I interviewed Gustaf Carlsson who discussed Strategy.
Well, it’s nice to speak with you today, Gustaf. Look, and that’s an interesting topic today. I’m looking forward to hearing your views on strategy and what’s involved with strategy as far as understanding context, what’s involved, what is it, and how you work with leadership. Before we start, can you provide a brief background of yourself?
Yes. Thank you, Justin, for being here today. It’s a pleasure. My background is that I have like more or less twenty years working in different operative works, mainly within the supply chain management area. And now I have like six years doing consultancy work, mostly in the same area. And a lot of the work during these years has been both as a line manager and also now as a consultant to work with the change. And included in the change you always have the strategy as the foundation. And you run into new situations where you need your company to perform in another way, and then you need to put in a new strategy and wall down circle. I would like to share a little bit about that today, about how working successfully with strategy and defining it and starting the mantles.
Well, thanks for your introduction about yourself. Can you discuss now the presentation that you were going to do regarding strategy?
GUSTAF: Yes, sure. This is kind of a formula that you see here, and it starts everything that you’re not satisfied with the current state. And sometimes you actually have met people that are satisfied with the current state, and then you don’t see anything happen. But you need to be dissatisfied with how things are today then. That’s the first step. And then of course you need to have a clear vision for how to change, and that is where the strategy creation comes in then. So you can create the strategy for how you would do them. And finally, you need to have a process to execute the change, but then we come more into the change management process that could be a specific topic. But all these things together need to be in place. You need to be dissatisfied with the current state, you need to have a vision for a change strategy that you define and want to implement, and the process to execute it. All of these three things together need to be made, and the cost of the change, because there’s always a cost wherever you use change, and you have some resistance of doing that. So this is sort of to say that the broader complex on how to work with this. Moving on then, many people have probably read From Good to Great [inaudible] by Jim Collins. It’s a good book, I can recommend that. And here you can also see that you need to have some other things in place before you run a strategy situation. And that the first that I mentioned, you need to have a good leadership and you also need to define who are the persons that you will work on, who are sitting on your management team and will be creating the strategy and then implement it? So that does need to be in place as well before going into strategy situation. And then you come into what Jim Collins talked about, the fourth dimension, where you go into the investigations, that you need to face the truth and you also find what is your concept, what is the thing that you will do differently and better than anyone else, which will be your success? That is why you do the hedgehog concept [inaudible]. [inaudible] and have the actual dimension where you do the change management part.
Let’s go back down and focus on the fourth dimension, then. Strategy today is an extremely well used word, in almost every case, every different situation you have in life you talk about the need to have a strategy for this and that. I would like to bring up some good definition here that I found in a book by Lawrence Friedman. It was a very, very good book on strategy history. And he says, why are you having a strategy? Yes, of course you need to have the ability to look up from what is short term and trivial, and instead of that you need to view the long term, the essential, you address causes rather than symptoms and you see the woods rather than trees. And the strategic thinking is about you need to get more out of a situation than the starting balance of power would suggest. So in very brief then, creating a strategy, it’s something about creating power. You need to create more power by the strategy that you will implement.
Then, coming into this concept for creating a strategy, it has been presented by Willie Pietersen in his book, Reinventing Strategy. It is something that I have used many times. It is very useful. It is more or less based on the PDCA cycle, which most of the strategy creation tools are. I would like to highlight here that you have the analysis phase, where you work with facts and figures and face the brutal truths. You come into different insights that you need to have about the customer, about your own company, about the industry where you are in and the environment around you, things like that. And then you come into the really tough work with creating a strategy, starting off with defining which customers are you going to prioritize. And many times you forget about this, and you make it very, very broad on the customers which you are going to satisfy their needs. But you need to think about who are the most important customers? What is the most important customer group for me? Which ones will I prioritize, listen more to when I hear about their demands, etc.? And of course you will serve a much broader audience than those customers, but you need to pin it down on which customers are you going to prioritize? And based on that, also you have to do the winning proposition. And that is what you do better or different than your competitors, which will also give you a great customer value and the higher profitability than your competitors. That is the core of creating a strategy. Defining the customers and finding your winning proposition.
And then you move on with aligning the organization. You need to make sure that you can carry on the continued work and get that in place, and then you have the implementation part. And then you need to revisit this at least every year to see that you’re on track. One thing that you need to remember here is that when you form that strategy, you will always have some assumptions on the different conditions that you base it on. And some of this might not be 100 percent correct, or there might be changing due to different reasons. Could be political reasons, technological reasons, things like that. So you don’t have the complete picture when you’re starting, when you’re creating your strategy. There’s always some assumption into this. And this of course means that you need to be able to adjust a little bit along the road. And for doing that, then you need to make sure that you have all the leaders in the organization with you so they are driving towards the strategy implementation and are also able to do smaller adjustments but still aiming at the same goal that you had in the strategy.
And that is coming into the step then where you need to connect strategy and leadership, which most of the time is not being done. We talk about the PDCA cycle that you see here and forget about the other part. But I would like to move on here and talk about the leadership in the change, which is also a cycle of four steps. Beginning with that you, as a leader, and each leader actually needs to gain some insights for themselves. That, so to say, corresponds to the analysis phase for creating a strategy. But here now you’re looking on you as a leader, thinking about what are your strengths, what are your weaknesses, what are your guiding principles in life, your values that you have in life? Once you have been doing that, you need to translate these insights into priorities and an action plan for you as a leader, how you will be working, how you will be developing. And then, in the third step here, when you create the leadership credo, here you integrate your personal values and leadership philosophy with the priorities that were set up in the strategy. So you show by your leadership credo that you, why you’re the right person to lead this change, why you’re the right person to participate in this change when we implement the new strategy. And that will create both a commitment from you as a leader, but it also will create the confidence from the staff that they know that you have the qualities that are needed in this situation at our company or organization right now, and you will be able to lead together with us then and implement the new strategy.
And then you go on with implementation and work according this support. So you can see that you have the connections here between, on the left hand side here, you see the strategy cycle, on the right hand side you see the leadership cycle. So you see you have the connections between them. So you take the strategy, you take the winning proposition that comes out, you take that into your leadership credo, and connect what are your strengths, what are your values and then driving forces that will check with the challenges that you have in implementing the strategy and the winning proposition. You also take some information from the line in the organization when it comes to how will be working, etc. You can that also into your leadership credo. And once you have your leadership credo, you will feed that back into the organization and during the implementation you will be basing your leadership on this credo that you have.
So by this, then, you’re able to define a strategy, but you’re also able to connect the strategy into each leader in the organization, starting with the management team and going down to make sure that every leader is aligned with the strategy and are working toward the strategy. So by this you get a very good commitment and you get a very good driving force. Not only become a top down approach, it will be spread out in the whole organization. And this has been working well when I’ve been working with this, that you take these extra steps, so to say, that offer great success in the strategy. You also make sure that it will be, it will come into the leadership in the organization.
So that’s the things I wanted to share. The important with having the right starting point when you create a strategy, you create the strategy, and then you connect into the leadership in the organization. And by that you have a great way of being successful in strategy creation and implementation.
Founder and Managing Director at See & Do AB