David and Goliath: Who Needs The Strategy? (CI 2012 Masterclass)

I attended a second masterclass on the first day of Creative Innovations, this one entitled “Strategic Diagnosis and Action”, given by Richard Rumelt from UCLA. Richard gave a fascinating and well-polished presentation on how you can actually get a strategy that you can use, as oppose to something that you can print up, put on the wall, and completely ignore. Richard’s definition of strategy is pretty straightforward:

A strategy is a coherent mix of policy and action designed to surmount a high-stakes challenge.

As I believe I’ve noted before, having a strategy is not just useful in terms of knowing where you’re going, it also allows you to make a choice between two (apparently) equal choices. Richard’s question is “What are we going to do in order to meet a challenge?” and, in my application, this makes any choice a matter of “which of these choices will give me the greatest assistance in meeting the challenge?”

As Richard said in his talk, when David met Goliath, if you’re Goliath you don’t think you need a strategy. David, however, has a high-stakes challenge and better be as fast with his mind as he is with his feet. Goliath winning? That’s not a strategy story; a strategy story is about the discovery or creation of strength (where we’re surprised to see it).

David has a post-negotiation debrief with the head of Goliath industries.

Another point that was clearly emphasised is that if you take a challenge focus to your strategy, your strategy can be specific to that challenge and, as a result, clearer and more goal focused. The example of Apple was given. When Steve Jobs returned in 1997, he had to implement a new strategy but it wasn’t one of growth or market domination, it was a survival strategy. Cutting 15 desktops to 1? Survival. Cutting 5 of the 6 national retailers? Survival? Off-shoring everything possible  to reduce expenditure? Survival. This is a coherent strategy with clear and sharp action – this is a survival strategy. The strategy is all about addressing the most important challenge that you have. If it’s survival, fix that first.

The speaker had apparently spoken to Jobs in 1998 and Jobs had said that he was going to “wait for the next big thing”. Well, in 1998 that made sense. Rather than being a second-rate (or small share) PC producer, Apple’s approach was to find a new market where they could dominate. The survival strategy kept the company going for long enough that they could switch to a new strategy of dominating the new music and mobile markets. And, of course, by doing this, Jobs got to set the new rules for that area. There’s a reason that iPods, by default, only work with iTunes and that Apple has complete vertical control. That reason is predominantly because it allows Apple to totally control that market, to avoid having to go through the hard lessons of 1997 and 1998 again.

So, taking this into my Educational Sector setting, what is the strategy that Universities should be employing? Well, first of all, the global tertiary sector is not one business so we’re restricted to individual institution decision making, even where state and federal guidelines are in play. The survival strategy is, to me, effectively off the table. If global education is under an extinction threat then we are facing a catastrophe of such proportion that human survival is probably the requisite strategy. If the MOOC is so successful, and of the required quality, that it can replace the University then a survival strategy for the Unis is ethically questionable as we are spending more money to achieve the same result, assuming that when MOOCs are fully costed they end up being cheaper.

So, either way we slice it, a survival strategy for Universities doesn’t actually look like a valid one. But what does a strategy for a University look like anyway? Let’s step back and ask what Richard things a general strategy is and isn’t.

Firstly, strategy is not a set of goals and, according to Richard, you know it’s a bad strategy when it’s all performance goals and no diagnosis and analysis. “We will increase revenue by 20%.” Great. How?

You know it’s a bad strategy when it’s all fluff. “Our fundamental strategy is one of customer-centric intermediation” from a bank. Good, you’re a retail bank, now what? How do you apply a values statement meaningfully to 30,000 people? Richard sees this as a childish approach – a third grade recitation of “I will not chew gum in school” and not productive when contaminating a strategy.

If no-one has bothered to diagnose what the problem is – bad strategy. To act with intelligence and to get a good strategy, you need to define the nature of the problem. (One of the most refreshing things about the new strategy that is about to be released for my Uni is that I know that a great deal of problem definition underpins it – so I’m quite looking forward to reading it when it’s released shortly. I am quite hopeful that little or any of the critique here will apply.)

What about if you have 47 strategies, 178 Action items and Action Item #122 is “Develop a strategic plan”? It’s a dog’s dinner that everything has gone into that you could find in the fridge, with no discipline, diagnosis, analysis or thought.

So how do we make a good strategy? Diagnose the challenge. Provide guiding policy. Build a set of coherent actions into the strategy and don’t just provide goals as if they are self-solving problem elements.

In terms of Universities, and the whole higher education sector, this means that we not only have to work out what our challenges are, but we have to pick challenges that we can solve. (A previous Prime Minister of Australia famously declared that “by 1990, no Australian child will be living in poverty.” Given that the definition of poverty in Australia is relative to the affluence enjoyed by other sectors, rather than the ‘true’ international definition of subsistence, this is declaring war on an unwinnable challenge. The goal “Stop the drug trade” is equally fraught as it requires legal powers that do not, and may not, exist.)

What are the key challenges facing Universities? Well, if we take survival off the table for the institutions, we change the challenge focus to “what are the key challenges facing the post-school education market in Australia?” and that gives us an entirely new lens on the problem.

I have a lot of thinking to do but, as I said, I’m looking forward to what our new strategic plan will look like for the next 5 years, because I hope that it will help me to identify a subset of challenges that I can look at. Having done that, then I can ask “which are the ones I can help to solve?”