Strategy – a military tradition – was conceived in the knowledge that to achieve successful outcomes in highly uncertain and constantly changing environments, you need future-focused thinking that’s fluid and activities that constantly adapt as conditions and events unfold. It’s an ongoing process of ‘execute and learn’ where purposeful thought informs action that looks for threats, advantage and opportunity in a constantly shifting landscape.
Yet, despite the increasingly dynamic environment, business strategy has evolved to become a very static, analytical discipline where plans that create the illusion of certainty are valued over planning for an uncertain future. As a result, strategy-making has become a manifesto for doing what you’ve always done – just more of it and/or more productively.
Adopting a project-led approach can imbue your strategy with forward momentum that ensures your business adapts at the pace of change and is nimble in the face of uncertainty. The transformation of IBM under the guidance of Lou Gerstner in the 1990s is a perfect example.
When Gerstner took over IBM in 1993, it had just posted the largest annual loss in its history (US$8 billion). This loss was the result of a 1980s strategy which targeted $100 billion in top-line revenue by investing heavily in infrastructure and people as a means of growing their ‘core business’. This investment was despite clear signals that competitive pressures were building and the computer market was shifting. Changes that their strategic planning, or perhaps ‘Big Blue’ arrogance, failed to acknowledge or adapt to.
From the outset, Gerstner understood that business adaptation was driven by projects not plans. He eschewed strategic plan developed in favour of decisive, immediate action. Shortly after accepting the CEO role, Gerstner famously said, ‘The last thing IBM needs right now is a vision.’
However, activity without strategic direction is just ‘busyness’. Gerstner knew that IBM’s strategic opportunity lay in its diversity and broad computing experience. He believed that IT customers would value ‘an integrator’ that could bring the disparate parts of technology together to deliver business outcomes.
So, Gerstner set about shaping IBM for a new and very different future by transforming its two most important relationships – the one with its people and the one with its customers.
The power of strategy-making lies in the ability to execute projects that consistently and persistently make meaningful progress toward your strategic objectives. That means triaging your strategic activities to include only those projects that are a high priority for the future you intend to create.
Understanding this, one of Gerstner’s first moves as a new CEO was a short, sharp project to quash an initiative to break IBM into a series of smaller autonomous operating units, each with its own identity and direction. He called it ‘the most important decision I ever made – not just at IBM, but in my entire business career.’
Gerstner also knew he needed to create a solid financial footing for the company so that it had a future to adapt to. So, he put in place projects to improve the cost-pricing structure of IBM’s mainframe computing business, which had become grossly over-priced in an ever-more competitive market.
To fully transform strategic insights into operational reality, you need more than projects – you need project teams that feel empowered and motivated to successfully execute them. Gerstner recognised that the long game for IBM was turning around a toxic, internally competitive culture where divisions were actively competing against each other, both within the organisation and out in the marketplace.
Nearly all the projects he put in place were made up of cross-functional teams intentionally designed to break down divisional and functional silos. A cross-business team created a compensation structure tied to overall organisational performance and rewarded speed to market and reliably meeting commitments over sales targets and KPIs – the exact qualities that a nimbler organisation would require.
Over the next decade, Gerstner continued to focus on projects and used a project mindset to move IBM toward a new future – a new incarnation. IBM went from an internally-focused company that had broken trust with its customers to one that offered customers a comprehensive, full-service technology solution. ‘Big Blue’ went from a US$8 billion loss in 1993 to an US$8 billion annual profit in 2001.
The IBM turnaround shows that projectifying strategy is an extremely effective way to re-shape even the largest and most traditional organisation. By developing and selecting the right strategic projects, you can respond to change in a rapid and targeted way. But crisis doesn’t have to be the driver for unlocking opportunities that maximise the customer experience and enhance your current operations. Don’t use a ‘burning platform’ to engage and motivate your people – give them meaningful strategic work to be engaged in and a purpose to be motivated by.
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Latest posts by Jeff Schwisow
- Strategic projects are the key to navigating uncertainty - July 10, 2018