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What Strategic Leaders Know that Others Don't: They are not stuck in the Current Business Model

Strategic leaders know the biggest idea in strategy is about being strongest at the decisive point. It's about finding out what really matters (what's decisive) and putting your horsepower behind that point. The analogy is of a sharp knife that cuts through easily or a magnifying glass that focuses the warmth of the sun into the heat of fire.

The first of a series on what Strategic Leaders know

Not all strategic positions are equal. Some lead to success and profit. Others lead to failure and loss.

One of the main responsibilities of a Chief Executive is to position his or her organisation so that it leads to success and profit. Sometimes they see this as their sole responsibility, which I guess is okay as long as they happen to be strategic geniuses. Other times they see their role as making it happen. They learn how to get the best advice and to listen closely to their customers, staff and advisors.

This is the first in a series of Strategic Snippets designed to set your organisation on the path to success and profit.

Strategic leaders understand their business model

Strategic leaders have the wisdom to question and change the business model that nearly everyone else follows. They understand that the current business model is outdated. It has been around for over 100 years. It no longer fits the world we live in.

The current model is based on a number of fallacies. It assumes the business world is based on mechanical type thinking and engineering principles. This may be partly true for highly industrialised industries but it does not fit information and service industries that are based on organic type thinking and emergent principles.

The basic aim of the current model is risk reduction and control. It achieves this partly through fear and isolation. Today, competitive advantage for information and service industries lives in flexibility and innovation.

The current model assumes that more control leads to more order. Today we know that more control leads to less order.

The current model values standardised products and people that conform. Information and service industries value personalised products and service and people who know their genius factor and use it.

Its structures are hierarchies and organisation charts. Today we work in more flexible ways in networks of living systems.

The current model assumes that top-down management is the natural order. Today science is showing that collaboration and self-management are at least as natural. We need top-down and bottom-up management, according to the circumstances.

Consequences of using the current business model

The current business model leads to unfortunate consequences.

These include unnecessary internal competition and politics with managers fighting each other over power and resources. Today we need far more collaboration and openness so resources can move quickly to meet customer needs. This means everyone with a 'line-of-sight' to their customer and the removal of all barriers.

The current model leads to silos of power where people hoard capital and talent even when they don't need it. Today silos of specialisation are too slow and inflexible. We need people who are able to move quickly to where the customer is.

It leads to a lack of passion in people who feel stuck, controlled and managed. Today we need ideas and creativity, and these come from people who feel free, liberated and well led.

In the worst cases people feel less than human and even abused by the current system. Research shows that 60% of employees feel disengaged. Today we know that every person is unique. We need 100% of their humanness, body, head, heart and soul. We need their genius at work to make our organisations stand out.

Business model innovation is a major opportunity

Business model innovation is a major opportunity. I agree with Gary Hamel who wrote in the Harvard Business Review ((February 2006) that more money is to be made out of business model innovation than out of innovation of products.

Examples of business model innovation that have succeeded include, Google who invented "pull systems", Visa International that invented "virtual organisations" and Wikipedia that invented "open source."

Hamel says it's strange how much money organisations spend on product research and development and how little they spend on business model innovation.

If you have any concerns that you may be inappropriately stuck in the current business model please let me know because there is no way you can be successful or profitable if you are.

Warmest wishes

Bruce Holland
Virtual Group Business Consultants
Phone 04 5700 727, Fax 04 5700 427, 021 620 456, Skype Bruce.Holland
Web site: http://www.virtual.co.nz

Bruce helps large mature organisations be more focused, fast and flexible. Places where people have more depth, connection and meaning. "Liberating the Human spirit at work"

Bruce helps large mature organisations be more focused, fast and flexible. Places where people have more depth, connection and meaning. He is one of New Zealand's most experienced change agents and is the founder of Virtual Group Business Consultants Limited.

"Liberating the Human spirit at work."

 
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