Executive Pulse 9 - London Aug 2014

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Breakfast Meeting Hosted by:
Megan James, Marketing and Operations
Michel Rooyen, Business Development
Ted Lemmers, Senior Client Partner
Executive Strategy
Breakfast: The Future of
Strategy
Meeting 9: 22nd August 2014
Location: London
Executive Summary
Building on prior executive conversations, this meeting
sought to further explore the evolution of the practice of
strategy. Executives were asked to consider how the practice
of strategy can be defined by two entities: the organization
(its culture, structure and modes of operation) and individuals
within the organization who ultimately make the decisions
underpinning the strategy as a whole.
From an individual perspective, we see that a new generation
of business leadership is driving daring approaches that are
the flagships of successful strategy. But what makes this new generation so different? How do they
approach strategy in new ways? And how do our old models surrounding strategy need to adapt in order to
compete against this new generation of strategists?
From an organizational perspective, a more competitive approach to strategy needs to be established in
order to play by the new rules of competition. To do this, organizations must ask: What are the dynamics
that will foster this new generation of strategists? How can existing organizations replicate the successes of
the nimble private companies rising quickly to fame? And how can innovation be nurtured as a key part of
strategy?
The following conversations by no means provide all the answers but start to analyze some of the
underlying differences between old and new strategy. They also provide some suggestions as to what
organizations and individuals can do in order to increase their strategic agility and compete more readily in
highly unpredictable markets.
A New Generation of Strategy:
A Change in the Way We Think About and Approach Strategy
There has been significant change in the way business approaches strategy, but not from the same people
who led strategy in the past. Meeting participants reflected on their own experiences and noted that many

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businesses still operate under the traditional strategy management models. Yet there is a new wave of
leaders whose approach to strategy is changing the game within many established markets, as well as
carving new ones. These emerging strategists are not set in the old ways of creating and doing strategy;
they are not beholden to management philosophy, and they tend to be more radical and disruptive in their
approach. It is these businesses and leaders who are coming to the forefront and shaping the future of
business markets and the nature of competition.
This has created an interesting battle of power. On one hand you have highly experienced business leaders
who are struggling to embrace disruptive strategy and translate this into the way they manage the
business. On the other hand you have this new generation of strategists who are markedly less
experienced and may not yet have the management skills to follow through long-term. They are great at
providing initial growth, but can they sustain a business as it grows?
What we are seeing is not a complete change in the way strategy is approached across all businesses, but
instead a power-shift towards this new generation of strategists and disruptive strategy. A power play
between the old and the new as the future landscape of strategy and business is created. The following
ideas document the difference in approaches that have been observed by leaders present in the
discussions.
From efficiency to disruptive strategy
Up until about five years ago, strategy was all about driving efficiency and quality—doing whatever you do
better, quicker and cheaper. This is evidenced by the popularity of the quality, Six Sigma and Lean
movements that still exist today and that have been discussed in many of the previous meetings.
More recently, successful strategy has been all about innovation and more specifically disruption.
“Disruptive innovation” as a concept in product/service innovation is widely known and accepted in
business language but disruption is also occurring at a wider market level—the dynamics of the business
landscape are shifting. It is the businesses that embrace disruptive change that have really grown and built
their own markets.
Not only does this change mark a new direction for strategy, but it
means the process of strategy creation and ideation needs to
change. Starting with a retrospective benchmarking approach is no
longer enough—you cannot base a disruptive strategy on what you
or others have done before or general market trends. The emphasis
has changed from “How do I do what I do better?” to “What should
I do?”
From 10-year plans to agile strategy
The shortening in timelines for strategy has also been discussed in previous meetings. In light of this
meeting’s discussion on disruptive strategy, the questions raised were: Is the 10-year strategic planning
process still valid? What does a timeline for a disruptive strategy look like?
On the whole it was agreed that the entire timeline for strategic planning has been shortened. For the new
generation of strategists, it is inconceivable that a plan for 10 years should be put in place. A 10-year plan

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simply would not remain relevant, nor would it allow for the quick reactions needed to respond to the
market. A new competitor can now enter a market overnight and win millions of customers and market
share in just a few days’ time.
However, this is not to say that a 10-year plan should not exist, but that it should be fluid and flexible,
easily and quickly edited in response to the needs of the business and changes in the market. Whilst the
old strategist treated these 10-year plans as sacrosanct, often to their detriment following them blindly to
completion, the new strategist sees the 10-year plan as something that can be molded and reshaped as
and when needed (or scrapped if indeed that is necessary). But this ability to change and adapt needs
agility—not only in thinking but also in infrastructure and operations.
Disruptive strategy is harder in larger legacy businesses
The ability to change and be agile is perceived to be significantly harder in a larger corporate business than
a new start-up. There are number of key factors that affect this ability to change.
1. Mind-set: A connection between the traditional strategist and bureaucratic company structures can
certainly be noted. If you look at the board of many of the large corporations, there is a lack of
diversity among their board members. They are likely trained and continue to operate in the old
management style of thinking. Whilst a burning platform for change is now recognized, the ability
to translate this need into business action is often missing within corporate leadership. To combat
this many businesses are taking action to bring in new thinkers and innovators, but this brings its
own challenges. Often disconnects begin to occur between the old and the new. Gaps emerge that
fail to truly integrate innovations and changes into the overall strategy of the business. By
comparison a new more entrepreneurial business is free to create its own strategy and
management style from scratch. They are free to be disruptive without having to change any mind-
sets and behaviors.
2. Infrastructure: The bigger the organization, the more complex its processes and operations. The
scale, complexity and bureaucracy of large organizations make them hard to be agile within. This is
not simply about the human infrastructure; it is also about the physical infrastructure of the
business. Technology, for instance, is an enabler but can also create an infrastructure with a lot of
investment that is hard to change overnight. Even if mind-sets were to shift, the logistical challenge
of pushing change through within the existing infrastructure can often be almost be impossible.
3. Financial planning and budgeting: The current process of budgeting cycles means that strategy and
innovation are limited by internal availability. Examples were given of how a new idea (service,
product or process) had been dismissed or held back for reasons related to financial forecasting and
monthly budgeting, reflecting the struggle large organizations have to be agile and innovative. With
an overarching goal of shareholder value, large organizations are driven to ensure investment is
predictable and kept in check. This shows a general malaise of short-termism in strategy leadership.
Cash flow is, of course, the lifeblood of any business—but not at the expense of innovation. To
combat this, traditional ROI and allocation models for investment need to be made more flexible
and aligned to the new agile mode of strategy.

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All these reflections show a progression and power shift within the world of strategy. Neither strategy nor
businesses will change overnight, but as more and more leaders enter the market with this new disruptive
and agile way of thinking, the more it will infiltrate the businesses of tomorrow.
So How Do You Build Agility?
Teaching Business to Change Fast
Change in the world of business is faster today than ever before.
Competitive products are appearing every day. Complacency is just
not possible. For instance, consider the online messaging world. First
SMS was disrupted by the ability to access email and instant
messaging (IM) on the mobile phone. Now we have a whole host of
new IM brands like WhatsApp or Tanga. Even though such products
may have a relatively short life span, each one moves the market
forward, changing the market dynamics. The ability to maintain relevance in a market is tough for any
business, and lifecycles for products are getting increasingly shorter. If you are not agile and innovating
then you will become extinct.
Since this concept of agility has reoccurred over multiple breakfasts, the questions were raised: How can
businesses truly become more agile? What does that actually mean in practise? The following documents
participants’ ideas around agility and what it takes to create it.
Idea #1: Change the culture
Organizations need to bring in new leaders who have a fresh mind-set and then allow these new strategists
to experiment. To do this, organizations must remove many of the bureaucratic rules that say “you can do
this” and “you can’t do that.” They also need to devolve the ability to make strategic decisions away from
the boardroom and back into the business itself. The ability to react and respond in order to seize an
opportunity or avoid a threat needs to be something that all business leaders can do without having to
wait for a change in corporate strategy. While a vision and objectives need to be in place to direct the
organisation, an agile strategy is one that is driven by the business on a day-to-day basis, not an annual
strategy planning retreat.
On the flipside, this means that managers and directors must step up to the challenge.
New skill sets will be needed that focus on strategic thinking and analysis, building
strategy and strategic planning. Leaders need to be taught how to improve their
“intellectual diet” and broaden their horizons, allowing them to connect dots and
create unique value propositions. (For more information on collecting the dots, read
“One Dot, Two Dots, Get Some New Dots” by David Silverstein.) In addition, as
organizations give more power to new strategists and leaders throughout the
organization, there also needs to be increased transparency and accountability to
drive execution.
Idea #2: Experiment and test quickly
Too often organizations try to build a complete strategy or product and then roll it out on a large scale.

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This means massive upfront investment and no feedback on success until after the concept is completed.
In such a scenario, not only is time to market often too slow to be “market leaders” but also the risk of
failure is incredibly high.
Under a new strategy model, businesses need to focus on experimentation, running test projects and pilots
to garner feedback and turn assumptions into knowledge very early on. These tests should ideally be less
than six months long with restricted investment in order to decide if it is a good or bad move for the
business. Such tests are easier to implement, even for larger organisations, but require delegation of pilots
to localised groups within the business. The results and learnings then need to be fed back up the business
chain quickly and acted upon.
Many business still struggle with how to innovate quickly and manage disruptive strategy. While one
approach has been to set up specific teams to explore new propositions and business extenders, many
struggle to go past the test phase. Business leaders that make the final strategic decisions are responsible
for profit and loss and are still very risk-adverse. So it’s a constant “push” situation, where a team that
comes up with an innovation is pushing their ideas and products onto a business unit that is still very
traditionally focused and risk adverse. There is a gap in comfort level and therefore the flow of ideas is
stopped from moving further. With the change in culture mentioned above comes the need to accept and
welcome failure as learning and opportunity.
Idea #3: Embrace partnerships and collaborations
Collaboration is proving to be one way to open doors and solve problems in multiple markets. This
collaboration can often disrupt the normal market forces and provide an agility that would not be possible
without the strength of the partnerships. As an example, consider Nokia, which was looking to compete as
one of the key mobile operators in Ghana, a country with incredibly poor mobile reception coverage.
Instead of investing heavily in massive infrastructure to compete, Nokia joined forces with three other
mobile providers to share networks and infrastructure, thus making it the provider with the best chance of
mobile coverage in the region. This example of collaboration shows that sometimes embracing
competition and collaborating can lead to greater market growth.
Recognising the need to partner with the “innovators” in the
market will be key for larger businesses to become more agile—
effectively insourcing core competencies that they cannot provide
themselves. Predominantly this approach is being used as a way
to extend products and services and to collaborate with this new
generation of innovators but without having to work out how to
integrate them within the business itself. Many banks, for
instance, are partnering with technology providers to provide new market solutions rather than developing
them in-house.
The trick with collaboration is to integrate these more agile and innovative businesses without causing
them to lose their identity and succumb to the same challenges of the larger business. In the past this was
one of the biggest problems with the traditional M&A solution and something that is addressed by the less
formal and often non-exclusive partnership framework.

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Idea #4: Recognize when it is time to let go
Agility is about the ability to change at the right time. Often companies that have started life with highly
innovative and even disruptive products have failed to move forward, hanging onto their product too long
as a unique selling proposition and finding themselves behind the market. Examples of this can be seen all
over the business landscape. It is important that innovation is continuous and that businesses recognise
when a particular innovation has run its course. These days this cycle is shortening even more dramatically.
As a good example one can once again look to Amazon. Originally set up as an online bookstore, the model
was disruptive in its own right and fast made Amazon the market leader ahead of traditional shop-based
bookstores. However, with the advent of e-books, Amazon leaders realised early that they would need to
expand their business model, investing early in capabilities as a more general online reseller. Two things to
note: Firstly, this investment happened in advance of the decline and therefore could be executed before
the market forced their hand, and secondly, they were willing to sacrifice profits in one part of the business
in order to grow in the long-term. If you do not cannibalize your own market, someone else will.
Businesses need to learn when to let go and move on.
Idea #5: Gain competitive advantage through curation of data
One concept also coming to the forefront of strategy is the idea of
“curation.” Big data and other technologies are giving businesses
more and more knowledge, but what do you do with it? The issue is
no longer that we don't have data but that the data is completely
irrelevant if you can’t turn it into knowledge and wisdom. So
businesses now need the ability to sift and filter through everything
to find out what is relevant. Much like a curator of an art exhibition
who we trust to pick the best pieces of art from a specific time or
artist, the business curator will be trusted to select the most relevant pieces of data and present findings in
a way that is in the language of the business.
This in itself is opening up a new industry that will no doubt have an impact on the way strategy is created
and dots are connected. Since many businesses do not have the capability to analysis this data and turn it
into knowledge themselves, they will start to look to trusted providers to do this for them. Where
businesses once turned to the likes of McKinsey to tell them their strategy, large analytics companies could
come to the forefront of the strategy creation process. But this brings as many questions as it does
solutions. How can another business truly know what data is most important for your business? If these
trusted curators are also working for competitors, will the same conclusions be drawn? How can an
external business make the right decisions without the context of your business?
Access to this data inevitably means a focus in strategy on individual customers, mass customizations and
personalization, all of which are turning increasingly from concept to reality. No longer are businesses
looking at general customer segments but at singular customer journeys across their entire value chain.
There is great value to be harnessed for those who can go past the analysis to act upon this personal and
customized data.
Intelligent data mining is already present in the B2C space, but at some point it will become commonplace

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in B2B as well—it is only a question of when. Technology today is offering us the ability to be more
innovative and to align to unique customers but both the business and consumer minds need to adapt to
enable full utilization of this data. As one participant noted, “The issue often comes down to the human
mind and its ability to change,” which is often two steps behind technology’s ability to change. This
statement is true for both the business creating the strategy and the consumers who are on the receiving
end. Not all consumers yet welcome the more disruptive and intelligent business and this needs to be kept
in mind when planning for the future.
Idea #6: Invest in the new generation of strategists
If the strategy landscape is changing so dramatically and we recognise that these new skills are essential,
then it is imperative that we invest in the education of the next generation to deliver. Arguably, the old-
style MBA programme is out of date—it reflects the traditional thinking on strategy and management
without in many cases addressing the new skill sets that are needed to breed successful future business.
Relooking at the education programmes for business across the globe could be a key part of creating a
competitive workforce. These new business skills would include, but not be limited to, the following:
Innovation
Strategic thinking
Communication
Managing change
Data analytics and “curation”
Social media and the art of influencing
Networking
System 1 and System 2 thinking
Instead of learning strategy model by rote, emphasis should be placed on decision making and autonomy
of thought, as well as the ability to execute.
Global Differences in Strategy:
How Do Cultural, Social and Economic Environments Impact Strategy?
Whilst strategy is often seen as a global management practice, it is evident that approaches vary
significantly from country to country. Stereotypes aside, we discussed a number of factors that might
influence the approach to strategy on a global basis.
Difference #1: Attitude to risk
Many studies have been done that compare levels of cultural risk taking. For
example, US businesses tend to have a higher tolerance of risk than UK
businesses. There is of course no black and white and with companies spread
across multiple countries, the balance is often a complex one to manage.
When the level of risk and fear of failure are too high, companies fail to create
an innovative strategy and this can be very dangerous in today’s market.
Bankruptcy, for instance, in the Netherlands is frowned upon, shunning those
leaders from business. By comparison, some cultures feel you are not a true
business leader until you have had at least one business fail. Such differences
affect the level of entrepreneurialism and innovation—and could be a factor in
the different approaches to strategy globally.

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Difference #2: Stakeholder priorities
This attitude toward risk is not just internalized by the management board, but in part directed by
investors and stakeholders. For instance, on the US stock exchanges, an investor is shown to look mainly at
top line growth. Earnings and P&L are important but a company’s re-investment of its earnings as growth is
of primary importance. This compares to UK markets, where there is much more emphasis on cash, break-
even points and expected dividends. Growth is important, but due to the lower tolerance of risk, return on
investment is expected quicker and stakeholders are less willing to invest in long-term growth without the
cash to match it. Such differences across global markets play a significant role in a public company’s
strategy—the level of risk it is willing to take on, how challenging innovation is and how much it can invest
to grow the future of the business.
Difference #3: Global vs. local
Of course, in reality, the global markets are not separate—most businesses operate internationally and
across cultural boundaries. This global reach provides increasing complexity in competition and operations.
It also creates a power struggle between the need to operate globally yet think and act locally when it
comes to business strategy. Companies need to have the power and scope to enter new markets and play
at a global level, but also the insights, data and operations to build relationships and trust at local level.
Meeting Conclusion
The dynamics of strategy are changing and the power is shifting from the old way of doing strategy to the
new form of disruptive, decentralized strategy. This strategy is hinged on a business’s agility and
willingness to change, to try new things, to fail fast and to fail quickly. This is a bold new approach to
strategy that will leave corporate giants in its wake unless they too can find a way to adapt. Whilst this
strategy is bold and dynamic, it is also places the customer at the heart of its business. Organizations must
seek to build relationships with individual consumers based on trust that will expand past the basic
products and services they offer. It is this balance between disruption and trust that will form the
foundations of tomorrow’s strategy. The next generation is already in motion.
For further information about the authors and future events, please contact:
Megan James, Marketing & Operations Europe, BMGI
Email: info.eu@bmgi.com | Tel: +44(0)7788292824
BMGI is a consulting firm focusing on Strategy, Innovation,
Operational Excellence and Change Management. Since 1999,
BMGI has been providing people-driven solutions to help
organizations build their problem solving capabilities, improve
operations and grow their business. With 16 offices worldwide,
BMGI delivers services in multiple languages and with a
mastery of many local cultures. BMGI’s clients, spread across more than 20 countries, include Consumers
Energy, Federal Reserve, Sasol Mining, Mutual of Omaha, Standard Bank, TNT Express, Philips,
MeadWestvaco, Sberbank, John Deere and many others. Your People + Our People = Problem Solved! For
more information, please visit www.bmgi.com and www.bmgi.org.

Executive Pulse 9 - London Aug 2014

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