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Cover Story
 

Enter ‘Tactical’ Strategy
In a Superlative & most Insightful analysis, B&E Documents how Corporate Leaders have Transformed their Organisations & Implemented continental strategic shifts that have Rewritten Global Management case books
Issue Date - 17/02/2011
 
THE ART OF ‘TACTICAL’ STRATEGY IN A 20-20 WORLD

In the good old days, winners knew that strategic changes and shifts were the key to survival and success. But they also had the luxury of time to implement strategic shifts. In the 21st century, winners not only have to change strategy; they have to do it very fast, and very often.
By : Sutanu Guru

So you are one of those doubting Thomases with mystic leanings who believe that in our world, the best laid plans of men and mice go awry because the random usually overwhelms the calculated. You have perhaps read or heard about the book Black Swan by Nassim Nicholas Taleb, where the unexpected barges in through our back door so unexpectedly that it is often futile to draw up strategies for the future. In such a scenario, tactics, of course, become akin to the spin of a coin. So you think that adopting strategies doesn’t really matter and changing tactics can be as much fun as a blind date in a dark room.

I admire your nonchalant reverence towards the random and the unexpected and your irreverent indifference towards those two much abused words – strategy and tactics. I wish I could also drink from the well spring of mysticism that you draw upon. But I look at dozens, scores and hundreds of cases where the right change in strategy and tactics has worked wonders for nations as well as corporations. Changing tactics are so frequent that there would not be enough space even in a 2000 page book to recount them. Let me tweak your mysticism and cynicism a bit by citing just two sets of contrarian examples – one from the realm of nation states and the other from the realm of corporations.

Back in the 1970s, both India and China were considered to be virtual basket cases when it came to economic performance. The two countries were simply too huge to be ignored completely; but that was that. In China, the ‘Great Helmsman’ Mao Zedong had adopted such a bewildering array of strategies that tens of millions of Chinese citizens simply perished. Most Chinese found it difficult to feed themselves every day. And the Communist paradise that Mao had dreamt of had actually turned into a living hell for a majority of Chinese citizens. Being subjects of an authoritarian and totalitarian state, they couldn’t even protest their lot. In contrast, Indians were protesting loudly by the 1970s. Bizarre economic strategies adopted by Jawaharlal Nehru – and even more so by his daughter Indira Gandhi – had made India one of the worst performing major economies of the world, along with China. GDP growth rate in both the countries was abysmal; starvation deaths and the spectre of a famine were still all too real; the middle class had virtually no access to the cornucopia of goods and services that their counterparts in other countries were devouring with relish; and poverty reduction had become a bad joke.

 
That was the precise time when one country – and its leaders – deliberately and consciously went for a huge course correction, a monumental and hitherto unimaginable change in basic policies that could easily be termed a historic strategic shift. Deng Xiaoping, a comrade who had marched with Mao, decided that the colour of the cat was not important as long as it caught mice. Deng unveiled a historic opening up of China that had not happened for hundreds of years. It was Deng who allowed the animal spirits of entrepreneurship and capitalism through the back door, even as he maintained a facade of being a dedicated socialist. It was China under Deng that invited multinational corporations from America, Europe and Japan to set up factories to exploit the cheap labour available there.

The rest, as they say, is history, as India – that delayed its own strategic shift by more than one and half decades – still despairingly and wistfully talks about the ever remote prospects of catching up with China, while China shares the high table with the sole superpower America and blithely talks about G-2 being a reality. I won’t bore you with numbers and statistics here to showcase how far ahead China has moved. But I would definitely point out one stark lesson of this: strategies do matter and it is even more important to get the right time to change your strategies. Of course, dedicated fans of Nicholas Taleb might say that China is lucky Mao didn’t kill Deng Xiaoping when the latter fell out of favour with the Communist regime. I would say fans of the random and the unexpected are lucky in their mystical skepticism.

Those are not just nations whose future gets changed – for better or worse – by changing strategies. It applies even more brutally to corporations across the world. Let me cite the example – once again without boring you with numbers and statistics – of two giant and iconic corporations to showcase the importance of strategy and the critical importance of changing strategy. By the late 1970s, it had become evident to prescient analysts that both General Motors and IBM were heading for trouble. Both were behemoths that were not willing to change with the times. Of course, for an overwhelming majority, GM and IBM looked so invincible that even whispering about them heading for calamitous and life threatening times was considered to be blasphemy. One was the juggernaut that dominated the automobile industry of the world. The other was another juggernaut that completely dominated the computer industry of the world in those days. Throughout the 1980s, as technologies started changing and evolving rapidly and as rising concerns about the future prices of gasoline worried consumers, both IBM and General Motors stuck to their old strategy.

But then, in what could also be described as a Black Swan kind of phenomenon (!), Louis V. Gerstner – a man with no prior experience of the technology industry – took over the reins at IBM in 1993 after successful stints in American Express and RJR Nabisco. By the time he took over, even the biggest fans of IBM were resigned to the fact that the giant was virtually on its knees and slowly and painfully heading for extinction. Gerstner realised that a complete rehaul of strategy was the only way he could save IBM and he did exactly that despite stiff opposition of entrenched old timers. He rammed down the strategic changes, abandoned the OS-2 platform, decisively moved away from mainframes towards ‘service solutions’ and tried damned hard to become extremely customer focused and process oriented, than product obsessed. By the time Gerstner retired 10 years later in 2003, the remarkable turnaround of IBM was such a talked about story that the media shy Gerstner even churned out a bestseller aptly called ‘Who Says Elephants Can’t Dance?’

          

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