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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
Changes in identity do not come easily

Strategic shifts have always been around. some companies which undertook them failed miserably while others succeeded magnificently. the question however is – what is it that makes such a shift successful?
Coordinated By : Amir Moin

Shift – the term itself underlines an obvious and concrete dimension of life in the 21st century – discontinuities. To survive and succeed, business, religious, and educational institutions alike are left with no choice but to tweak their strategies so that they can accommodate the myriad discontinuities which might be technological, demographic, economic, political or social in nature.

If the need for strategic shifts is so obvious then what do we know of how easily they can be made? Well, the record is not very encouraging. We know that while organisations of all sorts, often with the help of specialised consultants, attempt to orchestrate strategic shifts, surprisingly few are successful. Even the competitive landscape is littered with the remains of market leaders that were blindsided by discontinuities they failed to recognise and as a result were blown away by more agile and market-focused competitors. Remember Digital Equipment Company and Polaroid? Both were market leaders in their respective industries at one point of time. And sadly both turned out to be victims of a kind of strategic myopia arising primarily out of what we call the identity trap.

What is the identity trap? What is it that so often gets into the way of an effective strategic shift? What is it, for instance, that tripped an experienced and capable leader like Carly Fiorina at Hewlett-Packard (HP) to engineer a strategic shift and acquire Compaq? Or Thomas Middelhof when he made the strategic decision to take the company public at Bertlesmann? Why was as talented a person as Larry Summers forced to resign from the President’s post at Harvard while trying to orchestrate several new initiatives in the University?

What these three cases and hundreds of others like them have in common is a lack of appreciation by the leader for a key ingredient of a successful strategic shifts – the importance of either making sure the new strategy is aligned with the organisation’s historical identity or clearly articulating how the new strategy may require reinventing the organisation’s identity.

This ever critical identity is that deep-rooted, historically anchored sense of “Who we are?” Some call it the organisation’s DNA. It is rarely articulated in a formal way, but it is the psychological glue that imbues an organisation with a sense of meaning and purpose for its employees and differentiates the organisation from others in an often crowded competitive landscape. Therefore, while attempting a strategic shift at HP, Carly Fiorina underestimated the power of the HP heritage. It wasn’t that her strategic sense was misguided, but her approach to leadership was at the crossroads with the deeply-held beliefs in the company about how leaders should behave. And what about Thomas Middelhof? His effort to engineer a major strategic shift at Bertelsmann by taking the company public made good sense strategically. However, he underestimated the depth of the family’s commitment to keep the company private and paid dearly for his miscalculation. Even unceremonious departure of Larry Summers as President of Harvard University illustrates that the most sophisticated strategic shift will not succeed on the basis of brilliance alone. It need to be implemented in ways that can align the organisation’s deeply held beliefs about its identity. Summers’ brusque, autocratic style clashed with the more collegial structure of the organisation he was leading.

This apparently makes it clear that for a strategic shift to be successful, the entire process needs to be aligned with the target organisation’s identity. But what if that very identity anchors the organisation in a set of resource commitments that, while having served it well in the past, make it difficult, if not impossible, for it to adjust to new technologies or new markets?

Changes in identity do not come easily, but then, they might be the only way for an organisation to maintain its viability. Mindsets need to be changed, new resource commitments need to be made, new skill sets need to be developed, and new practices need to be incorporated. And all this needs to happen in a fashion that employees at all levels understand and are willing to embrace such a change. The old identity needs to be honored as a new identity is established and a new set of strategic priorities are implemented.

‘Shift the way you move’. This tagline from Nissan might sound deliciously ambiguous but do you see its significance in today’s world? The emergence of the new Nissan Leaf suggests that the strategic shifts initiated by Carlos Ghosn 11 years ago are paying off now. Ghosn then understood that saving Nissan would require a fresh strategic perspective of an outsider. As we move deeper into the 21st century, the need for strategic shifts by organisations will become more and more pressing.

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