George Stalk, a renowned strategist and senior partner of The Boston Consulting Group, says too many leaders are suffering from information overload. "I can tell a client is in trouble when the senior executives don't even have time to sit down and talk to me about the business," Stalk says. "They don't even have time to think." Presumably, those same leaders don't have time to read, either. That's why Stalk set out to write a "readable strategy book." Weighing in at a mere 116 pages, 5 Future Strategies You Need Right Now (Harvard Business Press) offers Stalk's insights on what will be the real "game changers" in the coming years. The book, which is part of Harvard Business School's "Memo to the CEO" series, delivers a quick read designed to help executives take a second look at their current business strategies. Stalk sat down with Joe Kornik, Consulting magazine's editor-in-chief, to discuss the book. Consulting: How did this book come about?
Stalk: Most CEOs and senior executives don't read anymore. They don't have the time. I think many business books are just too long. They have to get shorter; they have to get more interesting; they have to be a faster read, and they have to have clearer lessons. I hope I've done that with this book. I think this is something that a CEO can pick up and get some sound business insight pretty quickly.
Consulting: What about the topic? Why five future strategies?
Stalk: We actually identified a lot more, but we settled on just five because we thought these would happen sooner rather than later. These strategies are probably all about five years off. One thing we've observed at BCG is by the time a future strategy reaches the Wall Street Journal or BusinessWeek, it's been out for a while already. I tried to write a book that will be five years ahead of its time, one that outlines interesting and new strategies that haven't made the front pages yet, but will in the future.
Consulting: You touch on many areas in the book—supply chain, pricing, economies of scale, complexity and infinite bandwidth. Which of the five strategies do you feel is the most profound?
Stalk: Well, I think the one the world is least ready to deal with is infinite bandwidth and what that means to any business. Imagine a world where you can have any information you want—in any form you want it, any time you want it, anywhere you want it—all at zero cost. What would that world be like? It will be very different from the world we're in today. The reason I think it is the most profound is because we did an internal project at BCG a few years ago where we interviewed 60 leaders from around the world—30 were equipments suppliers, such as Cisco and Lucent, and 30 were end-users, such as GE and Progressive. There were only two companies that understood the full potential of where infinite bandwidth could take them. The rest were in the early stages of recognizing that increased bandwidth could trim costs, but no executive was really very adventurous in terms of pushing strategy around bandwidth. The equipment companies were basically trying to sell their nail and their hammer, but no one really saw the big picture. In the case of the end-user companies, it was an issue of the technology changing so fast that most decided to sit it out. The big exceptions were Progressive and GE, which both decided to make the investment. Progressive can literally sell car insurance by the minute, and GE Healthcare can make it possible for you to have some obscure medical condition in Moose Jaw, Canada, and get it evaluated at the University of Toronto medical school. Here's another example: I'm working with a company right now called Intuitive Surgical that makes robotic technology for minimally invasive surgery. With this technology, doctors actually did open-heart surgery on a patient in Paris while in Sunnyvale, Calif. These technology advances were made possible by bandwidth.
Consulting: Why do you think so many leaders aren't embracing the concept of infinite bandwidth?
Stalk: It's difficult to rethink a business model when one is still operating in the current business model. There's something we looked at called "strategic dislocations" in the U.S. economy since the 1800s, everything from electricity to railroads to the emergence of the credit card and big box retailer. In every case, these dislocations changed the way business was done, and there were clear winners and losers. So, we tried to get companies to look for strategic dislocations in their own businesses. Most CEOs said, "That's really interesting, but I'm not looking for trouble." We shelved the concept. Infinite bandwidth is a good example of a dislocation because it requires such a major rethinking of how your business would operate in a new world.
Consulting: Some strategies—Embracing Complexity and Sidestepping Economies of Scale—seem counterintuitive. Is that intentional?
Stalk: Well, I think the history of BCG is to sort of swim against the flow. Just because the whole world is saying something doesn't mean it's right for everybody and every business. In terms of complexity, what I'm saying is that there are companies that can demonstrate a revenue lift if you can make complexity friendly and meaningful to your customers. The same is true for economies of scale. In certain businesses, being fast is better than being big. If you don't know if the product is going to sell, don't build a world-class facility to develop it. You're better off in the market with a high-cost product and if it works, then make it low cost. If I have a great idea, I'm better off learning if that idea is valuable in one year instead of five. And if the business is not valuable, I need to get out quickly. In the interim, if I'm running a high-cost business, that's OK. But leaders usually don't think that way. What I'm suggesting is that there are degrees of freedom from conventional wisdom that people haven't considered in their day-to-day strategy. Does pricing have to be set for a year, or four months or even a day? The people at Progressive claim their big competitive advantage is that it can change its pricing faster than all of their competitors. That's a pretty powerful statement. I hope this book is an opportunity for companies to stop and ask if they've missed something. I think it's an opportunity to go back and revisit their strategy to look for something they haven't considered.
Consulting: How can consultants jump-start that type of thinking for a client?
Stalk: The last chapter focuses on how companies can discover new strategies on their own, but I think consultants play a pollinating role in all of this. There's a lot to learn about your business by looking at other business and other industries. Consultants can connect people from one industry to another. I think that's one of the responsibilities of consultants, and we're in a very unique position to be able to do that.
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