1. Safety First
1.1. Professional practice is not just about victory. First and foremost, it’s about safety.
1.1.1. Boeing and Airbus are engaged in a battle to achieve superior performance in their aircraft, but they ahare an even stronger commitment to making sure their planes don’t fall out of the sky.
1.2. In business strategy leaders often demonstrate a cavalier disregard for the continuing health of our organizations.
1.2.1. Starbucks should have known that its over expansion was risky.
1.2.2. Banks that messed up all our lives in 08-09 simply forgot to ask the critical question “What is the worst that can go wrong here?”
2. Learning and Standards
2.1. Professions train their people! That training is extensive, demanding, and time-consuming.
2.1.1. How long it takes to qualify as a doctor, lawyer, engineer, or accountant.
2.2. Training gives professionals’ confidence in what they know and also makes them painfully aware of what they don’t know.
2.3. Training alone is not enough, professions need standards. Examinations at varying levels are important to make clear to the individual and others, a professionals level of proficiency.
2.4. The nearest that management gets to a qualification is the MBA degree.
2.4.1. Strategy professionals, too, need training.
3. Policing the Professions
3.1. The role of professional Associations and institutions.
3.1.1. These bodies develop and protect standards for their fields and oversee the training and probity of their practicioners.
3.1.1.1. US American Institute of Certified Public Accountants
4. How professional is Strategy?
4.1. There is only the flimsiest relationship between success and its putative causes.
4.2. Failed to build cumulative knowledge, so organisations lurch from one fad to antoher, one moment obsessed with industry forces, then scenario planning, then core competencies, then transformation.
4.3. Management make virtually no use of any formal approaches to develop strategy or to make strategically critical decisions.
4.4. How much damage can the pursuit of fads, sold by consultants, actually be?
4.4.1. Bank of America 1980’s: Tried to copy Mao’s Cultural Revolution, Lurched Charles Schwab-culture clash erupted and it was sold back, Lurched Security Pacific copying Wells Fargo Crocker, acquisition failed, created a multibillion-dollar write-off.
5. The Finance Take Over
5.1. Strategy of performance forecasting
5.1.1. Step 1: Prepare and Analyse Historical Financials
5.1.2. Step 2: Build the Revenue Forecast
5.1.3. Step 3: Forecast the Income Statement.
5.1.4. Steps 4-5: How to Forecast the Balance Sheet
5.2. Problems with Finance Leading Strategy
5.2.1. It strangles Business development
5.2.2. It INCREASES exposure to risk.
6. TIPS
6.1. Don’t even start discussing strategy until everyone involved is crystal-clear about what exactly is meant by the words you will all be using.
6.2. There’s no point trading opinions about what drives performance or what choices should be made when there is no evidence that the causality being claimed is real. So what does the data say?
6.3. If anyone claims that a particular strategy method or approach is useful, ask them to specify exactly how it works: What information is needed, what you do with it, what questions it answers, and what decisions it may then inform. Then ask for worked examples of cases where the strategy method has been successfully applied.
6.4. When Hiring someone for Strategy work, whether internally or as a consultant, ask them what qualifications they have, what methods they use, and—again-ask for worked examples of success
6.5. Lastly, DON’T let finance lead your strategy.
7. Professions Speak a Common, Defined Language
7.1. A shared and well-defined vocabulary is important if professionals are to be able to perform consistently well, and be seen to do so by those they serve. Strategy has no standard terms that mean the same to everyone.
7.1.1. Terms like Performance and Strategy do not have clear definitions .“Core Competence”- Defined by C.K. Prahalad and Gary Hamel as-a particular feature of large, multi-business corporations who can exploit underlying technologies across multiple product types and end markets.” Now it is defined as “Something we think we’re pretty good at”
7.2. Clear Terminology is a pre-requisite for other features that make professions more reliable
8. Understanding how things work
8.1. Professionals don’t just share a common vocabulary, they also share an understanding of what causes what.
8.2. Understanding how things work is at the core of being a professional.
8.2.1. Materials Science explains why a bridge stays up, while the science of aerodynamics explains what keeps an aircraft in the air.
8.3. In the absence of any reliable and comprehensive structure of cause and effect for a business-how things work-managers get away with claims that their achievements rely on judgement rather than on demonstrable professional expertise.
9. Incremental Progress
9.1. Professions build new ideas on what is already known
9.1.1. Medics can treat illnesses that were unthinkably difficult just a few years ago because they have built on what they learned.
9.1.2. Accountants have procedures for dealing with goodwill and intangible assets that build on principles developed by Babylonian storekeepers.
9.2. Serious professions deploy their bodies of knowledge as a whole, not picking a single tool form the tool box and hinting that it will provide the complete solution.
9.2.1. Making an aircraft that flies needs aeronautics, materials science, control systems, and knowledge of a host of other principles
9.2.2. Operating on a heart requires understanding of blood flow, neuroscience, anaesthesia, and surgical practice.
9.3. True Professions do not constantly reinvent what they do, throwing out what is known and starting again with completely new concepts.
9.4. Most concepts in strategy are too imprecise, abstract, and qualitative, and are open to widely varying interpretations.
10. Standard Procedures
10.1. We have confidence in professionals because when they need to do something, they follow proven procedures.
10.1.1. Physicians don’t carry out totally different procedures to diagnose and treat some complaint you might have.
10.1.2. Two accounting firms wont use their own distinctive approaches in putting together your year-end accounts.
10.1.3. It would be alarming if two engineers followed different procedures to make sure an aircraft would fly safely.
10.2. With strategy advice, we have no such confidence. There is no set standard procedure.
10.2.1. If Strategy Consultancy were being conducted professionally we should expect to find some standard questions addressed, data gathered, and basic procedures followed.