This article summarises Stephen Bungay’s 2019 article 5 Myths About Strategy published in HBR
Agile companies need a coherent strategy to provide a framework for quick and adaptive decision-making.
An original paper by Stephen Bungay, Truths and Half-Truths, was summarised in a 2019 Harvard Business Review article 5 Myths about Strategy. This article reinforces the need for coherent strategy to provide a framework within businesses enabling them to adapt quickly to changing events.
This is a summary of the original article.
Bungay’s article starts on an ominous note: There are lies, big lies and myths. And myths are the worst of the three…
Whilst evidence can defeat lies, myths are subtle and dangerous because they fool smart individuals and organisations. The 5 myths are:
1. Strategy is about the long-term. The myth is plausible because in some sectors the basis for competition remains unchanged for decades, so long-term strategies seem appropriate, but it’s a myth because change can happen very quickly. A strategy is about business fundamentals: sources of value, the cost to deliver it and competition. Strategy is therefore not about duration, but doing the right things now to shape the future you want.
2. Disruptors change strategy all the time. It might look that way because of the huge investments in relentless technological innovation. But innovation isn’t the same as a change in direction, although it sometimes triggers change. It’s a myth because disruption isn’t the underlying strategy, which is to gain market share. Innovation is a means to get to the end.
3. Competitive advantage is dead. On one hand, competitive advantage may indeed be sustained for a shorter period (one only needs to witness the fate of the ‘giants’ identified in Jim Collins 2001 bestseller Good to Great to understand that!). On the other hand, it’s a myth. Today’s greats (the dominant platform giants: Amazon, Alphabet, Apple, Facebook and Microsoft) have reinforced competitive advantage by using their financial muscle to build multiple barriers to entry and acquiring competitive market entrants.
4. You don’t really need a strategy, you just need to be agile. Agile has such an obvious appeal. Agile firms seem to operate at speed, maintain high operational tempo and appear highly adaptive as the situation changes. But it’s a myth. Agile is a capability, not a strategy. A coherent strategy is about doing the right things and enables agile to succeed by providing a framework for decision-making, a set of guiding principles which can be applied as the situation evolves.
5. You need a digital strategy. This myth is believable. Digitisation seems to be the Holy Grail. With a bewildering range of digital applications, we can be seduced that a digital strategy will enable us to harness them. But it’s also wrong because strategy is holistic. It’s not possible to optimise digital without changing both the sources of customer value and the cost of delivering it.
Bungay concludes that the enduring purpose of strategy is to enable people to take purposeful action when they are under pressure. Business strategy is about creating and maintaining competitive advantage using the capabilities you have or can acquire and being able to spot opportunities arising from unexpected events at the customer interface. He encourages business to Think Deep and Act Fast.
Download Stephen Bungay’s original article
Access the HBR article 5 Myths About Strategy