Strategy is Defined by Big Picture | Art of Leadership 2012
“Competition for the future is about what you are doing today,” Vijay Govindarajan preaches passionately from the stage at the front of the Metro Toronto Convention center on June 5th, 2012 at the Art of Leadership Conference. Govindarajan is referencing his new book Reverse Innovation: Create Far from Home, a book on strategy, or what Govindarajan refers to as “pushing back the fold of the future.”
Govindarajan speaks from the world of academia, as Professor of International Business at the Tuck School of Business and founding director of Tuck’s Center for Global Leadership, but his words are very accurate to the realities of everyday business strategy. His lecture begins with three blank boxes on the projector in front of an audience of 500 business leaders, journalists, and aspiring entrepreneurs, leaders, and business executives of Toronto. According to Govindarajan these three boxes are universally significant; where strategy should be divided at every company. In the boxes he writes:
1. Manage the present
2. Selectively forget the past
3. Create the future
They are three concepts that seem fairly simple. Don’t we all do that? But Govindarajan takes us to an example he is truly passionate about from the emerging countries, in which he believes to be an integral part of the future of America. “The BRIC countries” he explains, can be looked at for future development based on age demographics and the globalization of information and innovation. His example has to do with Ford Motor cars expanding into India.
The goal of Ford was to create non-consumers into consumers (a task many American companies will face when looking to build in emerging markets). At the time that the India specific car was made from Ford, 90% of the population was using 2-wheelers at a price of $1500, explains Govindarajan. So Ford, pricing their car at $15,000, was aiming at the very rich India car buyer. Designed in the US, Ford decided to save on some features to hit this price point, one of which being to only put power windows in the front. Although, in India the rich population (willing to spend this on a car) has a driver. “The car buyer had manual windows and the driver had power windows!” Laughs Govindarajan.
Govindarajan’s point being that when you look at the 3 boxes, sure you must put focus on box 1, but box 2 and 3 can play an important part. Ford had failed to ‘selectively forget the past’ by using American designers that were not familiar with the market. They looked at box 3, but they didn’t go all the way. Govindarajan continues by pointing out the $2000 Tata in India, a much better approach to the Indian market. Govindarajan finishes the story pointing out that “emerging markets are going to change who we are.”
Govindarajan segways by showing the use of box one, but pointing out that by no means should you be 100% focused on managing the present (processes for efficiency) as the world is moving to fast to lean on the present. He takes us into box three, where energy on the future begins. He suggests that the future strategy of a company can be outlined in one page with five clear points.
Strategy Architecture:
“Do not plan for the future, but be prepared”
1. Non-linear shifts (test hypothesis)
2. Strategic Intent (be visual)
3. Core competencies
4. Annual Priorities (some must be to create the future)
5. New core competences
(All 5 should be a single sheet of paper that is the company’s strategy)
Criteria for Strategic Intent:
1. Direction
2. Motivation- You must present a “compelling reason for each employee to get up in the morning and come to work.”
3. Challenge-
“We will put a man on the moon and bring him back before the end of this decade.”
-John F. Kennedy
Govindarajan ended his talk with the story of Shaun White at the 2010 Olympics in Canada. (This was the part of the talk that I was acutely aware, being a huge snowboard and skateboard fanatic. That and I have met the great Shaun White twice, once at Tony Hawk’s and once at a diner on Sunset Blvd. But now I am just gloating, on with the story). “Competing in one of the hardest disciplines” in the winter Olympics, begins Govindarajan, “with only three attempts to win the gold.” (Govindarajan also pointed out that many of the maneuvers in 3 attempts is borderline statistically impossible). On his second attempt, Shaun White got a score of 48 out of 50, meaning he had already won the Olympic gold. His manager told him, to ease off, don’t try anything for your last one, it is already in the bag. But, to leave without giving it his all would be against his personality and personal goals. He may have already won, but for Shawn you can always reach higher. His third run went above and beyond (a double McTwist 1260 to be exact). Shawn had already reached the goal, he had won the gold. But, in his head the goal was much, much higher. Govindarajan finishes the story with a question to the audience:
Are you happy if you reach your goal, or do you redefine performance?
How far did he push the human horizon? “If Shaun White was a best practices benchmarker, he would have gone home [after winning the gold],” laughs Govindarajan, meaning reaching the top of the status quo is just not good enough. He urges us to look at the big picture and make that our strategy. “Strategy is about next practices, not best practices,” finishes Govindarajan.
