Contributor post by Michael Ballé, co-author of The Lean Strategy: Using Lean to Create Competitive Advantage, Unleash Innovation, and Deliver Sustainable Growth.
Times have changed and keep changing faster still. Traditional strategies, inspired by the Porter model taught in every business school, are based on the application of power: the power to keep new entrants out (by purchasing competitors); the power to lock-in customers and extract higher prices for lower service; the power to squeeze suppliers and break down supply chains in order to seek the lowest-cost producer globally; and the power to discourage customers from switching to new technologies by imposing high switching costs. In today’s saturated and disrupted markets, these strategies are counterproductive if not downright self-destructive. Even the largest players can’t control competition or customers, and competitive advantage is found in agility, speed of innovation and flexibility of delivery.
Look Beyond the Traditional Approach
Yet, the traditional approach to strategy is so ingrained in most executives they no longer see the underlying assumptions in their strategic calculations. They instinctively follow a 4D mental model of: Define the strategic problem, Decide on a plan, Drive this plan against “resistance to change,” and then Deal with the unintended consequences and unavoidable pushback. This thinking implicitly assumes that, first, we are able to anticipate market conditions in three to five years time and, second, that we will have the clout to push our preferred options through. Unfortunately, as we can read everyday in the business press, reality fights back and most of these brilliant strategies end up in a mess of wasted resources, discouraged employees and bitter recriminations about who’s fault it is if the brilliant plan failed.
More agile strategic thinking is based on a different form of leadership thinking. First, leaders go to meet with real customers and real employees to grasp the reality of their situation and Find the right problems to solve, then they Face their challenges and, with their management team Frame these challenges in terms every one in the company can understand the problem and contribute to solving at their level so that, overall, new solutions are Formed collectively. This 4F Find-Face-Frame-Form mental model opens up a completely new form of strategic thinking.
Face Your Core Problems
By facing their core problems, companies can focus on building capabilities from developing individual competencies at a team level and learning the skills they need to acquire to compete today. These new capabilities allow the leadership teams to take quickly advantage of strategic opportunities and keep leading the company in their chosen direction by winning customers from their competitors, one by one.
Strategy is no longer seen as separate from execution. It’s the patient building of know-how to perfect better responses to customer real-life issues and, through superior quality and flexibility, take away competitor’s very will to compete by seizing unexpected opportunities in order to build strong, sustainable and profitable competitive advantage. This approach of strategy, built on teamwork and daily experimentation, creates meaning and engagement for every team member as they work daily to better solve customers’ problems and grow stronger win-win relationships.
Michael Ballé, PH.D. is a best-selling author, speaker and co-founder of the Institut Lean France. He holds a doctorate from the Sorbonne in Social Sciences and Knowledge Sciences. He is also a renowned lean executive coach. His latest book is The Lean Strategy (with Dan Jones, Jacques Chaize and Orry Fiume).