Excerpt: Your Strategy Needs a Strategy

In Your Strategy Needs A Strategy: How To Choose And Execute The Right Approach, Boston Consulting Group’s Martin Reeves, Knut Haanæs and Janmejaya Sinha point out something that might seem obvious at first: Strategy cannot be a one-size-fits-all solution. They then go on to handle tricky questions, including the how-to’s of five main strategy approaches—“be big, be fast, be first, be an orchestrator or simply be viable”—and ways to judge which one might work for your business.

In the chapter “Shaping: Be The Orchestrator”, the writers explain that sometimes companies get an “extraordinary opportunity to shape or reshape an industry”. They give examples of companies across sectors, including pharmaceutical company Novo Nordisk and e-commerce firm Alibaba Group. Edited excerpts:

The Alibaba Group began (in 1999) with the business-to-business portal Alibaba.com, which connects Chinese manufacturers with foreign purchasers. Four years later, it launched its consumer variant, Taobao.com. By 2013, the group handled a larger transaction volume than Amazon.com and eBay combined, accounting for more than half of all Chinese parcel mail. In the meantime, Alibaba extended its platform into other complementary businesses, with associated portals, like AliPay for payment services and Aliyun for cloud computing. The firm has managed to grow at a remarkable 60 percent annually since 2008 by setting an expansive vision, engaging a broad set of stakeholders on its platforms, investing in platform expansion, and constantly evolving its ecosystems.

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The Shaping Approach In Practice: Implementation

Since the direction of a shaping strategy emerges from the frequent engagement and orchestration of an evolving set of collaborators, the approach needs to be embedded in every aspect of the “organization” to be effective. A shaping strategy must however reach beyond firm boundaries, from fostering external innovation to developing an open organizational structure to leading with an eye toward inspiring and influencing other ecosystem participants.

Organization

...The key unit of analysis in a shaping context is the business ecosystem, not just the firm itself. This larger view has implications for organizational structure, culture, and leadership. Shaping organizations need to be open to, and intertwined with, the external environment, in order to extend their reach beyond the boundaries of the firm and build a covenant of trust. Structurally, this means that orchestrators have few organizational boundaries; they leverage and share resources and knowledge externally and give up a certain degree of control by leveraging the same market-based mechanisms as the ecosystem itself.

For instance, the orchestrating firm might integrate itself with other stakeholders by rotating staff, investing in upstream and downstream ecosystem players, or by sharing IP when it serves the interest of the wider ecosystem.

Google, for instance, regularly holds developer conferences, where it invests in collaborators by giving them training, offers one-on-one feedback sessions, or lets collaborators codevelop apps with Google engineers. Inevitably, this open organizational approach can require a mind-set shift—especially for leaders or employees who are used to a clear division between “them” and “us.” It requires comfort with letting go. Instead of giving strict, detailed operational rules, leaders set broad guidelines to foster external collaboration.

Culture

The same tenets of going beyond the boundaries of the firm hold true for culture.

The culture of a shaping firm should look outward, have an inclusive attitude toward external parties, and encourage both catalysis rather than control in stakeholder interactions and collaboration rather than competition.

The firm should stimulate and reward employees for reaching beyond the boundaries of the company to build relationships. Openness and humility help to generate the trust necessary to build long-term, successful interaction with ecosystem participants... And, above all, shaping cultures encourage employees to respect other players in the ecosystem. Shaping firms often promote a nonmanagerial culture in which building relationships, rather than directly managing or controlling them, is most prized.

Leadership

It’s more of the same with leadership, where, counterintuitively, shaping leaders gain clout and respect through willingness to cede a degree of control. Shaping leadership extends beyond the boundaries of the firm. The shaping leader sets the ecosystem vision—often collaboratively—communicates the vision, builds external relationships rooted in mutual interest, resolves conflict, and influences rather than commands. In this way, the leader is more of a catalyst than a manager who strictly enforces his or her will.

Reprinted by permission of the Harvard Business Review Press. Excerpted from Your Strategy Needs A Strategy: How To Choose And Execute The Right Approach. ©2015. The Boston Consulting Group, Inc. All rights reserved.