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Highlights of The Association for Strategic Planning's 2004 conference, “Strategy in a turbulent world”
Stan Abraham
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Stan Abraham, (2005),"Highlights of The Association for Strategic Planning's 2004 conference, “Strategy in a turbulent world”", Strategy &
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Conference report
Highlights of The Association for Strategic
Planning’s 2004 conference, ‘‘Strategy in a
turbulent world’’
Stan Abraham

The Association for Strategic Planning plans Dwight Allen, Deloitte Research – the world maintain that capitalism and
to hold its fifth annual conference in Los ‘‘Globalization at risk: why your open markets are the best means for
Angeles in November 2005 strategy should allow for a divided achieving economic success and
(www.strategyplus.org). Stan Abraham, a and disorderly world’’ raising a country’s standard of living;
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Strategy & Leadership Contributing Editor, is the spread of democracy promotes


professor of strategy and entrepreneurship Most international or global strategists
international harmony because
at California State Polytechnic University, focus on adapting in the short-term to
democracies do not go to war with
Pomona (scabraham@csupomona.edu). conditions in the global arena and give
each other; and technological
less attention to how to strategize in an
advances, especially involving media
environment characterized by
and communications, foster
discontinuous changes. To help global
cross-border linkages. The big
strategists prepare for discontinuity,
questions, even for proponents of
Dwight Allen forcefully made two
globalization, are whether such a
points:
scenario will continue and for how long.
1. Equally qualified experts and
The contrary view – dubbed
prognosticators have diametrically
‘‘deglobalization’’ – and put forward by
opposed expectations of two
different futures – increasing equally prominent authorities, fears that
globalization or deglobalization. So, an integrated global economy may
great uncertainty exists as to how never be realized, that patterns of
international or global trade might cooperation are eroding, giving way to
develop. new frictions, and that the world order
we have become used to is beginning
2. Faced with such uncertainty, to crumble. In this view, the world is
strategists should undertake divided into opposing camps with the
scenario planning to develop possibility of conflict between them,
flexible strategies that can be even though within each camp there
implemented in a variety of futures. could be free trade, free markets, and
compatible business practices.
Globalization vs deglobalization Examples of such frictions include
differences between the US and EU
Over the last ten years, many writers
over antitrust law and use of customer
and observers of the international
data, and differences between the US,
scene have been saying that national
EU, and Asia over standards for
borders and boundaries are fading in
financial disclosure and corporate
significance, that world commerce and
governance.
global trade are here to stay, and that
market forces are in many cases In the energy sector, for example, the
Jim Wilson, Managing Director at Claremont usurping national-government power in ‘‘globalization’’ view is that the
Strategy Center, and Soren Eilertsen, Managing
Director at Kollner Group, Inc. organized and the spread of free flows of information, market allocates available fuel and
chaired the conference. goods, and people. Leaders around funds, whereas the ‘‘deglobalization’’

DOI 10.1108/10878570510608068 VOL. 33 NO. 4 2005, pp. 53-57, Emerald Group Publishing Limited, ISSN 1087-8572 j STRATEGY & LEADERSHIP j PAGE 53
view says that governments really between the US and the EU. For each people, the appropriate organizational
decide who gets what. Industrial scenario, strategists should come up structure, cultural discipline, and
nations (Western Europe, North with an optimal strategy. Common or strategic planning – the strategic
America, Japan, Korea, Australia, and ‘‘core elements’’ among the strategies process that takes you from where you
New Zealand) are not the only ones can be planned for, leaving only are to where you want to be. But for
who need more energy for electricity ‘‘contingent elements,’’ those that are most nonprofits, strategic planning as it
and cars; they must share energy different for each strategy, to be is done in the corporate sector takes
resources with developing nations accounted for. Companies can then too much time and money. Instead,
(Brazil, China, India, Indonesia, and the make a limited investment in a strategy nonprofits need more analytical tools
Middle East). In all major economies, – such as by acquiring facilities or land and better strategic thinking and
including China, demand for oil will with options to develop, or a joint execution.
increasingly outstrip supply to the year venture with options to increase or
2030, forcing them to depend heavily decrease participation. If conditions Peter Bershatsky, Chasm Group –
on imported energy. Producing and change that jeopardize the strategy, it ‘‘Managing innovation: strategy for
transporting this needed energy will be should be curtailed or abandoned; if turbulent times’’
costly, not only in economic measures, conditions continue to favor the Beginning with an adaptation of the
but also in terms of the resources strategy, the initial investment can be industry-lifecycle model in Geoffrey
needed to safeguard supplies from increased or options exercised. Moore’s book, Crossing the Chasm,
violence perpetrated by terrorists or summarized in Table I, Peter
rogue nations. Given this growing David La Piana, founder and
Bershatsky focused on what to do once
tension between oil demand and an president of La Piana Associates,
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the ‘‘chasm’’ between early adopters


insecure supply, the incidence of and coauthor of Play to Win: The and the early majority had been
conflict over vital resources and Nonprofit Guide to Competitive crossed. In other words, using less
materials is expected to grow (Klare, Strategy, Jossey-Bass, 2004 –
technical terms, once the market
2001). ‘‘Nonprofit organizations’’ begins to mature, how do you innovate?
Competition among the major powers Nonprofits are growing very rapidly in
Innovation could take one of six forms –
tends to undercut international number and significance in society.
line-extension and new-product
cooperation; in particular, US policy is Between 1940 and 1989, about 2,000
innovation, marketing innovation,
dividing the world and promoting new nonprofits came into being a year;
experiential innovation, process
conflict and opposition (‘‘US vs the since then, the rate has shot up to an
innovation, integration innovation, and
rest’’). One of the consequences may average of nearly 100,000 per year.
business-model innovation. And the
be some sort of US-EU cold war and Two reasons for the high growth are the
proper goal of innovation is not just
tensions rising to dangerous levels growing need that nonprofits fill in
simple return on investment; instead,
between the US and its old friends in society and the low entry barriers that
the objective should be to continue
South Korea, Europe, Japan, Southeast exist – little regulation, low capital
achieving return on investment over
Asia, and Latin America (Prestowitz, requirements, and grassroots,
time to increase shareholder value.
2003). The EU, in fact, is growing cause-based movements. About 80
What enables a return to be achieved
stronger and more integrated, and is percent of nonprofits have neither a
year after year? Increasing one’s
becoming a new center of global formal budget nor professional staff.
competitive advantage. Figure 1 shows
power, even forming its own military Nonprofits compete in four areas – the two components of competitive
arm. Forces pushing towards customers, people (staff, board, and advantage – gap and cap. ‘‘Gap’’ (the
deglobalization warrant attention from volunteers), sources of money to fund size of the returns or advantage) results
strategists, particularly because it is a programs, and for public attention from new product introductions, lower
less widely held view. Increasing through the media. In each of these prices, strategic alliances to add value,
protectionism will strain cross-border areas, competition is increasingly and superior customer service; it leads
commerce and, within domestic intense. First, resources are limited – to bargaining power over customers.
markets, look for monopoly franchises more nonprofits are competing for ‘‘Cap’’ (the competitive-advantage
and government ownership to grow. fewer sources of funding. Second, period over which the return or
nonprofits cannot compete effectively advantage endures) results from
Undertake scenario-based strategic without a unique and worthwhile market-share dominance, a
planning mission (cause or purpose) and good successfully defended patent position,
people (staff, board, and volunteers) to and an established brand; it leads to
Strategists should therefore explore
achieve it. category power.
different future scenarios, three
examples of which are the growing Nonprofits’ challenges mirror those of Market disruptions represent
power of Asian countries, increasing companies in the private sector – they fundamental rearrangements of
protectionism, and increasing turmoil need inspired leadership, effective category power, for example:

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PAGE 54 STRATEGY & LEADERSHIP VOL. 33 NO. 4 2005
Table I Industry lifecycle model
Lifecycle stage Adapted to technology adoption Type of customer Customer frame

Emerging Innovators and early adopters ‘‘Techies’’ and ‘‘Visionaries’’ Let’s try it! Let’s get ahead of the herd!
Growth Early majority ‘‘Pragmatists’’ Stick with the herd!
Mature Late majority ‘‘Conservatives’’ Hold on!
Declining Laggards ‘‘Skeptics’’ No way!

Note: Adapted from Moore (1999)

1. How we see determines what we


Figure 1 The two components of competitive advantage
see – try to be open-minded,
because articulating the future is
difficult.
2. Make sense of the information that is
not synthesized – use it to tell stories
about the future; perhaps some of
the information is truly important.
3. Imagine the unthinkable – find weak
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signals, go far beyond the familiar.


4. Handle strategic issues strategically
– reveal uncertainty, do not try to
reduce it.
B New user disruptions: filmmakers In the end, a business must determine 5. Make your assumptions explicit – do
Kodak and Fuji are experiencing for itself how vulnerable it is to not mistake the unexplored territory
disruptions in digital photography fundamental marketplace changes, for your map. Your mental model
and established record labels are and the degree to which it can exploit may differ from everyone else’s.
being challenged by on-line digital such changes. It must also understand Panelists in this session were asked to
music services. the power of the category (segment) it
focus on their respective industry and
Low-cost disruptions: long is in, and whether it is waxing or
B macro-environment (especially
established airlines and travel waning. A company is no more
turbulent environments), where typically
agencies are experiencing powerful than the category it operates
firms have little or no influence to control
disruptions from Southwest Airlines, in, but it should try to dominate its
them. Brief summaries of two of the
category. The appropriate question is,
JetBlue, and ATA in the US and presentations follow.
‘‘does the company have the right
RyanAir in Europe.
strategy to give it a sustainable
B Value-chain disruptions: mega retail competitive advantage?’’ Scott Dolan
stores such as Wal-Mart and Home
Depot are disrupting traditional United Airlines faces the following
value chains and affecting scores of challenges:
Morning Executive Panel, ‘‘Imagine
individual product suppliers. the future,’’ moderated by Doug B uncompetitive cost structure – has
Randall, Co-Leader of the reduced annual costs by $5 billion,
When a business in the declining phase
Consulting Practice, Global needs to reduce them a further $2
of a particular technology (‘‘old
Business Network[1] billion;
paradigm’’), faces a decision of when
to abandon it in favor of the new one The problem for executives today is B excess capacity in the domestic
(‘‘new paradigm’’) Bershatsky says it that, in an environment that is changing market – reduces profitability;
has reached the ‘‘challenge of the fault rapidly, they are being asked to make B vulnerable to terrorist and other
line.’’ The danger is twofold: more decisions quicker. How to do it? disruptions – greatly harmed by
abandoning too late means Most executives are good at either attacks of 9/11;
relinquishing the new market to thinking about the future or making
competitors, or abandoning too soon
B uncertain fuel prices – has a
short-term operational decisions. Few
risks premature adoption of technology, significant impact on profitability;
can do – or are comfortable doing –
before the market has sufficiently both. In preparing for the future, and
developed. Randall made the following five points: B uncertain regulatory environment.

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VOL. 33 NO. 4 2005 STRATEGY & LEADERSHIP PAGE 55
United is moving to address these In general, producers have not yet year; homes with two would purchase
challenges in the following ways: figured out how to compete in the new 17 per year, and those with three or
technological/Internet age. more purchase 22 per year. Certainly,
B leveraged the protection of the
Government appears unable to movie purchases follow purchases of
bankruptcy process – achieved
‘‘control the genie.’’ Consolidation and DVD players, which have now become
significant savings and flexibility
cost cutting continue and industry quite affordable. A third change is
through work rule, scope, and wage players are less willing to take risks. looming on the horizon – the shift to
and productivity changes; Consumers are changing in terms of HDTV. If that transition is managed well,
B leveraging TED (a low-cost their expectations, desires, and it can add a lot of value to companies in
subsidiary airline), United Express, perceptions of value. Early home entertainment.
Cargo, MRO (maintenance, repair, experimenters lead the market, which
Competition also requires a broader
and overhaul), and STAR alliance; still needs to be educated. Most paths
focus than just being aware of your
currently lead to a subscription model,
B moving assets to foreign countries – rivals; for example, anything anyone
thanks to the internet allowing
less competitive markets; does in their leisure time competes with
consumers to dictate how the industry
the time people spend watching more
B implementing plans for increased changes.
DVD movies. Our long-term planning
security;
Afternoon Executive Panel, horizon is no more than five years
B lowering fuel costs – hedging future because the landscape changes so
‘‘Strategy execution in turbulent
prices and implementing fuel-saving rapidly. Strategic planning is more
times,’’ moderated by Iain
techniques; and important than ever, especially the
Somerville, Founder and Managing
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B lobbying Washington, DC – Partner, Somerville and Associates external focus part for a
educating legislators about the consumer-driven business like ours –
The purpose of this session was to give monitoring and understanding the
airline industry.
examples of strategic-planning changing environment. As a reality
The intent is to transform United into a practices that produce results in check, one must know the critical
flexible and cost-focused organization today’s often difficult business climate. issues the firm faces, develop ways of
that can respond quickly to all unknown Summaries of four of the five addressing them, then develop action
challenges. presentations follow. plans to meet the goals that have been
set – complete with budgets, roles,
Amy Brandt, CEO and President, WMC
responsibilities, etc. As you implement
Jay Boberg Mortgage Corp. (a GE Consumer
the plans, feedback on how you are
Finance Company)
The music business has been marked doing is important for staying on track;
by consolidation in both labels and In 2000, WMC Mortgage Corp.’s discovering what works and what does
distribution. Four companies – Warner business model changed to be a 100 not is key to doing it better the next
Music Group, Sony/BMG, Universal, percent B2B internet lender with all its time. And above all, keep efforts
and EMI – now control the underwriting automated balanced between achieving
recorded-music industry and one (WMCDirect.com). In 2004, it passed short-term and long-term results.
player, Clear Channel, now dominates $18 billion in assets and was acquired
music broadcasting. Turbulence in the by GE. In the midst of rising interest Craig Levra, Chairman and CEO, Sport
music industry is characterized by: rates, increasing competition, and Chalet, Inc.
increasing consumer choices, WMC is
B digitization of content; expanding its product offerings and In years past, Sports Chalet’s planning
B inability to protect copyright; strategic marketing efforts, expanding revolved around the annual budgeting
its site, increasing its sales force, and process and was therefore tactical and
B peer-to-peer file sharing; not strategic. A company that had gone
providing alternative channel initiatives.
B internet as a means of discovery, public in 1962, it had a five-year
e.g. Yahoo music and videos will find Tony Rodriguez, Senior VP, Warner technology plan, but little else. In fact, it
other selections for you; Home Video wanted to double sales over a five-year
period, and use a more formalized
B satellite radio stations The entertainment business is an
process, but did not know how to go
(narrow-casting); industry undergoing constant change.
about it. In April 2003, it selected a book
Two changes have had profound
B internet radio individualized through on strategic planning (Bradford and
effects: the VHS to DVD shift affected
profiling; and Duncan, 2000) and a moderator, and
quality and economics, and the
began changing its planning process.
B physical distribution no longer purchase vs rental trend. We found that
critical for access to content by households with one DVD player would The company developed three
consumers. purchase on average one DVD movie a responses to its strategic challenges:

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PAGE 56 STRATEGY & LEADERSHIP VOL. 33 NO. 4 2005
1. Be in one-store markets (i.e. the only happening in the industry was a major continued growing as it was spun off in
sporting-good store in that area). event for us. We thought, if the market is 2002, and then was later acquired.’’
switching from pagers to cellular, let’s
2. Remodel existing stores and
go sell some cellular. At that time,
relocate some of them. Note
anyone who wanted a cell phone and
3. Accelerate the store-expansion had credit could get one. But our 1. Panelists included Scott Dolan, Senior
program. customers – our dealers – weren’t VP, United Airlines and President,
located in affluent areas, so all their United Cargo, Jay Boberg, former
Already, the second quarter’s results
customers, who were getting President, MCA Records and
(the first since implementing the new
increasingly younger, didn’t have ready Cofounder, IRS Records, Alice J. Taylor,
plan) are superior to the same quarter a
credit. Many of these new customers Director, Strategy & Partnering,
year ago, so we seem to be on the right
were demanding prepaid phones. In Homeland Security and Services Group,
track.
fact, over the next five years, fully 50-60 The Boeing Company, Patty DeDominic,
Cliff Tompkins, President, Prepaid percent of new subscribers wanted CEO, The PDQ Careers Group and Vice
Concepts, Inc prepaid service. So what we did was to Chair of Strategic Planning, Board of
capitalize on this essentially ‘‘cash’’ Directors, the Jane Goodall Institute,
In 2001, Cliff Tompkins was running a
business – from the end-user to the and Rohit K. Shukla, Founder and CEO,
paging company, and prospects LARTA (Los Angeles Regional
merchant selling the cards to the
looked good because his three other Technology Alliance).
company that supplied the prepaid
competitors had just declared
cards. We had two skill sets –
bankruptcy, clearing the way for him to
electronic systems and knowing how to
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make some profits. But wait! Could it be References


collect money. Taking these in account
that his company was next in line for
we looked at the world about three Bradford, R.W. and Duncan, J.P. (2000),
bankruptcy? Was something wrong
degrees ‘‘off center’’ (one way of Simplified Strategic Planning: A No-
with this industry? So he sat down with
describing the birth of a new business Nonsense Guide for Busy People Who Want
his managers for two days of strategic
model). The actual cards had no value, Results Fast, Chandler House Press, New
thinking – exploring how the company York, NY.
but in the magnetic stripe was a PIN
could make the best use of its current
number that had value. So when the Klare, M.T. (2001), Resource Wars: The New
resources and skill sets (an
customer bought more prepaid phone Landscape of Global Conflict, Henry Holt,
FCC-licensed wireless carrier,
time, say for $50, the transaction was New York, NY.
relationships with dealers) and trying to
electronic – the user’s account was
figure out how it got into its present fix. Moore, G. (1999), Crossing the Chasm:
credited with $50 and a transfer was
Marketing and Selling High-Tech Products to
Tompkins recalls: ‘‘Paging was a made between the merchant and PCI,
Mainstream Customers, HarperBusiness,
commodity, prices were plummeting, which is how PCI’s business model
New York, NY.
and fewer pagers were being sold worked. Being a cash business,
because people really preferred to talk. accounts receivable and bad-debt Prestowitz, C. (2003), Rogue Nation:
Even the prices of cell phones were expenses disappeared. The business American Unilateralism and the Failure of
falling. Focusing on what was grew rapidly for the rest of 2001, Good Intentions, Basic Books, New York, NY.

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VOL. 33 NO. 4 2005 STRATEGY & LEADERSHIP PAGE 57