Monday, August 13, 2007

Change is Good

Ideas taken from The McKinsey Quarterly interview with "the strategy's strategist," Richard Rumelt:

Most corporate plans have little to do with strategy. They are simply three-year or five-year rolling resource budgets and some sort of market share projection. This process should be separate from strategy work. Real strategy work starts with identifying changes.

For example, right now, the advent of 3G cellular technology makes it possible to deliver streaming video over mobile phones. Cell phone makers, cellular carriers, and media companies all need to develop strategies for exploiting this change. Even though these changes have long-term consequences, companies need to take a position now... invest in resources that will be made more valuable by the changes that are happening.

Now, you definitely need to have a "fasten your seatbelt" mentality. Speculative "what if" judgments are the essence of strategic thinking, and they can be the starting points for taking a position. Can you predict clearly enough which positions will pay off? Not easily.

Strategic thinking is essentially a substitute for having clear connections between the positions we take and the economic outcomes. You can't get rid of ambiguity and uncertainty-- they are the flip side of opportunity (and company success).

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