Strategic Intuition – by Kunaal Arya

I have spoken about Robert Greene before. The author of 48 Laws of Power, and 33 Strategies of War. He recently released an e-book titled ‘The Descent of Power – Thoughts on The Great Transformation and How to Master it.” As a short summary, he looks at a major transformation he sees in the world economy. Similar the agriculture, industrial, and internet revolutions. Discussing the two major recessions in such a short period (Internet bust, housing crisis), he finds that there is a major underlying shift in how businesses operate.

“Businesses that had been dependent on times of prosperity, that created products that had no deep connection to consumers and needed a lot of marketing to be sold, these are wiped out by the tsunami, never to return. Large companies that had used their size as tremendous leverage in the marketplace find that it is difficult to adapt; they are dependent on their scale of mass. They are like dinosaurs—big and lumbering, they will continue to make noise but they are doomed to disappear within a decade or two.

Other companies, however, which had foreseen the tremendous shift going on and had structured their business accordingly, they are poised to not only survive the tsunami, but to thrive. I am referring to a company like Google, which I will talk about later on, but there other examples as well. Last and most important, with all the destruction that is going on, there is finally space for new businesses to spring up, based on a model that fits the times. A thousand flowers can now bloom.”

He has studied companies such as Google and Zara, and sees that they have the capacity to handle change. He creates a parallel with Napolean Bonaparte, and his military strategy where instead of being a large bureaucratic army, he create smaller mobile units, where they could change direction and plans easier. Google and Zara have incorporated this into their business strategy. Zara can easily to adjust to new fashion trends. And Google has a culture developed around being able to develop products faster and more efficiently, compared to companies such as Microsoft, which have so many levels of bureaucracy that creating a product has to be approved by many levels of management, and has to meet requirements to even go into development. In comparison, Google, and many other companies following their model lets their employees spend 20% of their time working on any project they choose to, and they release products and services in beta form so that they can continually learn and get feedback from customers and continue to develop the product for years until it’s ready for an official release. This allows them to create a large breadth of products and services, and have a business model that will always stay a few steps ahead of their competitors.

So, how can companies adopt this strategy? Looking at other companies, there must also be different ways to incorporate change into their culture. Of course a strategy like Google’s and Zara’s can take advantage of change. But how about larger, more bureaucratic organizations? Can they adapt for change? Can they change their business formation strategy to easily adapt to change? I have a few theories in mind. It can take years to put that into place.

There are many examples of companies failing because they weren’t able to quickly change to new market conditions or consumer preferences. Nortel failed because they couldn’t adapt quick enough to the digital revolution. GM and Chrysler failed because they couldn’t adapt to new customer preferences fast enough, while Ford was able to. This could also be industry related. The radio industry declined when cassettes and CDs came into the market, and the overall music industry is suffering as MP3s and piracy is increasing. The magazine and newspaper industry is declining as well with the faster flow of information from the internet. Except there are ways to succeed around this. Instead of fighting these changes, there are ways to embrace them, and prepare yourself for them. But that has to be done by being able to quickly change your strategy.

Now how can a company easily change their direction and strategy?

Implement a strategy like Google and Zara as described above. This can be very difficult as companies already have their strategies in place. It can take years to implement a strategy like that. You would have to start with designing an organization structure which allows for a faster ability to change. Then design a corporate mission that invokes change throughout the organization, where any employees can have the responsibility to change. And then implementing this mission statement throughout the organization with full cooperation from managers. This can take years to fully implement. Therefore it is still possible for companies to restructure if it isn’t too late already.

Have an existing strong company culture. The best example I can think of this is Four Seasons. They treat their employees well, and all their employees go out of their way to go above and beyond their job requirements. If the company needs to make a drastic change, their employees will embrace it and take any steps to achieve what’s needed.

Company culture is crucial, but company culture must also come with a corporate structure that is quick to change. With a corporate structure open to change, then the company can embrace change, and be mobile and move with the market, and take advantage of opportunities. Quick change is crucial to a company. When we’ve had two recessions in a 7 year timeline, the industry is moving faster, and there is something deeper going on. Companies need to be prepared for change when times like these come, and through change can survive these, as the giants who don’t change their structures will fade away.