Conclusion

At the beginning of this book, I hoped that the idea of freeing your company’s future from the pull of the past would resonate with you. Now as we reach the end, I hope it feels more directly in your grasp. To cement that feeling, let us look at one last major case example in which bringing together a number of levels of the Hierarchy of Powers created a major break from the past.

By the end of the 1980s, IBM, the single most influential company that high tech had ever seen, had lost its way. In the early 1990s, it turned in such a catastrophic performance that even its most loyal supporters questioned its reason to be and were calling for its breakup. Instead Lou Gerstner and his team were able to engineer a now-famous turnaround, restoring a commitment and then a capability to be the end-to-end solution provider for information technology to global enterprises. That was what they decided the world wanted IBM to be, and subsequent events have proved them right. This was their core, the foundation upon which they would restore the company’s power.

In choosing this escape trajectory, they capitalized on several of IBM’s crown jewels: its long-standing customer relationships anchored in the original mainframe business, its deep service capabilities, and its brand reputation for end-to-end delivery. The team took these to a new level by refocusing the company on whole new classes of offers. That is, they transformed the decaying offer power of their legacy, prioritizing service offers over products and software offers over hardware. Then they doubled down in both areas with major crown-jewel acquisitions, including PricewaterhouseCoopers in services and Lotus Notes, Tivoli, Rational, Filenet, and the like in software.

On the execution-power front, they redeployed executives from corporate-facing to field-facing jobs, letting them either sink or swim in their new customer-intimate assignments. They encouraged the services teams to support competitors’ products, not just IBM’s, because that is inherent in keeping an end-to-end commitment. They leveraged broad system-maintenance pricing agreements to help middle-of-the-road products compete against best-of-breed point solutions. In short, they tilted the whole company toward a services-oriented core. And everywhere they leveraged the complex-systems execution paradigm of projects-to-playbooks, eventually extracting themselves altogether from volume-operations businesses like printers (spun off to Lexmark) and PCs (sold to Lenovo).

Hitting the market in the middle of the 1990s, this dramatic repositioning caught HP and Sun off guard and set them back on their heels. This let IBM exploit a major category-power transition to Internet-enabled business-process reengineering at a time when everyone thought that was Silicon Valley’s private pea patch. But what the Valley’s engineers did not understand fully enough was that IBM’s core was rooted in its abiding passion to help customers derive business value through technology investments, in part by sticking around long past the product sale just to make sure it paid off. The other companies in their competitive set just wanted to drop off their products and move on. That’s not what a large portion of the world wanted, however, and so IBM was able to win the nod. In other words, their services-led offer model trumped their competitors’ product-led approach.

Now, if an organization as unwieldy and disheartened as IBM was in the 1990s can make this journey, surely one as vibrant and lively as yours can do so as well. But that still leaves of the question of how: How do you actually get this done?

RECAPPING THE INVENTORY OF TOOLS

By my count, over the past five chapters I have presented some thirteen different models or frameworks nestled inside one or another level in the Hierarchy of Powers. That’s an awful lot to absorb in the course of a relatively short book. So let’s just pause here for a moment to inventory the full set of tools in our toolkit and remind ourselves what each one is for.

CATEGORY POWER

COMPANY POWER

MARKET POWER

OFFER POWER

EXECUTION POWER

Inventory complete. This entire body of intellectual property is devoted to the single goal of helping you to free your company’s future from the pull of the past. But it still doesn’t fully answer the question of how. What is the playbook for putting all these models to work?

The one we use is organized around vision, strategy, and execution. At any given time, one of these three typically calls out for attention more than the other two. In Stage C of the category maturity life cycle, when markets are stable and growth is cyclical, it is normally execution that needs attention. Conversely, in Stage A, when markets are being disrupted, it is a reframing of the vision that must be achieved. And finally, in Stage B, when they are undergoing secular growth change, whether positively or negatively, it is typically strategy that gets top billing.

So to close this book, we are going to outline three generic playbooks for transforming execution, vision, and strategy. It will be your job to decide which of these playbooks is most pertinent to the situation your company finds itself in currently.

TRANSFORMING EXECUTION

The underlying assumption of this playbook is that your market is mature with cyclical growth, your position long ago established, and that you are sort of stuck in neutral. Moreover, you are losing ground to competitors, not dramatically but with an increasing inevitability. Morale is declining, and prospects in general are somewhat dim. There is nothing wrong with your vision—the world does not need to be rethought. There isn’t anything wrong with your strategy per se, either—it ought to work. You just aren’t getting the traction you believe you should.

Time to run a set of plays around transforming execution, something along the lines of the following:

Obviously there is a ton of work embedded in the bulleted items above, but by now none of it should seem mysterious. The key thing for execution transformations is to move swiftly while maintaining a steady cadence. Organizations need to feel themselves changing, or else they will not transform. Your main job as transformation leader is to relentlessly reinforce the changes as they are being made, reviewing them weekly, securing commitments for the following week, charting progress all the way along, and reporting it out high and wide. “Making change visible” is the mantra for this playbook.

TRANSFORMING VISION

Transforming your company’s vision is an exercise in getting outside yourself. Such a perspective is critical whenever the status quo is under a fundamental disruption that promises to redefine the ground of competition categorywide. Regardless of your current market status, you must prepare your company to extract itself from its current web of relationships and transform itself and its role to align with the new order.

Here your playbook might look something like this:

1. An emerging demand based on new technology disrupting an old paradigm,

2. A class of customers accessible to you who participate in this demand and are looking for a vendor to lead them through this change, and

3. Crown jewels you have that can accelerate your ability to meet these demands as well as help protect your competitive advantage once you achieve it.

The whole point of a transformative vision is to reorient a universe of stakeholders in light of a disruption to their status quo. It is an act of thought leadership, by virtue of which you expect to win their confidence and support in leading the way through this change. This is a particularly important message for your employees. Their jobs, their job security, their very livelihoods are deeply threatened by the coming disruption, and their natural reaction will be to withdraw from it through denial. Your job as a leader is to communicate so vibrant a vision of the future that they are willing to let go of what they know and make the leap to the unknown. And then your job as a manager is to make sure that the future you have so confidently portrayed becomes real.

TRANSFORMING STRATEGY

The classic reason to change strategy is when you are in a winnable market with good growth opportunities but you are not winning, or at least not winning enough. At such time, leaders must get very clear with one another about whether this is a case of having a good strategy and simply not executing it properly or whether the current approach is putting too much wood behind the wrong arrows. Assuming it is the latter, here is how you might proceed:

Strategic transformations are all about overcoming the inertial resistance of the status quo. As such, they demand leadership first, to break the ties with the past and set the direction for the future, followed by management second, to drive the asymmetrical resource allocation and translate the ideas of strategy into the behaviors and offers of execution.

CLOSING REMARKS

We have now come full circle back to the role of frameworks and the purpose of this book. Frameworks are not machines; they are vocabulary. They do not produce strategies; they enable strategic dialogues. The final piece of the puzzle, therefore, is to incorporate them into an overall strategic planning sequence. We use the one outlined in the opening chapter of this book:

1. At the beginning of the strategic planning process, commit to reimagine your enterprise from the outside in. Specifically, ask the question, Given the changes of the past few years, what does the world really want from us now? What opportunities, in other words, align us best with the people in the world we most want to succeed and who most want us to succeed.

2. With this question in mind, organize your approach to the planning effort around:

a. Articulating a compelling vision of the future that others will want to support,

b. Setting a strategy consistent with that vision that positions you as the leader in the markets you want to serve, and

c. Resourcing your execution to accomplish your highest aspirations and generate superior economic returns.

3. More specifically, use the frameworks around category power, company power, and market power to develop a common vision as to what is happening in the world and how it relates to your business.

4. Go down a level and use the frameworks around company power, market power, and offer power, to develop a strategy for sustainable competitive advantage over the companies that also seek to serve the markets you have targeted.

5. Finally, with respect to execution, go to the very base of the model and use the frameworks around market power, offer power, and execution power to construct an operating plan that dramatically skews your resource allocation such that your direct competitors either cannot or will not match your commitments.

Thus it will take three separate passes to complete the strategic plan, each drawing you closer into the present while still allowing you the perspective of a longer-term outlook. In all cases, the underlying assumption is that a common vocabulary will enable strong-willed, strong-minded individuals to fully express their differences, thereby bringing to light multiple perspectives on a given challenge. The desired outcome at the end is for these same individuals to align around a common point of view, one that will enable them to make a highly asymmetrical bet and see it through to fruition.

This is an inherently collaborative vision of management. Indeed, if I had to point to the most impactful change I have experienced in my career as a business advisor, it is the reengineering of the global economy from a universe of vertically integrated corporations run by command-and-control management systems to one of highly specialized and disaggregated enterprises interoperating collaboratively to create global value chains. In this new environment, change happens much faster than ever before because the whole no longer has any way to hold back the part. And that means that market transitions and technology disruptions are much more frequent. It also means that responses to these changes must be negotiated across a broader set of constituencies, many of which you have no command or control over. Collaboration has never been more at a premium.

In a collaborative network, the advantage goes to whoever can call the tune first, identify the relevant changes under way, find the pivotal role to play, and communicate the vision in actionable frameworks. The purpose of the frameworks in this book has been to help you achieve that advantage and free your company to participate in its rewards. At this point, all that is left is for me to wish you the very best in that endeavor, and I do.