional
organization (ex: The R&D
head runs all the product
lines and technologies, the
head of sales and
marketing all geographies
and industries, …)
- Stretched goals/
CEO promises.
- Multidimensional
organization.
- Assigned designated
corporate and business
level strategists to drive and
facilitate corporate-wide
strategic collaboration with
key partners.
- Stretched goals/ CEO
promises.
- Open ‘business’
definition: Life goes
Mobile.
- Systematic recruitment
from other businesses.
- Multidimensional
organization.
- Open business definition.
- Global Innovation Outlooks
and technology outlooks.
- Corporate-wide cross
business unit themes for
new business
development (mobility,
security etc.).
Quality of
dialogue
- Training and Promotion
of ‘Constructive
Confrontation’.
- Systematic resource
acquisition from prime
management consultancy
companies and companies
from other industries and
internally.
- Rotation to line
organization after three
years.
- Define core business(es)
in a conceptually tight but
broad manner fostering
growth into new market
domains.
- Segment councils for
cross-functional solution
development.
- Corporate Strategy Group
- Strategic agenda :10
- Safeguard new insights
- CTO/CSO network
(30 person strong internal
major strategic issues
and opportunities: developed
facilitating internal
consultancy team) recruited
that are continuously
a process of time ‘Horizons’
strategy dialogue.
from consulting and
followed up, on emerging
to manage its emerging
investment banking to
technologies, business
businesses.
improve the quality of
models, or other
- 3 top teams focusing on:
strategic dialogue, common
important trends relevant
. strategy
frameworks and concepts
for more than one
. technology
that allow rich interpretations
business group.
. senior executives and
of strategic issues in a
- ‘Hand-pick’ 10 of the
selected (by CEO) other
common language.
most capable individuals
contributors (for 1 year).
- Create an environment
from any part of the
- Securing cognitive diversity
where everybody has the
organization to work on
by appointing ‘best brains’ to
freedom to speak up,
selected vision themes.
fully mandated top team
criticize, be out of the box.
- Strategy process
members for a year at a
Discuss first as a team at
involving thousands of
time.
the top. “Openness to
people, supported by
© Yves
Doz and dialoguing
Mikko Kosonen, Fast Strategy, Wharton School Publishing, 2007
disagree forces a true
web-based
t
”
t l
Drivers of Leadership Unity
Sharedagenda
agenda&&
Shared
incentives
incentives
Cabinet responsibility
Mutualdependency
dependency
Mutual
Embracing conflict +
dialogue
Institutionalized
Institutionalized
topteam
teamrenewal
renewal
top
Top team collaboration
LEADERSHIP
UNITY
CEOFirst
Firstamong
amongpeers
peers
CEO
Capabilitytotoplay
play
Capability
multipleroles
roles
multiple
Leadership style and
capabilities of the CEO
© Yves Doz and Mikko Kosonen, Fast Strategy, Wharton School Publishing, 2007
Embracing Conflict and Dialogue
Conflict
+
Dialogue
Consensus
+
Debate
From genuine visible
personal dissent
to…
From soft
personal disagreement
to…
…Collective agreement
…Public agreement,
private dissent
Energized action
Passive sabotage
© Yves Doz and Mikko Kosonen, Fast Strategy, Wharton School Publishing, 2007
Drivers of Resource Fluidity
Dissociatingresults
results
Dissociating
fromresource
resourceownership
ownership
from
Assumptionbased
based
Assumption
planning/resource
planning/resource
allocationprocess
process
allocation
Institutionalized
Institutionalized
jobrotation
rotation
job
Valuesand
andmanagement
management
Values
systememphasizing
emphasizing
system
knowledgesharing
sharing
knowledge
‘Plugand
andPlay’
Play’modular
modular
‘Plug
structures
structures
Fluid Re-allocation and Utilization
of Capital Resources
Mobility of People and
Knowledge Sharing
RESOURCE
FLUIDITY
Modular structures
© Yves Doz and Mikko Kosonen, Fast Strategy, Wharton School Publishing, 2007
‘Plug and Play’ modular structures
-in Nokia
Rapidly
changing
markets
Market opportunities
FIT
Business system 1
Reconfigurable
business systems
Business system 2
Business system 3
FIT
Modular
business
infrastructure
Process A
Process B
Process C
Combining
Economies of
scale and
Flexibility
Processes
Apps & Data
IT Platforms
© Yves Doz and Mikko Kosonen, Fast Strategy, Wharton School Publishing, 2007
Key Capabilities enabling Strategic Agility
-But it takes time to build them!
Strategic Sensitivity
• Open Strategy Process
• Heightened Strategic Alertness
• High Quality Internal Dialogue
• Cabinet responsibility
• Top team collaboration
Resource Fluidity
• Leadership style and
capabilities of the CEO
• Fluid re-allocation and utilization of capital resources
• Mobility of people and knowledge
• Modular structures
Leadership
Unity
© Yves Doz and Mikko Kosonen, Fast Strategy, Wharton School Publishing, 2007
The Risks of ‘Dead Ends’ in developing
Strategic Agility
Strategic
Sensitivity
Strategic
Sensitivity
Resource
Fluidity
Resource
Fluidity
”The Perils of Resource Fluidity”
Strategic
Sensitivity
”The Risk of Being too Smart”
Leadership
Unity
Leadership
Unity
Resource
Fluidity
Leadership
Unity
”The Risk of Being too Fast”
© Yves Doz and Mikko Kosonen, Fast Strategy, Wharton School Publishing, 2007
Rebuilding Strategic Agility
-The CORE levers of leadership
Emotional:
• Higher order meaning
• Articulation of values
and vision
• Leading by example
• Affiliation and belonging
Organizational:
•Organizational architecture
•Interdependency
•Measurement
•Processes and Systems
Activities
Capabilities
Cognitive:
• Sense making
• Framing (lenses, prisms)
• Filters
• Cognitive maps
• Value creation logic
•(Corporate / subunits)
Strategic Agility
(or Rigidity!)
Relational/Political:
• Top management team:
• Decision making
• Strategizing process
• Corporate / Unit roles
• Venturing / NBD / risk
• Diversity
© Yves Doz and Mikko Kosonen, Fast Strategy, Wharton School Publishing, 2007
CORE levers – in redirecting Nokia’s core business
Emotional
Evolution
Change
Dimension
Relational/Political
Changes
Multimedia trajectory
Organizational
Adjustments
Change triggers
Cognitive
“Seeds”
1995
Voice and “3G” trajectory
2001
2004
2007
© Yves Doz and Mikko Kosonen, Fast Strategy, Wharton School Publishing, 2007
Changing the ‘Cognitive Context’
• Encourage the expression of new ideas
• Planting and nurturing seeds of change
• Providing fora for sense-making dialogues
• Pacing the exploration journey to gain credibility
• Matching level of attention to level of learning
• Clustering and bending
© Yves Doz and Mikko Kosonen, Fast Strategy, Wharton School Publishing, 2007
Changing the ‘Organizational Context’
• Unpacking the core business system
• Putting the organization ‘off balance’
• Allowing for rapid entry and exit
• Allowing flexible and dynamic differentiation and integration
© Yves Doz and Mikko Kosonen, Fast Strategy, Wharton School Publishing, 2007
Changing the ‘Relational Context’
• Putting top team member under new tension
• Creating a sense of crisis
• Changing the top team composition
• Letting the new top team to gradually develop a new common
and more conceptual language
© Yves Doz and Mikko Kosonen, Fast Strategy, Wharton School Publishing, 2007
Continuity of ‘Emotional Context’
• Cognition does not translate into emotions!
• Momentum creates its own strong emotions
• A tentative new strategic direction does not elicit emotions
• Regaining strategic agility calls for a shift in emotional
attachment
• The organizational consequences of building resource fluidity
may impact emotions negatively
© Yves Doz and Mikko Kosonen, Fast Strategy, Wharton School Publishing, 2007
Forthcoming Events:
15 January 2008, London
7 February 2008, San Fransisco, US
If you would like to attend,
or for more information on Strategic Agility
please contact:
E-mail: [email protected]
© Yves Doz and Mikko Kosonen, Fast Strategy, Wharton School Publishing, 2007
Diagnostics
DISTROYERS OF
RESOURCE FLUIDITY
DISTROYERS OF
STRATEGIC ACUITY
TOXIC SIDE-EFFECTS OF FAST GROWTH
AND HIGH PERFORMANCE
• Strategic myopia
• Tunnel vision
• Tyranny of core
business
• Dominance mindset
• Imprisoned resources
• Business system rigidity
• Ties that bind
DISTROYERS OF
LEADERSHIP UNITY
• Management mediocrity
and competence gaps
• Management divergence
• Heady charm of fame
and power
• Expert management
• Emotional apathy
© Yves Doz and Mikko Kosonen, 2006
Source
Consequence
- Caused by tight focus on core
business trajectory
- Caused by tight focus on
incremental improvements and
consistency
- Caused by performance pressures
and familiarity to core business
- Caused by over-reliance on own
experience & implicit assumptions
- Considering everything outside the
core as non-relevant
- Internal short term orientation
- Caused by continuous resource
constraints and growing doubts
about corporate-level resource
allocation
- Caused by increasingly tight fit
between activities
- Caused by product compatibility
needs and customer partner
commitments
- Caused by hasty recruitment and
insufficient people development
- Core business managers wanting
to own their resources, lack of
transparency
- Caused by naturally increasing
subunit advocacy and decreasing
need for collective decisions
- Declining intensity of dialogue,
stalemates, and polictics
- Caused by the inflated egos and
hubris of the key leaders
- Caused by action orientation and
perceived time pressure
- Caused by future opportunities
looking less thrilling than past
Not
1
Relevant
Highly
2 3 4 5 6 7
- Framing everything in the light of
core business; committing
resources through core businesses
- Reluctance to open collaboration
and experimentation
- Highly differentiated & specialized
activity systems
- Decreased strategic freedom
- Forgiven & hidden shortcomings,
partly wrong competence profile
- “Action Hero Syndrom”, implicit
pecking order, risk aversion or
overly bold commitments
- Decisions elevating to the top team
where they are done quickly based
on individual expertise
- “Tired Hero Syndrom”
© Yves Doz and Mikko Kosonen, Fast Strategy, Wharton School Publishing, 2007