star trek strategy: real strategy at work

Perhaps you are a CEO or business unit managerleading a group of people who have worked togetherfor a long time. Until recently results were asexpected but performance is now slipping and theway ahead is unclear. You face the hardest challengeof all: developing a strategy to arrest the decline.

In your predicament you have consulted a legionof strategy experts, who suggest a variety of

approaches. Develop a formal, specific plan, saysome. Shoot the formal planners and planincrementally, counter others. Consider yourindustry structure and exploit generic strategies,advises a third. Refine your “strategic intent” andleverage core competencies, offers a fourth group.By now you are thoroughly confused –understandably so.

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Star Trek strategy: real strategy at workStrategic plans often contain generic or motherhood and apple pie statements accompanied byoutcome-based “stretch” goals that are not strategy but measures to determine whether or notgood strategy has been implemented. Star Trek strategy, as described by Peter J Brews, underscoreshow strategy must be evaluated: as a work of creative fiction sending firms boldly to go wherenone have gone before.

A review of your existing strategy documents isequally unhelpful. You find a mission statementthat could apply to all your competitors: to bemarket leader in the quality delivery of xyzservices to ABC consumers worldwide. Carefullycrafted over months of intensive debate, thestatement is accompanied by other “stretch” goalsand desired firm attributes: to be the employer ofchoice in your industry; to have one millioncustomers by 2005 (you currently have 670,000);to cut service delivery costs by 20 per cent overthe next financial year; all to achieve above-average returns for stockholders. A set of desired“values” complete the document: innovation;teamwork; and customer focus are all highlyvalued, important and vital but now, you discover,quite unhelpful when real strategy is needed.

Sadly, you are not alone. Often, what is done inthe name of strategy misses the mark. The causeof this is twofold. First, the essence of strategy ismisunderstood and considerable time and effort isdevoted to developing ideas that at best aremotherhood and apple pie statements supportedby high-level outcome goals. Second, fewappreciate how our current stock of knowledgeabout strategy assists in developing true strategy.

This article first describes the essence of strategy.Then it summarises the major schools of thoughtemerging from decades of strategy research andeach school’s contribution to our understandingof strategy is presented. How this knowledgehelps (or hinders) the development of truestrategy concludes the paper. Readers are invitedto use the ideas to test their appreciation ofstrategy and the strategy process as well as toevaluate the strategy formation activitiespractised by their firms.

Star Trek strategy

What first comes to mind when you hear thewords “strategy” or “strategy formation”? In myexperience, most executives associate strategywith plans or planning – the process of settinggoals and objectives and specifying the means toachieve those goals. Though valid and insightful,these conceptualisations focus on the processesused to form strategy rather than the substance ofstrategy itself. Neither do they differentiate“good” from “bad” strategy. To determine suchdifferences, the quality of the ideas embodied in aplan must be evaluated.

A well-known line from a popular televisionseries helped me develop a filter to conduct thisevaluation. This “Star Trek strategy” signifiesthat the raison d’être of strategy is to ensure thatan organisation “boldly goes where none havegone before”.

The critical test for any real strategic idea iswhether it describes an ambitious, imaginative yet

feasible foray into a new quadrant of thecompetitive universe. Does it describe thecharacteristics of this new universe in clear andunambiguous terms, detailing the nature of thegoods or services the firm intends offering? If not, it may be an interesting idea but it is notreal strategy.

At conception, Star Trek strategy resides in theimagination and is a work of creative fiction. Atits core, good strategy is abstract, not yet existingin the annals of human experience. If, as isdestined in the voyages of the Starship Enterprise,no-one has travelled to the quadrant of theuniverse about to be visited, the sector waits to bediscovered (or, for our purposes, created orinvented). In star trekking, creative imaginationand the ability to develop a compelling abstractidea are essential. I often employ my “You havegot to be kidding” test to evaluate the degree ofabstraction of an idea. If after initial exposure toa proposal your reaction is “YHGTBK!” the ideamay be on the right track.

Regrettably, most managers are more comfortablewith tangible reality than creative fiction and theworld of star trekking. When confronted with anidea that is even remotely strategic, the idea isimmediately dismissed. For star trekking,tolerance or even a welcoming of abstraction iskey. Star Trek strategy also captures thepioneering quality of strategy. Similar to theexperiences of real-life pioneers, adversity andfailure are likely. When evaluating a firm’sstrategic activities I always inquire how oftenfailure is encountered? If the answer is seldom ornever, I become concerned. Not experiencingsome failure in the execution of strategy isworrisome: either the firm is exceedingly luckyand/or very smart (unlikely) or the “strategic”ideas being implemented are not strategic at all

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Most managersare morecomfortablewith tangiblereality thancreative fictionand the worldof star trekking


Wal-Mart stores Despite conventional wisdom that held full-line discount stores required populations of100,000 or more to be sustainable, SamWalton set out to build a discount store chainto serve small southwestern towns. The ideawas to offer the same or a wider range ofproducts at prices as good as or better thanthose offered by existing metropolitan-based,high volume discount stores.

Canon’s personal copier Seeking to break Xerox’s photocopyingdominance, Canon’s top management asked across-functional team of engineers to designand build a value-for- money, low volumedesk-top copier, 50 per cent cheaper thanconventional copiers, 10 times as reliable andmaintenance free. Three years later thesmallest, lightest copier ever built wasintroduced, creating a new market niche andoutselling Xerox in units sold. Thisrevolutionised the copier industry andestablished Canon as a leading supplier ofelectronic office products.

Cementos Mexicanos’ ready-mixconcrete on demand Cementos Mexicanos (Cemex), now the thirdlargest cement company in the world, isrevolutionising the delivery of ready-mixconcrete in congested third-world citiesthrough the combination of advancedmodelling based on chaos theory and the useof satellite-based GPS to co-ordinate largecity-wide fleets of trucks. Preloaded trucksfulfil orders on demand, arriving within 10minutes of the promised time – down fromthe three-hour window previously consideredfeasible – and eliminating the need to placeorders 24 hours in advance. In the launch testmarket, Cemex promoted its concrete deliverycapability with miniature pizza boxes pokingfun at a local pizza franchise that deliveredpizza less efficiently. In these markets, Cemexnow offers an on-time guarantee and a fiveper cent rebate on orders more than 20minutes late.

Caterpillar’s just before failure (JBF)technology Supported by the firm’s global informationsystem and legendary parts supply capability,Caterpillar is imbedding microchips inmachines to identify key componentbreakdown before failure occurs. Theimpending failure will be automaticallysignalled from the machine to the local dealervia satellite, who then schedules replacementat a convenient time to avoid downtime.Simultaneously, if not on hand, an electronicsearch for the nearest replacement part iscommenced and the closest part is locatedand dispatched to the dealer. The JBFtechnology should vastly decrease downtimeand considerably enhance Caterpillar’s alreadyexcellent customer service.

Siemens Medical Solution’s digitalhospitalsSiemens Medical Solutions, a division ofGermany’s Siemens AG, is currently pioneeringthe development of all digital, fullyautomated hospitals. Combining the expertiseof several Siemens operating companies, thenew facilities are expected to be significantlymore efficient and safer than existinghospitals. Patients will wear wireless “wellnessmonitors” that signal problems as they arise,providing their exact location to enableimmediate response. Administrators,physicians and other health care providers willnavigate electronic patient records, vital signs,images, test results and enter medical ordersand treatment information virtually. Processsimplification and network-based IT shouldreduce medication cycles from around 10steps to four, cutting down medication errorsand costs. Drug interactions will beautomatically highlighted, averting errorsthat cost tens of thousands of lives a year inthe US alone. Naturally – though the Siemenssoftware will be compatible with competitorequipment – installations will mostly carry theSiemens brand. But the sale is not based onthe quality of the hardware, wheredifferentiation is difficult. Siemens is bettingthat integrated healthcare solutions willenable it to dominate competitors.

Table 1

Boldly going: star trekking by business pioneers

(more likely). Instead, the firm’s concept ofstrategy is fundamentally flawed.

Tolerance of failure is therefore key to successfulstar trekking. Firms that expect perfect executionand are quick to punish failure are unlikely to domuch star trekking. If the message is “go boldlybut go perfectly” after the first voyager has beenchastised for failing, the message will be out –don’t go boldly since as night follows day penaltyfollows failure.

Rather than punishing failure the intent must beto learn quickly from failure so that an alternativeviable path is established. A cherished value formany years at Honda Motor Company, arguablyJapan’s most innovative and creative carcompany, is that success is 99 per cent per centfailure.While hopefully the failure percentage insuccessful star trekking is not quite as high,trying then failing, then learning and trying again is an inescapable element of star trekking.This does not mean that failure is OK or to beencouraged. Failure should be avoided orminimised as much as is possible. Unfortunately,given the nature of true strategy failure is likely,indeed almost inescapable.

The box “Star trekking by business pioneers” (seepage 36) presents five examples of true Star Trekstrategy. Three have been successfullyimplemented and the last two are currentlymoving from creative fiction to profitablebusiness reality.

Each example tangibly reflects the essence of startrekking, and passes my YHGTBK test. The rangeof examples shows that star trekking occurs atmany levels: firm; product; orfunction/technology. Though not apparent fromthe examples, individuals can star trek too,regardless of organisational position or status.“Grand” strategy differs only in scope, resourcerequirement and impact. Strategically efficientfirms encourage all employees to star trek withinthe purview of their individual responsibilities –strategy in these firms is the sum of both “grand”and “individual” boldly going.

The examples also illustrate that strategy isuncomplicated at the core. Voluminous plans ofmind-numbing detail that cannot be reduced toaccessible, exciting creative ideas are often morebureaucratic “busy” work than cogent strategicideas. Does your strategy represent a compellingand accessible reconceptualisation of your firm’sbusiness or operations, or a revolutionaryproduct idea, or an inventive use of technologythat will break the boundaries of the knowncompetitive universe and offer unrivalled value tocustomers? Good strategy is usually acombination of all these. If drafted in such terms your ideas are on track. If not, scrap themand start again.

Strategy formation synopsis

Though Star Trek strategy captures the essence ofstrategy, it masks the complexity of the strategyprocess. Most good strategic ideas appear obviousonce implemented but transforming ideas fromcreative conception to profitable reality is complex.This complexity is reflected in the strategy schoolsof thought that have surfaced since the fieldemerged as an independent academic discipline inthe 1950s. These schools are summarised in thebox “Back to the future: a synopsis of strategyschools of thought”(see page 38).

The synopsis indicates our understanding ofstrategy has expanded impressively over theyears. Strategy as SWOT usefully specified theoverall strategy problem but in practice oftenproduced listings of Strengths, Weaknesses,Opportunities and Threats without a coherentconnection of Strengths to Opportunities orThreats. Strategy simply appeared once theSWOT analysis was completed.

Today we know that strategy formation extendsbeyond SWOT analysis. One contribution ofStrategy as Leverage and the resource-based viewof the firm is we now appreciate that strengthshave little value unless idiosyncratic and hard tocopy and unless they attract and retain customerswhen embodied in products or services – in otherwords, unless they are strategic resources.

Opportunities and threats were also initiallyconceptualised as independent of the firm,waiting either harvesting or neutralising. Todaywe understand that firms create opportunities andthreats (one firm’s opportunity is another’s threat)through good strategy, and that firm actionssignificantly influence competitive environments.

As initially depicted in Strategy as SWOT orStrategy as Planning, strategically smart firms donot attempt to predict or forecast the paths ofpowerful and capricious external environments –they create the environment by offering superiorproducts or services that less capable competitorscannot match. Futures wait to be created, notpredicted or forecast. One outcome of goodstrategy is it skews an environment towardsdominant competitors and away from weaker ones.

In addition, the summary shows that thedeepening of our understanding of strategy hasprogressed sometimes sequentially and sometimesin pendulum swings. Planning followed SWOTand suggested a range of processes that bothcomplemented and added to the contribution ofthe earlier school, while Strategy as Positioningadded techniques that deepened our understandingof industry – a vital part of the external environment.

In contrast, the Learning School surfaced incounterpoint to the perceived excesses of the



Strategy as SWOT (1950s-60s) Strategy was first presented as the matchingof firm Strengths and Weaknesses withenvironmental Opportunities and Threats. Theessence of strategy was conceived as thedevelopment of products or services around(internal) firm strengths that matched(external) competitive conditions. TheCEO/top management was responsible forstrategy formation and the model assumedthat firm strengths and weaknesses could beobjectively identified and assessed and thatexternal opportunities or threats existedindependently of the firm in the competitivecosmos, ripe for plucking or neutralisation bysmart strategists. The best strategies werestated in simple, explicit terms, suitable forimplementation once formed.Readers wishing to learn about Strategy asSWOT should read Kenneth R. Andrews’classic The Concept of Corporate Strategy(Homewood, Il: Dow Jones – Irwin, 1971).

Strategy as Formal Planning (1960s-70s)Building upon the ideas of Strategy as SWOT,Strategy as Formal Planning detailed theplanning activities necessary in strategyformation. The School conceptualised strategyformation as a formal, conscious, elaborateplanning process, decomposed into a numberof distinct rational steps. Starting with astatement of firm mission and key strategicobjectives, the process cascaded into detailedprogrammes and action plans, and budgetsand operating plans of ever-increasingspecificity. Once developed, this plan boundthe firm into a tightly coupled system ofhierarchically controlled plans and programmesthat monitored, evaluated, controlled andrewarded behaviour and performance. Thisends/means conceptualisation of strategyassumed strategy could be modelled beforethe fact and reduced to detailed, time-limitedstatements of objectives, programmes andaction plans. Similar to Strategy as SWOT, theexternal environment was assumed to beanalysable and predictable, and either topmanagement or staff planners were consideredresponsible for the development of the plan.Igor Ansoff’s work Corporate Strategy: AnAnalytical Approach to Business Policy forGrowth and Expansion. (New York, NY.McGraw Hill, 1965) exemplifies the earlythinking of the Planning School.

Strategy as Positioning (1980s) Strategy as Positioning considered industrystructure the key independent variable instrategic analysis, and suggested good firmperformance resulted from an industrystructure/firm strategy fit. Strategistsidentified attractive industries, and thenselected one of three “generic” strategies(low cost, differentiation, focus) that fittedthe industry structure. Porter’s Five ForcesModel (arguably the most famous frameworkin strategy) provided a template to determinethe degree of attractiveness of an industry.Industry attractiveness was presented as afunction of five forces: buyer power; supplierpower; threat of substitutes; threat of newentrants; and intensity of rivalry amongincumbents. Powerful firms reside inindustries with low buyer and supplier power,lack of substitutes, few new entrants due tohigh barriers to entry, and low intensity ofrivalry among incumbents. Profits in suchindustries would be high. Strategy asPositioning complemented both Strategy asSWOT and Strategy as Planning by presentinga technique that permitted a more rigorousanalysis of one key segment of the externalenvironment – the industry.Michael E. Porter’s Competitive Strategy:Techniques for Analyzing Industries andCompetitors. (New York, NY.:Free Press, 1980)sets out the initial thinking of Strategy asPositioning.

Strategy as Learning (Late 1970s-80s) Arising mostly in reaction to the perceivedexcesses and limitations of Strategy as FormalPlanning, Strategy as Learning viewed strategyformation as a process trial and error learning,and not formal planning. Rather than beingdeliberate and conscious (as suggested byformal planners) strategies typically emergeover time as organisations learn from theirsuccesses and failures. In turbulent, complex,fast-changing contexts, predetermination,formality and objective analysis weresuggested as insufficient, even dysfunctional.Instead of emerging full blown and completefrom the planning process, strategies start asbroad intentions that are crafted over timethrough incremental learning into appropriatefirm behaviours and policy. Strategy formationis more about incremental learning than theproduction of detailed specific plans.

Table 2

Back to the future: a synopsis of strategy schools of thought

Planning School. For years strategists wereadvised to plan formally, specifically and indetail, only to be urged by the Learning School toabandon formal planning as dysfunctional –formal planning introduced rigidity andbureaucracy, making organisations inflexible andresistant to change.

To some Learning School adherents the term“strategic planning” became an oxymoron.Similar to the Learning School’s appearance,Strategy as Stretch and Leverage also emergedpartially in reaction to the dominance of Strategy as Positioning. To some supporters ofStrategy as Stretch and Leverage, the Positioning School ignored the idiosyncratic andfirm-specific nature of strategy (grounded at thefirm level) in favour of higher-level aggregate“industry” constructs.

Given these controversies, the $64m question iscan these divergent threads be woven into atapestry that captures the complexity andchallenges of strategy formation? Though theanswer to this question is certainly yes, theintegration must be done with care.

The strategy formation tapestry: Star Trek strategy, and the strategyschools of thought

Star Trek strategy is Strategy as Stretch butwith amendment. Star Trek strategy captures the essence of strategy.

And though Strategy as Stretch approximatesthis, it does so often imprecisely. Proponents of“stretch’” advise organisations to set enduring,ambitious, “winning” goals that go beyondcurrent resources and capture the imaginationand motivate. Though these definitional terms fallwithin the boundaries of star trekking, flawedenactment of the concept have accompanied thebroad descriptions.

For example, an early exemplification set stretchgoals in exhortations such as “EncircleCaterpillar” or “Beat Benz”. Though such warcries motivate, they provide little guidance asexemplified in Star Trek strategy. It would be likeSam Walton setting out to “Beat K Mart” ratherthan accomplishing the goal described in the boxBoldly going: star trekking by business pioneers”.Beating K Mart does not describe Wal-Mart’sstrategy – it records the outcome of Wal-Mart’spowerful strategy in discount retailing.

Others depict stretch goals in more specific butequally unhelpful outcome-based terms. Thesealso fail to make the grade. I am often asked tocomment on stretch goals such as a doubling ofsales in two years or increasing returns to 20 percent by the year 2004, or the expansion of thecustomer base to 200 million (up from 150million now) by 2005.

Often imposed from on high for budgeting,control or shock therapy purposes, these are notreal Star Trek goals.


For perspectives on the Learning School, seeJB. Quinn, “Strategic change: logicalincrementalism,” Sloan Management Review,20 (1), 1978, 7-21, or Henry Mintzberg’s“Crafting strategy”, Harvard Business Review,July – August 1987, 66 –75

Strategy as Stretch and Leverage(late 1980s – present)Similar to Strategy as Learning, Strategy asStretch and Leverage emerged tocounterbalance an earlier school. Restoringfirms to the centre of strategic analysis (incontrast to the industry-level orientation inStrategy as Positioning) Strategy as Stretchand Leverage holds strategy is aboutachieving seemingly unattainable “stretch”goals through the leverage of firm strategicresources (also referred to as core capabilities,core competencies or, more generally,strategic resources). Firms are conceptualisedas bundles of resources (now referred to asthe resource-based view of the firm) a few of

which are strategic, that is, unique, valuableand hard to copy resources that whenembodied in products and services presentofferings competitors cannot match. The“Stretch” element requires the setting ofambitious, enduring goals far beyond currentcapabilities that rally firm members and forcenew and innovative uses of existing or to bedeveloped strategic resources. Rather thanbeing about fit within a given industrystructure, strategy disrupts and creates“misfit” as innovative goods or services thatcompetitors cannot replicate are created andvoraciously consumed.For insights into Strategy as Stretch andLeverage, see Gary Hamel and CK Prahalad,Competing for the Future. (Boston, MA.:Harvard Business School Press, 1994). Theresource-based view of the firm is covered in“Competing on Resources – Strategy in the1990s”. by D.J. Collis and C.A. Montgomery,Harvard Business Review, July – August 1995,118-128.

First, they focus attention wrongly. Rather thanpromoting debate on the cogency of a creativeidea, discussion degenerates into the fine-tuningof outcomes to four decimal points: why adoubling (and not a 75 per cent increase) in sales?Or why 200 million and not 175 million customers?

Second, such goals are often arbitrarily imposedand demotivate, in the extreme representing anabuse of power.

Third, defining strategy in outcome termsprovides no means to evaluate intermediateprogress – it does not develop beacons indicatingwhere an organisation intends boldly going orhow it intends getting there. In short,performance-based outcome goals are notstrategy. They establish the means to measurewhether good (or bad) strategy has beenimplemented after the fact.

If your stretch goals are written in terms ofdoubling sales, becoming number one in yourmarket or increasing market share by 10 per centover the next three years, start again. Importantstrategic questions are not whether or by howmuch market share is to be increased, but how –with which offerings, in which market, usingwhich resources? Though outcomes – before,during and after the fact are a part of setting andevaluating strategy – these can only be estimatedonce the creative core itself is specified.

Neither do qualitative statements specifyinggeneralised desirable firm attributes qualify.These include mission statements such as “we willbe the best in class company in the xxx industry,

filled with empowered, motivated people doinggreat things”. Not only is this statement outcomebased – with the attendant weaknesses of

outcome-based goals outlined above – it is alsogeneric and potentially applicable to anyorganisation in almost any industry.

Star trekking is anything but “generic”. The ideaof a generic strategy is in itself oxymoronic.Further, though warm and fuzzy motherhood andapple pie statements can motivate and areunlikely to do damage, they must not be confusedwith real strategy.

Star Trek goals are creative, tangible abstractideas specified in product market terms thatclearly describe a firm’s competitive intentions –we will build this house on that hill with theseunique and innovative characteristics that onceconstructed will attract customers from near andfar with great return to all. Competitors,naturally, will be unable to match.

Before boldly going, know where others haveboldly gone before: Strategy as Positioning.Gathering knowledge of competitor positions isadvisable before embarkation on any Star Trekjourney. Avoiding going boldly where othercompetitors already are requires such insights.

However, similar to Strategy as Stretch theprescriptions of the Positioning School should beapplied with caution.

The concept of “average” industry attractivenesssuffers from the deficiency of many aggregatestatements: with one hand in the refrigerator andthe other on the hob, on average you’re OK.

In practice, an industry may be attractive to onecompetitor but unattractive to others. Sinceattractiveness may differ according to who isasking, average statements of attractiveness inisolation are really unhelpful. Why has Toyotadone so well while GM struggled? Or why didCisco Systems do so well in the internetworkingbusiness while Bay Networks fell by the wayside?Analysis per key competitor rather than perindustry reveals these “positional” differences.Specifying competitor differences is key tounderstanding positioning in an industry.

Another reason for caution relates to theapplication of industry analysis. Industry analysismaps where key competitors have gone andwhere they are. If really comprehensive, wherecompetitors intend going may be included.Strategy was often expected to appear magicallyupon completion of this analysis. Thisexpectation is misplaced. Industry analysis doesnot create strategy, but provides information vitalto the strategy development that hopefully willfollow. But this is creative and not analytical work.

Neither do “generic” strategies help much indetermining where firms should boldly go. Termssuch as low cost, focus, or differentiation cannotcapture the substance of good strategy – startrekking defies reduction to such “generic” termsor descriptions.

Star trekking requires a route map:Strategy as Planning.

Travellers embarking on a journey into theunknown are better off with a map. Plans shouldrecord where a firm intends boldly going andhow it intends getting there. A healthy planning


Travellers embarking on ajourney into the unknownare better off with a map

process allows the testing and refinement offictional ideas, hopefully reducing the likelihoodof failure and minimising the costs of learningonce translation from fictional intent to non-fictional reality begins. Plans also guideimplementation – strategic control and learningcan only be achieved by comparing actualoutcomes against original star trek intentions.

The intensive and often bitter PlanningSchool/Learning School debate on the pluses andminuses of formal planning has identified manyelements of planning that must be avoided.However, one regrettable result of the LearningSchool’s assault on formal planning has been theconclusion that the remedy for bad planning is noplanning. In fact, the remedy for bad planning isgood planning. Though many of the LearningSchool’s criticisms of formal planning areinsightful, there is a vital role for “good”planning in the strategy process.

For example, we now recognise that good planningrequires formulation and that implementationshould neither be separate nor performedseparately – thinkers cannot be detached fromdoers. Those charged with creating the futuremust have a significant say in its conceptual design.

In this regard, I urge the observance of twosimple rules: never formulate a plan you areunlikely to implement; nor implement a plan youdid not help formulate. Failing to observe eitherrule misaligns incentives, becoming mostapparent when difficulties surface. Detachedformulators attribute failure to poor executionwhile detached implementers blame flawedformulation. And while the planners and doerssquabble, competitors advance. Moreover, it isastonishing how motivated people are toimplement their own ideas and how demotivated they become when implementing theideas of others.

Finally, more responsible formulation is likelywhen formulators know they will be required toimplement the ideas they suggest.

We have also learned that good planning is ateam-based line activity and not the bailiwick ofisolated staff planners or senior managers. A keytop management responsibility is ensuring that

the appropriate people from the appropriatelevels with the appropriate knowledge,background and resources are entrusted to createand implement a firm’s future.

Since formulation cannot be detached fromimplementation and since successful star trekkingtypically takes time, the core of the team shouldremain until implementation is achieved or theidea is abandoned. Teams comprising mostly orexclusively of executives close to retirement maybe unable to see the plan through to completion,often necessitating disruptive and costly hand-overs. At worst, ideas to ensure goodperformance until retirement and stock optionshave been exercised may be implemented.

But this does not mean that executives close toretirement should not be part of a strategy team.Though not the core, they certainly can mentorand advise as the team struggles to develop andimplement its strategic ideas. And we also nowknow that implementation is only complete oncea new prototype is up and operating having beentested with customers and shown to be viable.

Finally, today we recognise good strategicplanning is essentially a future-oriented, creativeprocess not to be confused with more precisethough equally important activities such as themaintenance of ongoing operational efficiency.

Downsizing, rightsizing, restructuring or costcutting reflect the quest for operational efficiency.Operationally inefficient firms must cure thedisease they are likely to die from first – no sensein boldly going when current costs are too highand the firm is bleeding to death. However, thisoperational “managing of the farm” is differentfrom “betting the farm,” which involves strategicefficiency and star trekking. But both arenecessary – while some are entrusted to bet thefarm, others must manage the farm to keep itoperationally intact.

To reduce the probability of failure (startrekking is risky) have equipment thatprovides advantage and defence in the sectorof the universe you intend entering: Strategyas Leverage.Strategy as Leverage points out that in addition tobold and innovative ideas, strategy is also about


Good strategic planning is essentially a future-oriented, creative process

possessing unique resources that permit thetransformation of creative fiction into sustainablefact despite competitor endeavours to prevent this.

I am often asked whether it is the innovative ideasor the leverage of unique resources that reallycounts. After all, star trekking can be achievedwith freely available resources (Strategy as Stretchbut without Leverage). Answering this question iseasy – a valuable innovation offered with freelyavailable resources is likely to be copied and thereturns quickly traded away. Competitors mayalso force prices below levels that permit theinnovator’s pioneering costs to be recouped.Sustainable star trekking thus requires bothcreative ideas and unique resources. Executionthrough unique resources prevents competitorreplication of the idea.

Applying the resource-based view does havechallenges, however. Strategists view firmsdifferently from customers and if they are anygood they hide strategic resources to mask thetrue nature of their firm’s competitiveness. I findlikening firms to icebergs a helpful metaphor. The90 per cent of an iceberg below the waterrepresent the strategic resources strategists seewhile the 10 per cent above the water are thegoods or services customers enjoy.

To customers, Nike sells shoes and clothing. ToCEO Phillip Knight, athletic shoe design andbrand management is a better “under the water”strategic description of Nike’s business. To Wal-Mart shoppers the firm is a discount retailer butto Wal-Mart strategists the firm is in theIT/logistics management business displayed in thesuperior cross-docking, inventory replenishmentand transport management systems operated bythe firm. Since these resources enable Wal-Martto stock shelves at prices competitors cannotmatch, they define the firm’s true nature ofbusiness and competitive substance.

Philip Morris’s understanding of multi-purchaseconsumer marketing (developed over years ofbuilding strong cigarette brands) was the strategicresource the firm leveraged to acquire Miller Beerand enter the food business. Cemex changed theready-mix concrete business in developing countrycities into an IT-based transport services business,leaving competitors with the daunting task ofreconceptualising their resource base to avoidbeing driven out of business. Siemens is currentlychanging the core of its medical business from themanufacture of medical systems to the provisionof healthcare solutions that integrate the systemswith other workflow processes in hospitals. Thisreflects a shift in resources to workflowmanagement and integrated software development.

Resource-based analysis thus often requiresgetting hands around clouds, a process withconsiderable uncertainty and imprecision.

Hidden layers of the strategic onion must becontinually peeled back in the hope that the truelayer of competitiveness is finally revealed. Andthere is no sure way to verify yourconceptualisation of what is going on under thewater is correct, especially when confronted by acarefully guarded competitor resource base.

A final concern regarding resource-based analysisrelates to which comes first – innovative ideas orstrategic resources? Examples of either sequenceabound, as do combinations of both. Walton’svision for Wal-Mart preceded the logistics,inventory replenishment and cross-dockingcapabilities that turned the vision into reality.Alternatively, Philip Morris’ entry into the beerindustry relied upon a pre-existing strategicresource developed in another context. Hereresources preceded the idea.

Canon’s personal copier illustrates an innovativeidea achieved with both existing and newstrategic resources. The desktop personal copierwas built on the company’s existing strategicknowledge in optics, fine chemicals, electronicsand precision mechanics but needed thedevelopment of new copier technology tocircumvent Xerox’s patents. Siemens’ evolution tomedical solutions was conceived in the mid-1990sbut an acquisition in the late 1990s providedsome of the resources needed to digitise workflowprocesses in healthcare.

However, though the relationship betweeninnovative ideas and strategic resources is messyand circular, which comes first does haveimportant consequences. Attaining innovativeideas with yet-to-be-created strategic resources isprobably more risky than ideas achieved throughthe application of existing strategic resources. It ismore than likely that innovative ideasimplemented with new resources will take longerand cost more than those relying on existingstrategic resources.

All things being equal, such star trek venturesshould produce greater returns than thoseapplying existing resources to new arenas. Aportfolio approach may be optimal – some startrek goals relying on resources yet to be createdtogether with some ideas requiring theapplication of both existing and new strategicresources balanced by innovative ideasimplemented out of existing strategic resources.

Once your journey into the unknown beginsmistakes and surprises will happen: Strategyas Learning.The Learning School’s greatest contribution toour understanding of strategy rests upon thedistinction between intended and realisedstrategy. Even the best-laid plans are intentionsthat may never be realised. We now recognisethat plans supported by the most cogent industry


analysis and containing the most creative ideasremain fictional theories of action untilimplementation starts. Usually, as implementationproceeds setbacks are encountered and learningtakes place. What was thought feasible turns outto be impossible – the environment shifts, acompetitor responds unexpectedly or customerrejection gets in the way.

Stated differently, good strategy includes bothbefore-the-fact planning and during-the-factadjustment/recalibration as implementationproceeds. Neither formal planning norincrementalism alone adequately describes thecomplexity of the strategy process. Recognisingthat implementation is fundamentally a learningprocess avoids many of the dysfunctional planningprocesses the Learning School warns about –rigidity, inflexibility and the fallacy of consideringplans a perfect predetermination of the future.

What we do and do not know aboutstrategy

The essence of strategy is the creation of atangible but abstract description of a firm’s boldintentions followed by a voyage of invention thatturns these intentions into profitable reality.

Albert Einstein once said that imagination is moreimportant than knowledge. Star Trek Strategyendorses this – the bright spark of true strategyflows from this most important and unique ofhuman capabilities. However a gloss on Einstein’sstatement is necessary. Successful star trekking isunlikely to emerge from isolated creativity conceivedin a vacuum or the uncontrolled experiments of

scientists randomly tinkering in a laboratory. Instead, successful star trekking requires creativebut intelligent imagination informed byPositioning, shaped and refined by Planning,resourced through Leverage and implementedwhile Learning. Imagination based on andsupported by knowledge is the strategists’domain.

Five decades of investigation and experience haveconsiderably enhanced our understanding ofstrategy and the strategy process. We nowappreciate that strategy formation is amultidimensional complex activity with manyelements and dimensions. The strategy schoolcurrently in vogue holds that strategic success iscontingent upon the ownership and application ofidiosyncratic, hard-to-copy, valuable strategicresources. Though essential, this emphasises onlyone dimension of the strategy puzzle. The otherdimensions must neither be ignored nor forgotten– a sophisticated and balanced application of allis required.

However, if intelligent creativity is the Holy Grailof strategy, many questions remain. Though anunderstanding of Positioning, Planning, Stretch,Leverage and Learning may increase theprobability of strategic creativity, it is unclearwhether organisations (or humans) can learn orbe taught to be more creative.

How to develop and control creativity is anotherkey question. Employing monthly budgets orshort-term financial performance measures toshape and control abstract and hard-to-modelcreative ideas will probably hinder more thanhelp. Since star trekking is typically longer termwith uncertain payoffs, rewarding on the basis ofshort-term financial targets may kill creativitybefore it starts. Our current level of knowledgeonly permits us to conclude that we should beintelligently creative in strategy and incorporateappropriately the portfolio of capabilities thatmake up good strategy process. Hopefully, in 50years time our understanding will have expandedsignificantly, allowing many to boldly go wherethey first imagined they would be, to the benefitof us all. �

Resources

Henry Mintzberg. “Crafting strategy”. HarvardBusiness Review, July – August 1987.

PJ Brews and MA Hunt. “Learning to plan andplanning to learn: resolving the planningschool/learning school debate”. StrategicManagement Journal, 20: 889-913. (1999).


Peter J. Brews([email protected]) is aprofessor ofinformation andtechnologymanagement atthe Kenan-FlaglerBusiness School,University ofNorth Carolina atChapel Hill. Healso teachesinternationalmanagementand strategy.

The essence ofstrategy is the creationof a tangible butabstract description ofa firm’s boldintentions followed bya voyage of inventionthat turns theseintentions intoprofitable reality

star trek strategy: real strategy at work

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