Strategy AND people

 

A simple question that I ask MBA students towards the end of their first course on strategy is one that shines a light on parts of strategy and management that is uncomfortable and revealing. I give them ten minutes to discuss this question in their breakout groups and, although it’s not a tricky question, silence usually dominates, at least initially, while they think through the implications of potential answers.

Should strategy be focused on the success of the organisation, the success of the people in an organisation, or both?

Before I address the question, it’s important to understand a little of business strategy’s past through some clear, and critical, academic eyes.

If you review business strategy’s history you will see it doesn’t stretch back into antiquity as it is portrayed by citing the importance of Sun Tzu, Clausewitz or Machiavelli (Carter, 2013). The history of strategy often employs selective sources, often uncritically, leaving something closer to folk tradition than scholarship (Jacques, 2006). Also, it’s problematic to ascribe activities carried out prior to the establishment of current strategic management thinking as though they are the same as current practice (Knights and Morgan 1991), this simply rewrites history in terms of the present, what is in effect an old marketing trick (Carter, Clegg, and Kornberger 2008b).

In reality, modern business strategy dates to 1960s America and, to this day, it has been dominated by rational, economic thinking. This view of strategy relies heavily on military style thinking of command and control (Whittington, 2001), complemented by a strong influence from the field of economics (Rumelt, Schendel, & Teece, 1991). In a series of distinct steps, a strategy, grounded in the economic theory that individuals are rational and act to maximise benefits for themselves, is formulated by those in command, promulgated through the organisational chain of command and executed by operational managers (Mintzberg et al., 1998a). For this strategy to be effective it requires that the future be predicted/anticipated with a degree of accuracy achieved through rational synthesis and hard data (Mintzberg, 1994).

This traditional view of strategy places little importance on people, who are noticeable by their absence, and are seen as a resource to be employed for the benefit of the organisation. It can be paraphrased as - our strategy may result in some causalities and this is the price of making money for our shareholders (another flawed assumption). While this view is being challenged, it remains, by far, the dominant view of strategy.

If we return to our question, the dominant view holds that strategy is focused on taking the organisation into the future where it may, or may not, need the people it currently employs. Our people, often referred in strategy statements as an organisations greatest asset, are useful as long as they are useful - and no longer.

To borrow from Al Gore – this is an inconvenient truth and renders the notion of staff loyalty an absurdity. You simply can’t have it both ways. If you want to treat people as disposable assets you cannot expect them to act in any other way than their own self-interest. Imagine if you treated your husband/wife/partner that way? I love you until I need to change you for a different model!

So, let’s call it the way it is. If strategy is solely focused on getting an organisation to the future then our organisations are cold, rationale, self-interested and Darwinian no matter what HR spiel they recite. If you are employed in one of these, which will be the vast majority of people, keep alert. I hate the stories I hear of long-term employees being made redundant late in their careers. It is one of the reasons I have stayed self-employed.

What’s the alternative? Focusing solely on your people isn’t practical and wouldn’t work and so, I believe, that embracing the “genius of the AND”, a core lesson from Collins and Porras (2001) in their book Built to Last is where the answer may lie. Let’s focus on the organisation AND our people. And, when you think about it, they are intertwined. It is only through people that anything happens at all and so strategy crafted by, and with, the people who will be implementing it has a descent chance of success (although it is always down to skilled implementation married with a bit of luck).

Sir John Anderson, who has fronted many high-profile New Zealand companies, identified two key aspects of his success – listening to people and respecting people. If you respect people it’s difficult to want to run an organisation that pays the minimum wage, surely you want to run an organisation where people are well paid, love their jobs and want to be part of a successful team.

While I’m not familiar with Paul Kelly and his motor company, taking the entire staff to Vegas for a week speaks directly to this ethos. He has created an environment where people are valued and part of the organisation, not a resource to be purchased as cheaply as possible until no longer required. His attitude was nicely summed up when he was asked why a week in Vegas . . .

I think [I did it] because nobody ever did it for me when I worked for them. It kind of makes sense that if you can, why wouldn’t you?
— Paul Kelly