The Power of Great Strategy by Dr. Eric Flamholtz

LOS ANGELES - Sept. 13, 2013 - PRLog -- Hyper Successful Strategy^SM

         Lessons from the African Savannah

         Eric G. Flamholtz, Phd

Dr. Eric Flamholtz, on the anniversary of Management Systems' 36th year in business shares some amazing insights on Hyper Successful Strategy^SM.

With a nod of respect to the late Gertrude Stein, strategy is not strategy is not strategy! Some strategy is truly outstanding, and other strategy is impotent or even nonsense.¹ And a few achieve what can be termed Hyper Successful Strategy℠.²

Hyper Successful Strategy℠ (or HS2 Strategy) can be defined as any strategy that delivers “very significant differential competitive advantage”. In this context “very significant differential competitive advantage” means a result that is a multiple of at least two times standard performance for the given task. Thus if standard financial performance of a business is 15% ROI, then the criterion of a Hyper Successful Strategy℠ would be to produce a result at least two times standard (average) ROI or at least 30% or more.

Hyper Successful Strategy℠ can be viewed more simply as great strategy. Thus a great strategy is one that delivers a multiple of standard (average) performance. Stated differently, we can think of great strategy as one that crated or leads to hyper successful performance through some competitive advantage. The advantage can be almost anything such as concept (the Starbucks Experience in its Cafés), intellectual property (Amgen’s molecule “Epogen”), a product (Apple’sI-phone) or a network of independent dealerships (i.e., Caterpillar).

At the outset it is important to note that great strategy without execution can render the strategy less valuable or possibly even worthless.²    However, great execution of a poor strategy as a method of achieving superior performance is clearly nonsense.

The next question is: Does Hyper Successful Strategy℠ exist in the real world? The answer is yes, though it is relatively rare, perhaps like White Tigers.

Illustrating the Competitive Value of an HS2 Strategy

To illustrate the existence and value of a Hyper Successful Strategy℠ or HS2 Strategy, we will first examine a lesson from the African Savannah, where strategy and execution are literally life and death matters. In 2009 I traveled to South Africa, Botswana and Zimbabwe on a photo safari. It was purely vacation; but there were business lessons to be learned, if you paid attention.

¹ Gertrude Stein is credited with the statement that “A rose is a rose is a rose.”

² Larry Bossidy and Ram Charan,“Execution: The Discipline of Getting Things Done,” Crown Business, 2012.

In Kruger, a world renowned animal reserve in South Africa that is home to a large number of lions, the rangers introduced us to a lioness that had an unusual distinction. She was a great hunter.

It is an established fact that the big cats such as lions, leopards, and cheetahs are successful in their hunts about 20 to 25% of the time, and fail the remaining 75 to 80% of the time. That is an “execution rate” of 20-25%.

However, the lioness the rangers introduced us to had a staggeringly successful hunt rate of

90%! Why?  Was she unusually fast like Usain Bolt? Actually, no: She was older than the young lionesses that typically do the hunting for their pride. In addition, she was not part of a pride, which is unusual for female lions. It is typically male lions that are pushed out of the pride and can end up as solitary hunters or in what are termed “bachelor” groups. Why was she alone? We never really asked that question, so I don’t really know.

What I do know was that in spite of the fact that she was not a young lioness (and therefore she was not as physically strong or as swift as her younger counterparts or even a member of a hunting team) she was reputedly an extraordinarily successful hunter with a 90% success rate! How did she do that? It was more than simply execution.

She had a Hyper Successful Strategy℠! We were told that the rangers do not typically give names to animals; but, as a special sign of respect, the Rangers gave her the name

”Narula,” (which, we were told, means “orange” in the native African language of the tribe near her hunting grounds). Narula had somehow created a great strategy. Like other lions she knew that all animals needed to get water. Her HS2 Strategy involved hiding in the

bushes near a large water hole and waiting for prey to come by her (see photos). Then she attacked! Her strategy was brilliant: she preserved valuable energy and calories and made the most of her hunting attempts. Other lions hunted near water as well as elsewhere, but Narula exclusively hunted near her water hole!

How did she create or discover that strategy? Is she a mutation with a larger size brain? Or was it an accidental discovery that has become a learned strategy? Regardless, it is a powerful HS2 Strategy that clearly provides a great competitive advantage.

HS2 Strategies in Business Organizations

Business organizations too are capable of developing powerful HS2 Strategies. Strategies that provide significant competitive advantage. Examples of companies that have developed great strategies include well- known companies such as Starbucks, Wal-Mart, and Microsoft. Starbucks and Wal-Mart are probably the best examples of how strategy and execution provides great benefit. For example, Starbucks has become the undisputed leader in its space selling a commodity product.

When asked to explain Starbucks’ extraordinary success, Howard Schultz has stated that he usually surprises people by stating that it is Starbucks’ people who provide its competitive advantage and the reason for their overwhelming success. That is certainly true, but it is not the complete explanation. The real reason for Starbucks success is its culture and culture management, as explained by Howard Behar, who was the head of retail operations during its early years.  As Behar states in the title of his book “It’s Not About the Coffee”, it is Starbuck’s strategic use of its culture and not its product – the coffee, that has made the company what it is.³

Similarly, Wal-Mart sells exactly what K-Mart sells (Colgate toothpaste, Johnson’s baby powder, Allergan lens solution, etc.); but Wal-Mart has surpassed K-Mart by a strategy the emphasized the development of logistic and information systems.

How to Develop a Hyper Successful Strategy^SM

Although it is possible that a flash of genius can lead to the development of a HS2 Strategy, there is a more systematic way to do it. For more than 36 years, we have assisted many companies develop Hyper Successful Strategies^SM (using our proprietary Strategic Planning Methodology) that lead to their becoming leading or dominant companies in their space. For more information see www.mgtsystems.com/strategic-planning- tools.⁴