John Hagel: The Big Shift in Strategy – Part 1

ATN-300InsightaaS: In August of 2014, ATN highlighted a post by John Hagel, who has been shaping perspectives of the IT/business figure since he released the seminal Net Gain in the late 1990s. Today, we’re featuring another post from Hagel’s Edge Perspectives blog, which expands on some of the issues raised in August's "The Shifting Ground of Strategy" post. In today's feature, Hagel explains that "strategies of terrain" are poorly suited to today's environment and that "strategies shaped by trajectory."

Hagel sensibly follows this observation by asking "what do I mean by this?" and describing the approaches that fit into each category. Strategies of terrain, he says, are shaped by "your current position and the current landscape surrounding your existing position." As the competitive environment became more unstable and unpredictable, corporate strategists retreated in two directions, both of which Hagel believes, are inadequate. The first response was to focus on core competencies (as the author of a book entitled "The Death of Core Competency." I was delighted to see this listed as a failure path!). The other, "hustle," is focused on speed of response - a curious metric for strategy. Hagel sums up both approaches by opining that "our efforts to evolve terrain-based strategies to cope with an exponential world are yielding rapidly diminishing returns."

Hagel believes that strategies of trajectory are contrasted with strategies of terrain by their starting point: strategies of trajectory "need to focus on the most attractive and advantaged positions in future landscapes, not the current landscape." Hagel acknowledges that the uncertainty of the future poses a challenge to this approach, but adds that "we don't need a detailed blueprint of that future...all we need is enough detail to give us a sense of direction and to help us make some difficult choices in the near-term." He closes by promising to add insight into winning strategies of trajectory in a future post; ATN will monitor the Edge Perspectives site, and review the next chapter in this tale when Hagel posts it.

In an exponential world, it stands to reason that our traditional, linear approaches to strategy will need to be re-thought from the ground up. One way to characterize the big shift in strategy is that we are moving from strategies shaped by terrain to strategies shaped by trajectory. What do I mean by this?

Strategies of terrain

If you think about traditional approaches to strategy, they were profoundly shaped by the current landscape. The job of the strategist was to look across the surrounding terrain from the vantage point of the company and determine what were the most favorable positions to occupy – where could the company build positions of sustainable competitive advantage? Sure, there was a dynamic component to the strategy – your actions could alter the landscape and any good strategist would need to anticipate the likely actions of existing competitors and potential new entrants. But the starting point was always your current position and the current landscape surrounding your existing position.

But as the world changed, so did strategy.  As the terrain become more unstable, evolving at a faster and faster rate with increasing uncertainty as to potential outcomes, the horizon of the strategist began to shrink in two ways.  First, strategists shifted from a view of the external terrain to a view of the internal terrain.  Rather than looking at the structure of markets or industries, the strategist began to focus on “core competencies.”  Strategists started to look inward, at the terrain within the company...

Read the entire post on the Edge Perspectives blogsite: Link