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Passion, People and Principles

What IF There’s No Final Whistle?

post # 138 — July 20, 2006 — a Strategy post

Cristian Mitreanu has written a fascinating article called “Is Strategy a Bad Word?” He writes:

What explains the relative failure of most organizations to create effective strategy? Part of the problem …can be traced to their interpretation of the word strategy itself…

In war, objectives can often be clearly defined, and so strategy is thought of as a means to a specific end. ….By contrast, sustainable success is not, and cannot be by definition, an end unto itself or a goal to achieve. That is, goal orientation becomes arguably inappropriate when success has to be indefinitely sustained.

Despite this, an overwhelming number of top executives and researchers make extensive use of objectives in their quest for lasting corporate success. …It is, of course, impractical and probably imprudent to advocate a total ban on using objectives in creating corporate strategy, but it is important for strategists to remember that the more specific an objective, the further away it may potentially lead the organization from its optimal big picture.

Another person who offers the caution that we should beware taking our business parallels from war or from sports is Charlie Green, my co-author on The Trusted Advisor.

How does your view of how you would make business (or career) decisions change if there were no “end points” and no date- or time-related objectives? What if all measures were temporary indicators on the way, rather than ‘final scores’?

What if you were aiming to create something that would go, on and on, outlasting even you, with no one point at time being the ultimate stage at which you measured your success?

This is evocative of a biological entity or a species. How does the species act if the measure of success is not a state at any period of time, but the overall health and fitness of the species to flourish and survive in whatever new environment comes along?

Bring it closer to home: What if the whole point of the enterprise (or your career) was to survive, pass on the gene pool and act as stewards for the next generation? What if your business’ goal was to give your (business) offspring a better life than you had?

These are not new thoughts: others have written about this “stewardship’ approach to running a business (for example, Peter Block (although there’s a weighting toard the moral argument in his work). Some of these ideas are also embedded in Collins’ and Porras’ book Built to Last (not built to maximize income next quarter, but built to LAST).

Viewed this way, the right measure for success of the enterprise would not be “net shareholder value” but whether or not you had “left the organization behind in better shape when you leave than when you inherited it.”

paperback edition cover of David Maister's book, 'Managing the Professional Service Firm'

The fascinating thing is that I do hear some (usually very successful) firms talk this way, and this approach (related to the One-Firm Firm concept described in Managing the Professional Service Firm) does, in my anecdotal experience, lead to greater commitment by the members of the organization, and hence better work and service delivered to customers, and hence superior financial returns.

So, let me try and elicit reactions from you out there, who are probably ahead of me in understanding this point of view – what precsiely do you do differently if you take this perpspective? What does it mean for how you manage, deal with clients, employees and others?

Obviously, if you don’t know when the final whistle is going to blow – or if you know there isn’t going to be one – what does that do to how you live your life, your career and your business enterprise? Or as Cristian Mitreanu would ask: what does doing strategy really mean in this context?


James Bullock said:

An indirect answer to the questions you pose: “strategy” isn’t what you think. I’m mulling over a direct response, since I clearly have been influenced by the Block / Handy / Bennis / Maslow perspective on business thus ought to have a direct answer – er handy.

Particular goals, objectives, resource allocations, which of the three ways we’ll be excellent, and so on are consequences of strategy. Even deciding gross whacks of capital allocation are consequences of strategy.

Borrow from game theory. “Strategy” isn’t any particular decision, or group of decisions. It is a way to go about making a class of decisions.

I’ll illustrate with a quote from Virginia Satir about interpersonal conflict: “You can win. You can lose. Or you can learn.” So, she is suggesting a strategy – in this case a policy for making choices in interacting with other folks. Set yourself up so that win or lose, you can always learn something.

Now, is this a good strategy or bad? That’s another subject. The point is that strategy is about how you go about making decisions. “Corporate strategy” during the finance spasm was about pursuing efficient allocation of capitol, with capitol and “efficient” both defined a particular way. So, the way to ask about “strategy” from a Block-esque point of view, is to ask: “How does this POV propose we make decisions?” and “Which decisions?”

posted on July 20, 2006

David (Maister) said:

Jaames, I like it – strategy as the set of rules acording to which we make our decisions.

Defined that way, it’s a close correelaation to the “values and ideology and principles” that I keep harping about – the rules that drive your decisions. That really helps.

Why isn’t this point of view on strategy more broadly understood, especially among businesspeople?

posted on July 20, 2006

Leo Bottary said:

Fascinating discussion. What if we expanded the concept to balance not only what kind of company is left to future generations, but what kind of world? Particularly when a company’s core business may be drawing from unrenewable resources to survive. How do we reconcile strategy then?

posted on July 20, 2006

Duncan Bucknell said:

Hi David

I strongly agree with the sentiments you are expressing.

I think one way to set ‘strategy’ in this context is to define your core principles – the ones that you never, ever compromise. These, and your reason for existing (as an individual or organisation) act as a compass against which strategic decisions can be made with surprising ease.

In relation to your question – “Why isn’t this point of view on strategy more broadly understood” – I suspect that probably many do.

However, as you have so often pointed out, most do not have the courage to abide by the principles they espouse. (In large organisations, this is further complicated because the strategic decision makers will have a different set of personal principles and reasons for being that make it extremely difficult to pull in one direction.)

Great stuff. Great discussion.



posted on July 20, 2006

Peter Kua said:

Great point. Many businesses talk about an “exit strategy”, a time when major shareholders would cash out. But in reality, short of the business folding up, there’s really no end point to a business. To survive and thrive, it’s always about value innovation. To strategize would mean taking appropriate actions to reach some objective… within the lifecycle of a business.

posted on July 21, 2006

David (Maister) said:

Duncan, one of the implications of your point (lack of clarity or conflicting personal ideologies at the top) may lead you back – no matter how relucatantly – to the “Great Man or Woman” theory of business success – that organizations never thrive better than when ther is one person at the top, who so clearly embodies the “rules.”

This doesn’t mean the person has to be charismatic, but has to be credible as the high priest of the organization’s values. What I read you as saying is that committees and joint responsibilities can destroy the effectiveness of this. Interesting. Maybe we DO need a “leader” embodied in a single human being! (Wow, I didn’t know I believed that!)

Peter – your observation strikes to the core. Of course, how can a leader who visible has “an exit strategy” inspire the kind of energy that organizations need to succeed. It may be ‘exit’ for the investors, but how are the rest of us suckers working here supposed to view that?

posted on July 21, 2006

Brad Farris said:

In her book The Culture of Success Lisa Endlich argues that a major contributor to the success of Goldman Sachs is that they regarded their customer relationships part of the firm’s equity value. They would teach each associate that those relationships were there before you joined the firm, make sure that you leave them in better shape than you found them. It’s almost a stewardship mentality. You have the opportunity to make a living from these relationships today because of what others have done before you, make sure that your successors have the same opportunity.

In other words, their strategy was to preserve the firms relationships and reputation from one generation to the next. A task that truly has no final whistle.

posted on July 21, 2006

David (Maister) said:

Yes, Brad. And Goldman was (and I hear, still is) one of the firms I identified in 1985 as being one of the ‘One-Firm Firms.’

posted on July 21, 2006

Leo Bottary said:

I agree with Brad, we have a certain generational responsibility to the brand we represent. The most important name on my business card isn’t mine, it’s Hill & Knowlton’s.

posted on July 21, 2006

Tim Percival said:

Strategy as a set of guiding principles by which we make decisions? I quite agree that having a strong set of guiding principles is condition of a good strategy, but only that it is a necessary and not a sufficient one. It all depends, of course, on the organisation’s purpose ie what is good for a public sector or charity organisation, in strategic terms, may be poor for a commercial organisation and vice versa. So I think you have to have a clear business or organisation purpose which is not too narrowly defined yet has clarity, allied to a strong set of guiding decision-making principles, both of which are there to achieve benefit for all the stakeholders in the organisation. The problem with not having objectives is, how do all the stakeholders know a) what they are buying into in the first place and b) whether they are receiving what they hoped for (I dont’ just mean financially by the way)? Perhaps unfortunately, the public world of commerce demands measures. So I’d say objectives are important to ensure that an organisation is moving towards its business purpose, but that they should be seen as minimum acceptable short term achievements. They should never be the sole dictators of organisational activity but simply a part of the basket factors which determine strategy – principles, purpose and objectives. That is where leadership comes to the fore – we all know that objectives aka performance targets can foster inappropriate activities/outcomes – I think leadership attributes need to be present in all aspects/levels of an organisation, and they need to promote the organisation’s purpose and principles above objectives, if this is to work. Sounds great – now just do it!!!

posted on July 24, 2006

Duncan Bucknell said:

David – Thanks for your response to my comment.

Are there any clear examples in which the senior executive team embodied the principles with similar success? (ie – does it really have to be a single person?)

If it is one person, I’m guessing that Jim Collins’ ‘Level 5’ leader would be pretty close to the mark.

posted on July 24, 2006

David (Maister) said:

Duncan, the classic examples in the professional sector of ‘teams’ playing the role might be the recent heads of the “one-firm firms” I wrote about in 1985 (and am currently re-reviewing): Goldman, McKinsey, Accenture, Latham & Watkins. In all those cases, I think the strong culture and clear ideology is nutrued and conveyed by more than one person. I agree that Collins’ Level 5 manager is very close to what I think works best.

Tim, you’re right: on top of an ideology or rules by which we make decisions, it really does seem as if human organizations need a purpose. I also like the fact that you immediately tie that to the question of how well do you monitor that purpose (which, as you say, is different from how well we’re doing financially.)

Any guidance on how one creates a ‘purpose’ in the real world, without lapsing into motherhood and apple pie? How do you know when an organization really has a purpose (beyond self-preservation.) How would you tell?

posted on July 24, 2006

James Bullock said:

So, if “a strategy is a way to make decisions” and “there is no final whistle” something really interesting happens if you figure the organization has some reason to exist – some value of benefit it provides, that can serve as or lead to an organizing principle.

Once there is no final whistle, the way to make decisions (to maximize the value delivered) is in terms of preserving the system (the organization) and it’s ability to do whatever good it does. Isn’t that interesting.

An organization is a system, but it also exists within a system – a culture, business environment, town, profession, whatever. Also at lest suppliers, customers, physical location, population pool, and polis. To survive, an organization must preserve the system it is part of – the system it depends on. An otherwise perfectly healthy liver that allows the body it occupies to die, well, it is probably done also.

The interesting parts of the system the business lives in – the ones it depends on intimately – seem to be themselves systems. A supplier community is a system. Acting to destroy the ecosystem of your own suppliers is ultimately self-defeating, so Dell-ing or Wal-Mart-ing your suppliers can be brilliant, or slow suicide depending on how you go about it.

The most interesting thing to me about the idea of “no final whistle” is that it is implicit even in cashing out in the short term. So I burn up and flip my organization, cash out. Now what. All those shekles are only useful to me if there is some other system which continues, within which they have value. Even the crass cases of “flipping” a startup, either taking it public, or acquisition, depend on the startup’s delivering value after the fact, wherever it ends up.

I may be simply fascinated by an attractive idea here. For a “designer of systems” which I am, sometimes, the elaborations of what I just said go on, literally endlessly. Took me a while to reel this back in from endless examples and implications to the big “ah-ha’s” behind them.

posted on August 14, 2006

David (Maister) said:

It’s been a long time since I read it, but the book “Goedel, escher & Bach” by (?) Douglas Hofstader was all about systems within systems, and what happens if they become self referential. If I ever get a spare week, I gong to go back and read that again (It was fun but required a lot of concentration, I seem to recall.)

Don’t give up on this, James – there IS something fascinating here. Let’s work on it together!

posted on August 14, 2006

Cristian Mitreanu said:

< !—[if !supportEmptyParas]—>David,

< !—[if !supportEmptyParas]—>Thanks for building this post upon my article, and sorry for being so late with my acknowledgement.

< !—[if !supportEmptyParas]—>Continuing the line of this conversation, I think that readers will find the following quotation thought-provoking:

< !—[if !supportEmptyParas]—>“In conclusion, in order to advance the field of corporate strategy, or better yet, in order to advance the search for a universal formula for enduring corporate success, it is imperative to use a broader perspective and start asking two simple questions:

1) What would corporate strategy be if the concept would have emerged not two decades after a world war, but five or more?

< !—[if !supportEmptyParas]—>2) Assuming that there was never a concept of corporate strategy, what would a new concept serving the same purpose (finding a formula for enduring success) be like?”

(Excerpt from “Looking Down on Corporate Strategy” published at RedefiningStrategy.com)

Cristian Mitreanu http://www.RedefiningStrategy.com


posted on August 20, 2006