A New Grammar for Strategy
There is widespread error in confusing tactics with strategy. Strategy is the relationship between means and objectives.
By on Feb 16, 2007There is widespread error in confusing tactics with strategy. Strategy is the relationship between means and objectives. The ever-expanding universe of specialized assets and technology applications make possible any conceivable operational vision, but technology is not strategy, nor can strategic understanding be keyed to any specific technology application.
There is an enduring human dimension to strategy that ensures 'strategy by analysis' will miss the mark more often than not. Human limitations, informational uncertainties, and nonlinearity are not pesky difficulties better technology can eliminate, but built-in structural features of the environment.1 Improving strategic performance will only come from discovering a new grammar for strategy with creativity at its heart.
Poor strategy is expensive and bad strategy can be lethal. There is a heavy price to pay in mistaking functional output from components with strategy, or misreading the strategic effect of functional output from components.
DTC advertising is having strategic effect on the pharmaceutical industry, but in a way that is threatening to the industry as a whole. While claims can be made at a tactical level for its value, continued high levels of spend on branding and promotion will have negative consequences on future outcomes throughout the world for drug companies. Tactical success does not necessarily yield successful strategic performance.
Components are not agents of strategy. Strategic performance can be amplified by the output from an advertising agency or technology vendor, but their output is not strategy. Strategy is value neutral. It is holistic, separate from the bias of business interests from vendors. Proliferating components simply provide more diverse data to master.
New technology is wonderful, but strategy is not driven by technological advantage, particularly when everyone has access to the virtually the same information technology. It is often surprising just how common it is for managers to engage in strategic business planning that either ignores competitors entirely, or forgets that their competitors have the same core competencies and buy the same core components.
Competitive advantage comes from doing things competitors can't. Everyone is competent with the same pieces. Opportunity now comes from linking pieces into new wholes that are difficult for others to duplicate or discern. In other words, competitive advantage comes from creating a unique totality of action using new operational methods.
Strategy has vertical and horizontal dimensions, which explains why strategy is so difficult to do well.2 Much of what the pharmaceutical industry construes as strategy is activity at the technical or tactical levels.
Pharmaceutical companies generally frame their world around discovering and communicating functional attributes. They emulate each other in operational methods to present competing data claims. The story is science and the revenue is driven by linear output from a business model whose center of gravity comes from making and marketing medicine. But at best, the truly novel drug is rare and has only a temporary advantage before a competitor can emerge to present contradictory certainty. Devolving rapidly into commoditization, the game comes down to a jump ball won by the team with the best price.
You can tell that a system is at a critical state, or the edge of chaos, if it shows waves of change on all scales. Heaving disorder and dynamic complexity are exploding at a global system level for most industries: music, media, information technology, marketing services. There is great pressure to evolve into something different.
The pharmaceutical industry is suffering through its own process of transformation. The central challenge is discovering the language to frame mindsets and an approach across a whole ecology a business ecosystem of institutions and organizations engaged in the service of health.
The shape and texture of a new commercial model for the pharmaceutical industry will be more a function of conceptualization and creativity with new theories and strategic ideas than the building of a customer-centric's vision (or even discovering new medicine). The industry thinks with a linear logic trained by science and history since the time of Newton to break things apart and analyze ever smaller fragments of experience. But strategic success will come from using a new basis for thinking, in essence moving in the exact opposite direction from current trends and technological capabilities, not to mention going against the very fabric of experience and identity that made the pharmaceutical industry successful. This takes leadership and different perceptual skills that flow from a new act of understanding and creating.
Sources:
1 Gray, C. (1999), Modern Strategy, Oxford University Press, New York, NY.
2 Luttwak, E. (1987), Strategy: The Logic of War and Peace, The Belknap Press of Harvard University Press, Cambridge, MA.
Contact Information: john@bluespoonconsulting, 917.538.4239, www.bluespoonconsulting.com