Aurik Johan - The Future of Strategy

Copyright 2015 by A.T. Kearney. All rights reserved. Except as permitted under the United States Copyright Act of 1976, no part of this publication may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, without the prior written permission of the publisher.

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Throughout our careers we have been extraordinarily fortunate to learn from, work beside, and partner with the best. We gratefully dedicate this book to our mentors, colleagues, and clients who have inspired us to dig deeper and reach higherchallenging the status quo, always with the goal of making things better.

W E BEGAN THINKING ABOUT WRITING a strategy book in 2012, inspired by the many challenges that our clients were facing. Just like today, companies were struggling with more competitive markets and trends that were forcing smaller players out of business and leading bigger players to alter, and even shorten, their strategies. How do you deliberate over five- or ten-year strategies when your markets are being shaken by a bright new technology every six months? How do you stick to a long-term plan when an upstart challenger is doing everything faster, better, and cheaper than you are?

We had answers for these challenges, thanks to decades of research and experience working with organizations in most industries. But writing a book is never the work of just one, two, or three people. Our colleagues helped us by sharing their own expertise from their work with clients. This book incorporates our insights, learnings, and hands-on experience as well as those of our colleagues: Carol Cruickshank, Adam Dixon, Saurine Doshi, Richard Forrest, Laurent Guerard, Martin Handschuh, Angus Hodgson, Andres Mendoza Pena, Naveen Menon, Isabel Neiva, Joe Reifel, Sean Ryan, Priscilla Seki, Tak Umezawa, and Zuwairi Zakaria.

Steve Denning provided valuable support and expertise, becoming a sounding board for new perspectives and concepts. Patricia Sibo and Sharon Putman handled the overall revisions with great patience and professionalism, and, of course, we are grateful to Knox Huston at McGraw-Hill for his enthusiastic support and close cooperation.

O NE OF US WAS HAVING DINNER some time ago when a colleague asked him why he didnt play chess. All strategists play chess, his colleague said, so why dont you? Everyone at the table was silent, waiting for an answer.

Years ago, our colleague would have had a point. In the 1980s, strategy was indeed like playing chess, which is done on a board with 64 squares and 6 unique pieces, or chessmen, that are allowed specific moves. Chess and strategy were about thinking ahead and anticipating competitors moves. Each could be done in a fairly analytical way, drawing on what had happened in the past. That IBMs supercomputer Watson was able to beat Gary Kasparov, the worlds best chess player in the 1990s, is evidence of this.

Today, strategy is very different. Imagine playing chess on a board that gets bigger in some areas, but smaller in others. You dont know where it will grow or shrink, or whether growth will occur in squares, circles, or triangles. Imagine that the number of pieces also changes. You can split pieces in two or merge them, and some pieces can become obsolete. On top of that, new moves are allowedrooks start jumping, and knights can run across the board. Some parts of the board vanish and new opportunities pop up, allowing your mutating stable of pieces to move in new and attractive ways, and, to top it off, more players start playing on your board.

Strategy today is about more than analyzing and anticipating predefined moves and thinking several moves ahead. It is also about determining where interesting opportunities for creating strategic advantage will arise, where new rules can work to your advantage, where the playing field might expand or contract, and where new threats might appear. It is also about howhow new pieces can help create or defend strategic advantage, and how to determine it is time to abandon once-promising game plans. Analytics wont solve todays problems, which is one reason why twenty-first-century strategy isnt like playing chess.

In the past, business leaders turned to strategy to set the direction of the business and help them make choices amid the chaos. After all, for thousands of years, ever since Sun Tzu wrote The Art of War