A compelling case for our Purpose-Profit balanced "Portfolio-Thread View"

For those of us who have been following our blogs closely for the last few months would have definitely noticed a key message - that our purpose driven strategy is based on the collaborative “Portfolio-Thread View" (PTV) that is being derived from the nature’s principle of “balancing opposites”. I hear someone surely asking a follow-on question - how is it different from the other predominant views such as - Strategic Positioning view (SPV), Strategy Execution/Operations View (SEV), Resource Based View (RBV) and Design Thinking View (DTV)? Before answering that question, let us refresh our memories with a strategy history refresher.

As practitioners, those of us who have practiced one or more of these dominant views as part of our strategic planning engagements would definitely agree with our observation – that these views, in most situations, end up creating conflicts with one another – thus, resulting in a tension, between the two key opposing business realities of “competitive advantages and aspiration structures”. Interestingly enough – we had depicted this tension with a funny cartoon with a tug- of-war metaphor in one of our earlier blogs (http://strategywithapurpose.blogspot.com/2010/09/what-in-world-is-strategy-pitch.html).

By advantage - we mean the ease in which companies can sustain their competitive advantage for an extended period of time in spite of the emerging challenges like disruptive innovations, globalization, and reverse capital flows etc. By aspiration structure, we mean, how flexible are company’s system (including system wide processes, culture, relationships, and distinctive capabilities that are knitted together uniquely creating their brand identity) structures to help sustain those competitive advantages.

Sustaining competitive advantage for an extended period of time- though sounds easy – in reality, is one of the most challenging things to do- especially within old economy companies - partly because of their rigid system-wide aspiration structures. Trying to change those rigid system-wide aspiration structures (especially after it has been set in stone for 50+ years or so) invariably results in a tension – which has made the business leaders to experiment different strategic views with a hope to arrive at that magical “advantage/aspiration” mix - producing , just the right amount of optimal tension needed to win the game. Nevertheless, most leaders have not been 100% successful yet on that mission – partly because of the fact, these dominant views inherently do not help them to balance these opposites effectively and to arrive at that magical “advantage/aspiration” mix.

Hence, the need of the hour is to develop a fifth strategic view (or framework) called Portfolio-Thread View (PTV) – that inherently helps leaders to balance these opposites (advantage/ aspiration mix and its sub variables) and help them to answer the key strategy question of “How do you win?” along with its three sub-part questions -

• How do you win or increase the value for your key stakeholders (shareholders, customers, consumers, partners and suppliers alike)?
• What is the optimal advantage/aspiration mix that uniquely creates the DNA of your brand/firm (or the so called “sustainable competitive advantage/aspiration” mix) that is difficult to be emulated by your competitors?
• How do you align that DNA with your Portfolio-Thread elements?

PTV is a blended “collaboration driven, purpose-profit balanced, boundary-less based, pull value chain driven, portfolio-theme view” – and, in a way, it is unique, because of its ability to answer these three questions effectively with a set of “what if scenario” based “balancing opposites” type dashboards - that is built on top of the set of interlinked purpose-profit balanced, boundary-less based, pull value chain driven, portfolio structures/ schema (i.e. product, services, experiences, market, investment, process, competency, sustainability, risk etc) that are further knitted together by key strategic themes (i.e. differentiation, low price, globalization, disruptive innovation etc) as outlined in our earlier blog (http://strategywithapurpose.blogspot.com/2010/06/purpose-driven-systemic-strategic.html). This dashboard driven model not only helps leaders to balance these portfolio variables within the context of their advantage/aspiration mix simultaneously, but also help them to arrive at the magical “advantage/aspiration mix” that is custom tailored to their specific set of market, resource, operation and creative needs –so that they can win with an absolute certainty.

Within that winning spirit – we then did a deeper dive analysis using an Advantage Aspiration Portfolio (AAP) Framework (as outlined in the top of the page) - to gauge where all of these dominant strategy views stand viz-a-viz to our PT strategic view - to help develop a compelling case for PTV. Before going too much further with our analysis, let us reiterate an important fact- that all of these four dominant strategy views are not only being widely practiced within various quarters today, but also have proven to be effective for most companies.

With that said, let us first recap the compelling cases behind each and every one of these strategic views to get a perspective of how the strategy landscape has evolved in the last 50+ years – before building a case for PTV. The Strategic Positioning View (SPV) was developed in the 70’s with a compelling case for choosing the right market entry options (while market conditions are stable) and was heavily promoted by leading thinkers like Michel Porter, whereas the Strategic Execution View (SEV) was developed as a compelling case to answer the criticism of the execution practitioners - who argued that relying too much on market share and financial algorithms have started slowing their productivity and so, they stressed the need for an execution view – with an emphasis on optimization, continuous improvement, quality and process reengineering -and, promoted heavily by leading thinkers like Ram Charan and Larry Bossidy.

While SPV and OTV were still widely practiced within various quarters during the 70’s and 80’s –an economic shift silently happened in the 90’s in terms of the capital moving from the developed economies in to the developing economies as part of the globalization phenomena -and so companies quickly realized the need to scale their expertise and resources for the global market -and hence the Resource Based View (RBV) became the new mantra (promoted heavily by C.K.Prahalad and Garry Hamel) with a compelling case that “effective companies must have set of core competencies” to win with an absolute certainty.

While all of these three views were being practiced in different quarters in the nineties- the dot com era slowly came along - and so did, the compelling case from the “design thinking” promoters – and they argued that all of these analytics driven views (SPV, OEV and RBV) try to put strategy in a box and so they do not necessarily guarantee competitive advantage for an extended period of time - and hence, they proposed a synthesis focused Design Thinking View (DTV) with a mantra – “let out-of-the- box strategic visions and creative ideas bloom with an innovation focus using right- brain based design thinking insights, before we start deciding the patterns of strategic choices” – and most recently, this view has been promoted by Roger Martin and Roberta Verganti.

Interesting history – isn’t it? What does these 50+ years worth of strategy history tell us? - None of these four views seem to meet all the needs, at all the time, for all the markets/industries. In other words, while all of these strategic views definitely have helped companies to devise effective strategic plans, not all of them have equally balanced the “advantage/aspiration” mix effectively – the key prerequisite for winning with an absolute certainty. With this renewed insight and finding – we placed all of these strategic views within the AAP framework – with “degree of aspirations” on X axis and “degree of advantages” in Y axis as outlined below and on the top of the page.

• SPV – addressing the market centric view – wherein companies can win by selecting the niche market entry options - with a key assumption - that those niche markets eventually can become their stronghold - and pretty much make competition irrelevant for them – which kind of gives a perception that this view can work well regardless of how flexible (or less flexible) their aspiration structures are – and hence, at times, is being misinterpreted to be creating class differences among various markets and industries.

• SEV – addressing the execution centric view – wherein companies can win by optimizing their processes, practices and eliminating waste/idle capacity with a leading edge analytics/statistics (Six sigma, lean, regression etc) tools and techniques with a value engineering focus – but at times, is being misinterpreted to be resulting in an over engineered initiatives in certain markets/industries that do not produce sufficient returns to justify those initiatives.

• RBV – addressing the core concentration view - wherein companies can win by focusing on their core businesses i.e. by finding creative ways to unleash the untapped value from their core, with a set of core competencies – but at times is being misinterpreted to be promoting too much cost containment mindset stifling the edge focused disruptive innovation.

• DTV – addressing the design thinking view – wherein companies can win by “trial and error” based innovation culture and willingness to experiment with “out of the box” ideas and directions, and adjust the efforts based on the experimental learning every step of the way – but at times, is being misinterpreted to be lacking focus, discipline and coherence.

• PTV – addressing some combination of the above four categories – wherein companies can win by balancing their opposites to their best – i.e. advantage/aspiration mix –that is further custom tailored to suit to their individual market, resource, operation and creative needs with a set of analytics/synthesis focused (left and right brain focused) interlinked purpose-profit balanced, boundary-less based, pull value chain driven portfolio structures and themes – to help face the challenges of 21st century and to win with an absolute certainty (http://strategywithapurpose.blogspot.com/2010/10/transforming-so-what-opposites-in-to-so.html) – but at times, can potentially be misinterpreted as - “being all things, to meet all needs, for all industries”.
  

As we recognize from these “advantage/aspiration” mix driven strategic view placement analysis- interestingly enough, four of these strategic view categories fell perfectly in to those four quadrants of the framework with an exception of our PTV – which got placed in the centre of the framework covering all the four quadrants. What does this tell us? There is a need for a fifth view with a flexible set of “collaboration driven, purpose-profit balanced, boundary-less based, pull value chain driven, portfolio structures and themes”- to effectively balance these opposites and help answer these three key questions – with an absolute certainty to win at all times. And so, it is time for companies to accept this new reality (i.e. PTV strategic view) and start using them in their strategic planning engagements to help answer these three winning questions effectively - to meet the emerging ever changing challenges of the 21st century and to win with an absolute certainty. However, by no means – we are suggesting that other views have lost its relevance – I guess “doing both” is the way to go in the words of Inder Sidhu and Roger Martin and as summarized in the poem below.

Realizing the need to weed the strategic creed’s advantage-aspiration clutter, (then)
Rebranding that creed with nature’s “balancing opposites’ principle breeder, (by)
Renewing that aspiration fixture (of SPV) with a flexible structure,
Re-energizing that engineering overture (of SEV) with a good-enough engineering culture,
Rejuvenating those core competencies culture (of RBV) with an edge competencies glitter,
Refreshing that free thinking sculptor (of DTV) with a process rigging stature, (by)
Reinvigorating them all with a fifth venture, with an optimal advantage-aspiration mixture, (and delivered by)
Rendering them all with a “collaboration driven, purpose-profit balanced, boundary-less based, pull value chain driven, portfolio-theme structure”, (that is)
Reverberating the corridors of the world’s elite’s strategy theatre,
Raising the bar to a newer glitter with a startling strategy whisper– purpose driven strategy is the new clatter to rattle!