Innovatia

end up arguing about budgets and who is spending what. Is that because that is not strategic planning? Basically, yes. This distinction between strategy and operational improvement is very important and the operational stuff can be easily handled during the budgeting exercise, and it ought to be looked at on a yearly basis. The strategic stuff does not need to happen every year; it needs an integrated process of look- ing at choices and tradeoffs. Strategic planning has a bad name. The systems that were created became ritualistic, and a buzz developed that strategy was not important. It was really execu- tion. The emergence of Japanese companies got many people going in that direction. It is quite interesting to see the ebb and flow of ideas about management; we do keep getting better and more professional. The strategy field

of the product or service you provide. Having someone run your cafeteria is a no-brainer. Hav- ing someone manage your computers, to make sure they are operational, is fine. Where we start to get in trouble is when we ask, “How many components should be made outside?” or “Should you have someone assem- ble your product?” My criteria is: how important is this to the essential design or performance of the product? Should you retain the skills that are involved in doing it versus whether you care if somebody else does it. So you shouldn’t outsource core competen- cies where you have built your competitive advantage? Right. Your work suggests a big payback from knowl- edge about your company and your industry. I’m wondering how this applies with appoint- ing a chief executive from outside the industry on the basis that he’s good at process or man- agement or that he’s a people leader? Having an outside person come in can often be very therapeutic because of their independence and lack of conventional wisdom, and the abil- ity to look again at the business. This is as long as they are actually a student of strategic analy- sis and are willing to collect or do the homework required to dig in. It’s interesting how often good strategies get created by outsiders because they are the ones who are less afflicted by the attitude of a pro- cess always having been done a certain way. But they’ve got to do a log of homework and make sure their idea works. Another observation I’ve made is that many

is still relatively new. It was born in the late 1960s with Boston Consulting Group and that was the first systematic work on strategy. We’re maturing, hopefully. We’ve had some wake-up calls in the last three to five years, and I’m hopeful we will make progress. Let’s talk about the Australian banking in- dustry. Here is an industry where four com- petitors have 80 per cent of the market and they are almost indistinguishable. Given your views, do you think that this situation is sustainable? What will have to happen is either somebody from within will move the industry in a new di- rection, by really having a strategy and making some choices, or the regulatory environment will be more open to foreign companies, or to new banks.

companies with really good strategies are reluc- tant to hire employees from within the industry. They find those employees are too set in their beliefs. They tend to hire people who haven’t been in the industry and train them in their way of doing things. I think that the downside of hiring the outsider is the sad version of what leaders do today, which is just cut costs, look for some things to get out of, and maybe do a merg- er or two, and then they feel like they’ve done their job as a leader. You get short-term gains but what have you built? Yes, and did you really have a strategy? I think there’ll be a chapter in my book on rearticulat- ing what leaders do. What their real role is in strategy and how to play that role. I think we’ve lost that. Today, we have the charismatic leader who is the media star. And the analysts love him. Yes. You’ve got the cost-cutting restructuring leader, but there needs to be more attention on strategy. Many people inside companies say the stra- tegic planning process is disappointing. You Company culture needs to be more systematic – based not on what is universally thought of as a good culture but on what fits the strategy and position in the marketplace.

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INNOVATIA

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