Your Company Needs a Strategy

      Reading into Harvard Business Review Article Your strategy needs a strategy, the authors are trying to make the case of how critical two factors are when it comes to shaping your company's strategy given a certain industry. "predictability (How far into the future and how accurately can you confidently forecast demand, corporate performance, competitive dynamics, and market expectations?) and malleability (To what extent can you or your competitors influence those factors?)" These two main factors were used to build the "simple" framework that divides strategy planning into four styles depending on the industry or environment predictability.  

The four strategy styles are:

• Classical 
• Adaptive 
• Shaping
• Visionary

The article then went on describing in detail what each style is, how it works and giving some supporting examples of companies who started some time ago and recent ones as well. I personally have a general suspicion towards this whole approach that presents itself as a “cookie cutter” solution for businesses and new founders. Indeed, looking at the proposed framework with industries nested in their places across the axes seemed reasonable and making sense, however, this high level classification of industries is missing a lot of important detail and might be misleading for companies to use it this way. Here is  how I see why; For instance, the articles takes the Oil & Gas industry as an example for the classical strategy style saying: “The classical approach works for oil companies because their strategists operate in an environment in which the most attractive positions and the most rewarded capabilities today will, in all likelihood, remain the same tomorrow”. I see this is not always true for two reasons:

1.     Industry circumstances never stay the same no matter what this industry is. Indeed, the nature of oil and gas as an industry seems to be very stable in terms of supply and demand, major players, geopolitical factors. Etc. (again high-level factors) But who would have imagined what happened two years ago with Saudi Arabia (as an OPEC leader) messing with prices the way it did and disturbing the whole international market because of its political conflicts with another country in the region. I started working in a mid-sized oil and gas firm based in Houston with some operations in the middle east and Asia. The company had the very same classical strategy of “nothing is going to happen” and “we’ve seen this before”. However, two years later, it couldn’t withstand the low prices of barrels for more than a year, lost significantly and was acquired. This leads us to the next point:

2.     Not every company is playing within a one single industry. The same company I worked for used to develop and sell drilling tools. In a sense they are in the Oil and Gas industry because they don’t sell to anywhere else outside oil and gas, but it another sense they were in the “Manufacturing” business, which even though it was manufacturing for oil and gas, the dynamics of the running the engineering, the supply chain and operations were totally different and almost closer to a “Home Appliances” industry so to speak.

Point being, someone who’s new to the market or a corporate who’s framing their strategy might fall in trap of this extremely generalized approach of classifying industries across the predictability and malleability axes while ignoring other factors that are also essential for its strategy development in its very specific context.

Aside from this concern, I think the article is really useful for a company who’s trying to shape and develop a strategy in the sense of drawing insights by shedding the light on the differences between certain industries and companies. A company in fashion, for instance, having to be reactive and adaptive should not follow the leads of a company that is in a stable space or a company that is shaping the industry.