Last week, more than two hundred strategy professionals from around the world gathered at the Chief Strategy Office Summit in London to discuss current challenges in strategy work and share their experiences and best practices. Both the list of speakers and the list of participants were rather impressive. Among the participants were many renowned global companies, such as Airbus, BP, Pfizer, Sony, Hewlett Packard, Rolls-Royce, PepsiCo, Statoil, Aviva, and TUI Travel. Speakers included the chief strategists of Siemens, Philips, GE, Skype, Nokia, Twitter, and Sky News, among others. As a specialist for the digitization of strategic management processes, SOLYP took part in the event as well. The two-day summit was organized by Enterprise Innovation, an independent B2B multi-channel media brand specialized in the information needs of senior strategists and other types of executives.
Particularly striking during the presentations and discussions was that companies across all industries were struggling with the same or similar strategic challenges. In addition to the four big megatrends—demographic change, climate change, urbanization, and globalization—the digital transformation was mentioned time and again as being one of the major challenges these days. As Joachim Kraege, Senior Vice President and Head of Corporate Strategy Development at Siemens AG, stressed, the digital transformation offers great opportunities for growth, but its disruptive impact on business and society is “enormous.” Large established companies are forced to develop new business models and skills in order to meet the changing and ever increasing customer expectations. At the same time, the number of competitors is increasing rapidly due to the lower entrance barriers in the digital world, and innovation and product life cycles are shortening at a very fast pace. During one of the two panel discussions, Ray Collins, Vice President Strategy & Corporate Development at Liberty Global, summarized the problem from a strategic point of view very well by stating: “Every industry is disruptive. It is the job of the strategist to see where the next disruption will come from.”
A good example of a traditional company successfully making the transition into the digital age was provided by Jeroen de Waal, Vice President Head of Strategy of Philips Light Sources & Electronics. In response to the current change from analog to digital in the lightning industry, Philips developed the smart light bulb Hue, which is wireless and can be controlled from anywhere via app offering custom lighting schemes. Hue was first launched in October 2012 and available exclusively in Apple Stores in order to let consumers know that they were dealing with a completely new product geared towards their specific needs. Hue was an instant success giving Philips a leading role in this new and evolving market.
The biggest internal challenges which Philips faced in implementing its digitization strategy, de Waal said, were all cultural in nature. Resistance to change and the very subjective and selective interpretation of facts—depending on one's position within the company—made the work of the strategy team rather difficult. It took a lot of time and persuasion to overcome these hurdles. The other speakers and panelists all seemed to agree with him that changing peoples’ thinking and behavior patterns are both the most important prerequisite and the biggest obstacle to successful strategy implementation.
Key Success Factors and Best Practices
One important question which found much attention throughout the event was how the agility of a company can be increased in order to stay competitive in today's volatile market environment. The magic word most mentioned in this context was “empowerment.” Rigid hierarchies and authoritarian leadership styles are totally outdated as they considerably slow down decision-making processes within the company, said Jenni Lloyd, Partner at the consulting agency NixonMcInnes. Instead, companies should give their employees more freedom to make their own decisions, thus speeding up action at an individual level. Rhordi Drach, Chief Strategy Officer of Unibet, very much agreed with her saying that “if you challenge people, you´ll be surprised.” However, you need to trust them to deliver the right results and provide them with the appropriate framework (training, a clear and simple vision, motivation, work in small teams, etc.).
Another aspect sparking the interest of the audience was the desire and strategic need to focus and simplify. The experts agree that companies should develop a clear and simple vision and focus on those products, segments, and regions of the world that are the key drivers for the success of the enterprise. “Knowing where to play and where NOT play” is one of the basic rules of strategy work which, sadly so, gets forgotten or ignored far too often. This also includes saying “No” to the customer every now and then. The security company G4S had to learn this lesson rather painfully during the security chaos scandal surrounding the 2012 Olympics in London, as Douglas Greenwell, Director of Strategy, shared in his talk. During contract negotiations, G4S had bowed down to the pressures of the organizers, sponsors, and government organizations too much promising services at a scale it was ultimately unable to deliver. A big mistake which has cost the company millions and damaged its good reputation with customers.
Moreover, many strategy professionals reported they were struggling pretty much on a daily basis with the almost infinite amount of data that accumulates and needs to be considered during the strategic planning process. The ability to interpret this data correctly and act accordingly was seen by many experts as one of the most important competitive advantages today. In this context, Xavier Durand, Head of Strategy & Growth of GE, stressed the need to validate soft data, such as individual opinions and gut feelings, with hard data in order to provide a solid foundation for strategic planning.
Other key success factors discussed include the consistent focusing of all activities within the organization on the customer needs (“pull strategy” instead of “push strategy”), the participation of major stakeholder groups throughout the strategy process, transparency, leadership, performance measurement based on clearly defined KPIs, and communication, communication, and again communication.
Among the most frequently mentioned strategy tools used in practice were strategic foresight, scenario planning, and business gaming. In addition, strikingly many companies relied on M&As in order to achieve their growth targets.
Like Nicholas Barton of The Barton Partnership, who moderated the first day of the conference, said, the Chief Strategy Summit is „probably the best independent event in strategy.” We couldn’t agree more with him—at least when it comes to non-German speaking countries—and would like to recommend the regular event to all the strategy enthusiasts out there!