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July 17, 2006

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Cristian Mitreanu

Chris,

Thanks for your post centered on my MIT Sloan article, and sorry for being late acknowledging this.

Obviously, the customer is not everything when it comes to strategy. But it is the foundation of a successful strategy. The customer (actually, the customer's problem solving behavior) provides the perpetual fixed reference system on which strategy (a basic formula for enduring success) can be anchored. Objectives, competition, offerings, industries, even competencies (they are interconnected with offerings/industries) have all a limited existence. Therefore, the effectiveness of a corporate strategy based on them can be significantly reduced.

The term "strategy" is deceiving, conceptually validating the use of objectives and positioning relative to competition. So, like you, I am strongly advocating the demise of "corporate strategy" as a term used to refer to the fundamental formula for enduring corporate success.

Cristian Mitreanu
www.BizBigPic.com

Chris Lawer

Graham

I can see where you are coming from with real options and the role of strategy in making trade-offs - yet I would concur with Cristian that the first purpose of strategy should to be develop and sustain a capability for ongoing customer value-discovery. By doing so, value-driven strategy can continuously feed the subsequent optioning process that helps a firm make appropriate, evolving capability and investment trade-offs.

Importantly, a strategy centred on sustained value discovery is independent of short-term objectives and should have a better ability to sense and respond to significant shifts in turbulent environments. When enacted effectively it can help to avoid the perils of short-sightedness and competitive positioning arising from keeping too close a watch on near rivals.

Then again, I concede that the title of the post is a little misleading as I dont advocate Killing Off Strategy at all! Maybe, I was just in need of some old-style attention and got carried away seeing the death of Spartacus!

GrahamHill

Chris

Understanding customers is very important in strategy but not the be-all and end-all. Strategy in turbulent, dynamic markets like those we tend to live in today is about developing a portfolio of real options we can exercise as the market evolves.

The individual real options are developed based upon the trade-off between customers' desired outcomes (what customers want), company capabilities to deliver them (what the company can do) and the financial value of doing so (whether it is worth it). It is increasingly useful to consider how these factors and their inherent trade-offs change over the end-to-end lifeycyle of the customer.

Whether you apply military metaphors to strategy, biological ones, complexity science ones or some other ones is not really relevant. At the end of the day, it all comes to these three trade-offs and how they change over time.

Of course, we can never know how these things will work out over any longer period of time. So we need real options.

Graham Hill
Independent Management Consultant

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