Joe's Jottings
Jottings Number 54, by Joe Podolsky:
From: uunet!HP-PaloAlto-om4.om.hp.com!JOE_PODOLSKY
Date: Fri, 3 May 96 12:55:36 -0700
Subject: Why We Can't Get There From Here
As most of you well know, one of the key principles of HP's
Quality Maturity System is alignment of all elements of the
operation of a business unit. QMS uses the "strategic focus"
process to reach across the HP organizational boundary to
involve customers, partners, and suppliers.
The concept of strategic focus is examined in the Winter 1996
issue of _California Management Review_, in an article titled
"Strategic Dissonance" by Robert Burgelman and Andrew Grove.
Burgelman is a professor at the Graduate School of Business at
Stanford and Grove, as you know, is a scholar and author ...
who happens also to be the feisty CEO of Intel.
Burgelman and Grove say, "Aligning corporate strategy and
strategic action is a key top management responsibility...(but)
in extremely dynamic industries (such as Intel and HP work in),
alignment between ... strategic intent and strategic action is
not likely to last. Inevitably, strategic actions will begin to
lead or lag strategic intent. Such divergences...cause
'strategic dissonance...'
The divergence may be significant and permanent, for example,
when PCs caused a shift from mainframe architectures. The
authors call this a strategic infection point. Or the
divergence might be a sight dip in the industry environment, and
all we have to do is to wait for return to "normal." We can
tell the difference when we look back, of course, but by then
all we can do is to react.
Burgelman and Grove offer no sure way of knowing the difference
in real time, but they suggest that top managers listen to
"voices at the periphery of the organization," field people and
middle managers who are "unaffected by company beliefs, dogmas,
and rhetoric."
The response to these uncertain changes is called "strategic
recognition." The authors describe five factors that create a
model to help us figure out what to do:
1. The basis for competitive advantage in the industry. They
suggest using Michael Porter's concepts of bargaining power of
customers and suppliers, the nature of the rivalry among
industry players, and the threat of new entrants and of
substitution.
2. The internal distinctive competence of the organization
3. The company's official corporate strategy. This is the
company's statement of its strategic intent.
4. Strategic action (what the company actually does)
5. The company's internal selection environment for new
strategies, including resource allocation rules and cultural
issues
The authors advise us to identify dissonance by finding
divergence between industry factors and the company's
distinctive competence and divergence between official strategy
and actions. They suggest that we specifically look at
independent strategic actions taken by middle and lower-level
managers in defiance of existing norms.
It's hard enough to identify real strategic dissonance but it's
harder still to do something about it. The article suggests
that top managers need to go through a distinct change process
that includes the painful steps of denial, anger, and escape
before getting to more constructive acceptance and action. Even
top managers are human.
One way of helping top managers through this change is to ask
them to focus on what they _don't_ want the company to become.
It's a way of having them face the results of inaction.
(Incidentally, the authors say that HP has done extremely well
at transforming itself through strategic inflection points,
citing our moves from instruments to minicomputers to printers
and now to desktop computers, but they don't describe any
details of how they think we did all this. Perhaps Collins and
Porras, in their book _Built to Last_ (see Jottings # 44 )
provide us some clues at least from the cultural viewpoint.)
I think that HP-IT (and probably the IT industry, in general) is
going through the latest in a series of significant strategic
inflection points. Let's look at each factor:
1. Competitive advantage in the industry:
Pay-for-service funding models are giving complete control to
customers while we in internal IT have no degrees of freedom to
choose customers. Likewise, the shift to packages and
outsourcing give significant control to suppliers over whom we
have little or no influence and create distinct substitutes for
our traditional products and services.
2. Internal distinctive competence:
We used to need technical skills, and that's still what our
official position descriptions say, and what we hire for. But
in the world of "buying technology," we in internal IT groups
really need a completely different palette of business and
consulting skills.
3. Official corporate strategy, strategic intent:
Our plans usually now are described in technical terms; e.g.,
migrate to client-server, create a work-anywhere environment,
install SAP.
4. Strategic action (what we're actually doing):
Our infrastructure groups seem to be walking the technical talk;
maybe they are not suffering significant strategic dissonance.
But our application groups are still struggling as requirements
change faster than IT strategic intent model can deliver. This
model doesn't appear to be reducing customer frustration, even
though our internal customers are spending ever more money for
packages and outside consultants.
5. Internal selection environment for new strategies:
We have a selection process for technology that is part of the
Architectural Technology Committee, but we don't really have a
forum for discussing the non-technical issues. Our business
unit orientation achieves appropriate linkage and customer
responsiveness, but we haven't built a process that helps us
learn from each other and create new strategic intent.
These are particularly tough problems. Strategic inertia comes
from managers who are justifiably proud of their past successes.
The first step in overcoming the inertia, of course, is to
recognize and label it, and perhaps the five factor framework
that Burgelman and Grove offer can help.
What strategic dissonances are you seeing? Have you seen any
evidence of strategic recognition and revision of strategic
intent? Do you feel that a tool like QMS can help us recognize
and grow through strategic inflection points? Are there other
tools that do this well also?
Best regards,
Joe