A version of this article first appeared in the June 2010 issue of Strategy magazine, with the title What lies beneath?
Several leading modern business leaders seem, surprisingly, to downplay the importance of strategy. You can make too much fuss about strategy, they imply—you have a few clear options; just choose one and get on with it.
Is it really that simple?
‘Strategy is straightforward – just pick a general direction and implement like hell.’
Jack Welch, for example – the chairman and CEO of the U.S.A’s General Electric Company; the man who grew the company from a market capitalisation of $27 billion to $140 billion, making GE the largest and most valuable company in the world.
He must know a thing or two about strategy.
But here’s what he says: “In real life, strategy is actually very straightforward. You pick a general direction and you implement like hell.”
Or Allan Leighton, the man who was recruited by Archie Norman to help rescue the UK’s ailing Asda supermarket chain, and went on to build the company into one of Britain’s most successful retailers. “Strategy is important,” says Leighton, “but it is a compass, not a road map. It tells you in which direction you are heading, but the important bit is how you get there.”
Or Louis Gerstner, the man who rescued IBM in the 1990’s when the struggling mainframe supplier was about to be driven into extinction by the new, smaller and more agile personal computer manufacturers. “It is extremely difficult to develop a unique strategy for a company; and if the strategy is truly different, it is probably highly risky [. . .] Execution really is the critical part of a successful strategy. Getting it done, getting it done right, getting it done better than the next person is far more important than dreaming up new visions of the future.”
So strategy is simple. And having an ingenious new strategy is less important than carrying it out successfully. In fact it might be dangerous. Is that right?
Let’s look at one last quote from Mr Welch.
“When I became CEO [of GE] in 1981, we launched a highly publicised initiative: Be number one or number two in every market, and fix, sell or close to get there. This was not our strategy, although I’ve often heard it described that way. It was a galvanising mantra to describe how we were going to do business going forward [. . .] Our strategy was much more directional. GE was going to move away from businesses that were being commoditised toward businesses that manufactured high-value technology products or sold services instead of things.”
Grand strategy versus strategy
I would argue that these CEO’s of blue chip corporations are taking a slightly Olympian view of the concept of ‘strategy’.
Let’s call what they are talking about ‘grand strategy’: a strategy, but in the overarching sense, like the American car industry saying that they are going to move out of gas-guzzlers and into smaller, more fuel-efficient models.
And perhaps this is where Allan Leighton and Louis Gerstner were coming from in their earlier quotes. “It was simple,” Leighton might say. “Asda had always been about value.” Or Gerstner might say: “It was simple. We had to get IBM back to thinking about customer service.” Maybe, for a chief executive, that’s strategy – and rightly so. But I can’t agree with Welch when he says that “Be number one or number two in every market, and fix, sell or close to get there” was not a strategy. It was, in my humble opinion, a very clear business strategy: one of the many strategies that Welch must have employed in pursuit of his grand strategy, to move out of commodities. And I also don’t believe (as Leighton and Gerstner appear to believe) that ‘low level’ strategy is simple or easily chosen, even once the grand strategy is clear, or that it is difficult to devise a radically new strategy.
A battle of wits
Strategy is about detailed planning; a battle of wits between the leader/manager and whatever forces he or she is pitted against. Even relatively simple business initiatives require ‘strategic’ thinking – the need to act in a way that moves you closer to the final goal, rather than in a way that merely solves the immediate problem.
Napoleon Bonaparte was one of the greatest strategic thinkers of history, a brilliant planner and a masterful logistician. In a career studded with brilliant victories, Napoleon’s most overwhelming strategic victory was perhaps his campaign of 1805, when he made a pre-emptive strike against the armies of Austria and Russia who were combining forces to invade France.
He dispatched 210,000 troops from northern France to the Danube, collecting 25,000 Bavarian allies along the way: an unprecedented number of men travelling more than two hundred miles in the remarkably short time of thirteen days. Napoleon surprised the Austrians with both the speed and direction of his attack, cutting them off in the fortress city of Ulm on the upper reaches of the Danube. The Austrian General Mack was forced to surrender his 30,000 men without any significant battle having been fought.
Napoleon’s impetuous commander of cavalry then failed to execute Napoleon’s plan to encircle the Russian army in a similar way, leaving Napoleon in a very exposed position, even though his cavalry commander did achieve the trophy victory of occupying Vienna, the Austrian capital.
The French troops were tired after eight weeks of campaigning; their lines of communication were very stretched. The Russians had met with the remnants of the Austrian Army in the interior and their combined forces now numbered some 90,000 men. Napoleon was exposed between a rock and a hard place.
He made a key strategic decision: attack.
From a position of apparent weakness, he marched towards the enemy, luring them into the decisive battle that was his best hope of success—the battle of Austerlitz, in what is now the Czech Republic.
The glorious sun of Austerlitz
Napoleon marched north from Vienna with only 53,000 troops. The Allies watched as the French army seemed to walk into a trap.
On the day of the battle, Napoleon sprung a trap within a trap.
Having made a great show of relinquishing the key high ground of the chosen battlefield, in apparent confusion, before the action began, he allowed the Russian and Austrian Allies to seize this commanding position. He then disposed of his troops in a way that encouraged the Allies to attack his apparently vulnerable right wing.
As the Allies poured troops off the high ground in the centre to attack this wing, the French attacked with reinforcements who had arrived by forced march from Vienna, as planned, on the very eve of the battle. A heavy fog filled the valley beneath the heights, concealing the troops that Napoleon was gathering at his centre. As the sun broke through the mist at nine o’clock—‘the glorious sun of Austerlitz’—the French stormed and seized the high ground, cutting the Allied position in two.
The Russians and Austrians lost 15,000 killed with 12,000 taken prisoner: nearly one third of their force. The remainder of the army was scattered: the Russians retreated through Hungary and Poland. The day after the battle, the Austrian Emperor asked for an armistice.
Destroy the opposition as a cohesive force
The battle of Austerlitz was surely a great ‘strategic victory’. Napoleon never wanted merely to win a battle; in every campaign, he tried to bring the enemy to a position where their defeat would be catastrophic. He sought either to neutralise whole armies by out-manoeuvring them, or to destroy them as a cohesive fighting force. Napoleon out-thought his enemies strategically, which was far more significant than his undoubted tactical brilliance on the battlefield.
Perhaps Jack Welch would argue that Napoleon had simply ‘picked his general direction and implemented like hell’.
If that is the case, then we would have to step back and consider what would represent Napoleon’s ‘grand strategy’—the overarching strategy that would then enable him to pick ‘general directions’ and get implementing.
At this stage in his career, his grand strategy was the defence of the French Republic: ever since the French Revolution, the established monarchies of Europe had tried to snuff out the revolution and re-establish the French Bourbon monarchy. On Welch’s analysis, Napoleon was following this ‘general direction’ and implementing away by destroying or neutralising the invading Austrian and Russian armies and concluding an extremely favourable armistice.
At this point, we are in danger of arguing about semantics. Nevertheless, I would argue strongly that, although Napoleon’s ‘strategy’ was the defence of France, his lower-level decisions – to suprise the Austrians with the speed and direction of his first attack, or to lure the Allies into a decisive battle – were still strategic decisions.
Grand strategy: life or death
Intriguingly it was Napoleon’s grand strategy that was later to lead to his downfall.
Britain, un-invaded and unconquered, became an increasing thorn in Napoleon’s side as it used the huge reserves of cash and credit, derived from the industrial revolution and the expanding empire, to fund alliances of various European nations against the new French Republic.
Napoleon decided to starve Britain of cash: he would conquer the whole of Europe and force the continent to stop trading with Britain. It was an over-ambitious strategy that led him to invade Britain’s old trading ally, Portugal, and then Spain, and finally Russia, with disastrous consequences.
Welch, Leighton, Gerstner and their fellow business leaders will not be wrong: get the grand strategy right and then sweat the execution: get it wrong and you are doomed. But, if the grand strategy is right, then the devil (and potential victory) is still in the detail. You can execute for all you’re worth but, without brilliant conception and faultless planning, the minor strategies that you employ in pursuit of the overall goal will fail.
And I stick to my guns: these are indeed strategies: they are not mere ‘implementation’.