April 2012Strategy

Mastering Strategy: It’s All About Integration

Mastering Strategy

Kodak's recent bankruptcy didn't take anyone by surprise. The century-old company succumbed to a common dilemma: evolving in a radically changing market. Over thirty years before its demise, Kodak seemed to be doing everything right, including investing in new opportunities. In fact, it was a Kodak engineer and his team who developed the digital camera. At the same time, Kodak never truly changed its business model, revising its strategy. "While its industry landscape had changed dramatically, Kodak was still trying to cling to its old and declining performance peak, and not embracing a systemic change to its strategy that would have led it to a new and higher, but radically different, performance peak," says Wharton management professor Nicolaj Siggelkow.

Siggelkow notes that Kodak’s problem wasn't unique. "In the 12 years I have been teaching in Strategic Thinking and Management for Competitive Advantage, the same common themes emerge among the participants. It's remarkable since it is always a very diverse group in terms of industry, geography, and culture. Some of them, like Kodak, are in a stagnating market and need to change. Others are in an environment where regulations are changing quickly, so they need to reposition. And others don't have a problem with growth, but they need to focus themselves so they don't run off the cliff. What all of these problems have in common is the need for strategic change that is systemic in nature. And to pull this off, firms need strategists who think in an integrative fashion."

Siggelkow, who is the faculty director of the program, says there is "a tremendous amount of nodding" on the first day when the theme of 'integration is central to strategy' is introduced. "The point resonates well because everyone has a horror story of lack of integration. Strategists need to be the ones to pick up tidbits of information from all over the organization and see how the pieces fit together to paint a larger picture. They need to stop sales people from making promises that production can't keep; prevent R&D from designing products that can't be made; put the brakes on new products that will produce less profit than the old products they cannibalize. They need to see how the parts of a firm fit together and how these parts might fit together differently."

Strategic Thinking and Management for Competitive Advantage offers a number of approaches to achieve such integrative thinking. Siggelkow continues, "We provide tools to help manage growth initiatives, to structure mergers and acquisitions, and to position the firm relative to competitors. We also create activity system maps to delineate how interdependent choices either support or erode a strategy. For the strategist, understanding how to create a system of consistent choices is critical. Moreover, they need to create processes that allow consistent strategies to emerge. Strategies won't work if everyone in the organization is doing their own thing. At the same time, the idea of 'trickle down' strategy, where you build it at the top and hope it filters down, doesn’t work, either."

Executives who attend the program, says Siggelkow, frequently go back to their teams the following Monday and raise the level of strategic thinking. "We are really 'teaching the teachers.' Part of that is raising strategic awareness, but it has to be more than just changing thinking. Learning must be as actionable as possible. In the middle of the week, we have participants start using the tools they're learning on their companies' strategic initiatives. They make assessments, and then share them in small groups. The feedback they receive from each other is tremendous. Everyone comes with issues, and having the opportunity to connect with executives who are facing similar difficulties is invaluable."

Lanre Fagbohun, an executive director of Unity Bank, attended the program in 2011. He notes, "Months later, it continues to add value. As different situations come up, you start applying more of what you learned. You don’t really know how much you gained until you get back to the office and start getting involved again."