Is there anything new to be said on the subject of strategy? Kim Warren believes there is. Georgina Peters talks with him about his new book, Strategic Management Dynamics.
Kim Warren focuses on strategy dynamics, a fact-based approach to analyzing and improving business performance over time. His new book aims to answer seemingly simple questions about why a business is performing as it is, where it will go if it continues as it is now, and how it can design a strategy to improve performance in the future. Warren had extensive experience in the oil industry before becoming retail strategy director for leisure group Whitbread. He then joined London Business School where he is a Teaching Fellow in Strategy.
Executives are short on time. Do you think that they will have time to read what is essentially a textbook?
Well, surprisingly, many people in such positions do exactly that – having come up to senior levels via an MBA or other solid professional qualification, they regard it as vital to their continuing professional development to keep up to date with thinking in their field. So you will often find weighty professional books on their shelves, alongside the popular airport titles. If these senior executives do not read the book themselves, though, they should at least be concerned that their advisers, both internal and external, are aware of the latest thinking on the subject.
When I googled “business strategy books” there were over 85 million hits, dozens of which were textbooks. Why do students, consultants and executives need another book?
There are indeed many books on strategy, and fine works most of them are. But as in any field, strategic management moves forward with new insights, both in how things work and how to do better practice, and this is just such an example. I can’t take all the credit for this, though. Most of the ideas have been around for decades – they just needed pulling together in a form that professionals can use.
So your book takes a different approach to strategy? How is it different?
The main difference is that it focuses on explaining how organizations improve performance over time. Put simply, would you prefer to make $15 million per year indefinitely, or $12 million this year, increasing by 20 per cent a year, starting with the same resources? Established approaches to strategy rely on static frameworks to identify why one organization performs better than another at a given point in time. But that’s not the reality of the strategy question that senior executives face.
Surely business leaders and their advisors already focus on how to improve performance?
You might expect so; and, indeed, they try their best with the tools available. The problem is that those tools are not up to the job, so “strategies” are often little more than spreadsheet-based projections of market growth and targets for market share and efficiency improvements. A spreadsheet is a perfectly good hammer for hitting nails, but it’s not much use for driving in screws.
Sounds curious; can you explain what you mean?
The main difference readers will see is that the book’s examples are full of numerical time-charts, rather than 2-by-2 boxes, checklists or qualitative word-and-arrow diagrams. These time-charts show, for example, how profits are rising and falling over months or years, how customers are being won and lost, or how reputation is changing. The figures also show rigorous, quantified, causal connections between these factors: for example, how profit growth is slowing because customer losses are rising, or how rising pressure on staff is damaging service quality, hurting reputation and stopping the sales growth that caused the problem in the first place.