The French medievalist, Marc Bloch, pioneered an approach to history that revered facts not theories, delved into the behaviors and mindsets that turned the gears of cause and effect, and did not shy from revealing instances where sufficient facts lacked for drawing firm conclusions. He penned a volume on France's experience in the Second World War, Strange Defeat, before a German firing squad executed him for his role in the Resistance. His critique of France's military and political leadership traced the country's defeat to a failure of ideas, or more precisely one idea. Armaments and infrastructure (the infamous Maginot Line) were not principally to blame for France's dramatic defeat. Certainly, France's soldiery was equal to its neighbor's. The root was a paralysis engendered by the military leadership's inability to appreciate the fundamental strategic implications of speed.
Digitization is paralyzing many strategy consultants in much the same way. Strategy consultants built their services in direct response to the longstanding client critique that they produce uninspired or infeasible strategies at exceptionally high cost. The name of the game for making strategy relevant is securing client commitment to execute across the leadership hierarchy, which consultants do by producing irrefutable economic evidence and then installing management systems designed to transform commitments into actions. That game works so long as the objective of strategy is to make positional bets (where to play and how to win). Digitization, however, changes the strategy game by simultaneously making markets less predictable and allowing companies to execute much faster against more provisional bets. Client commitment is no longer the endgame, but many strategy consultants continue to chase perfect foresight to back up bigger bets, thereby closing off rather than opening up strategic options.
Bloch pointed out that the failure to appreciate the speed of mechanized warfare not only preserved several outdated assumptions about the drivers of strategic advantage, but also contributed to a singular lack of imagination on the part of France's commanders. That, in turn, blinded them to the lessons they might have learned from Germany's invasion of Poland the year before and compounded the effect of initial setbacks by making it exceedingly difficult for those commanders to learn and react. While there were instances of tactical experimentation with new ways of fighting, absent a coherent strategic vision they stayed isolated.
"When one has become too much fuddled by words and theories," Bloch reasoned, "the only safe guide is a sense of the facts, a power to make decisions, and an ability to improvise." Consultants are heeding this advice by fostering experimentation with new ways of working—everywhere, including clients' back office functions, supply chain operations, and marketing and sales teams. But those tactical wins are not adding up to strategic advantage for their clients, as various studies continue to report as many as 90 percent of digital transformation programs fail. Tactical experimentation cannot alone fill a strategic gap.
The objective of strategy today is not to pick winning bets but rather to make the organization faster. That makes planning more about continuously managing change and less about one-off moves. It is less about problem solving and more about a transformation journey. Some consultants are innovating with design thinking for uncovering uncommon facts drawn from unfamiliar sectors or bots and artificial intelligence for automating and accelerating the digestion of much larger volumes of facts.
Bloch's analysis also revealed the way in which a change in the idea animating strategy carried over to the assets enlisted to carry it out. Mechanized warfare elevated the importance of tanks and airplanes over that of concrete. Differentiation in the era of digitization issues less from tangible assets such as companies, structures, and equipment, and more from intangibles such as operating models, ways of working, and other types of intellectual property. That makes the classic linkage between strategy and M&A consulting less relevant and puts a premium on consultants' ability to help their clients understand the value of their portfolio. But those intangibles are messy: tough to measure and acquire.
What will not change is that strategy, whether in business or war, will always be a leadership problem. Perhaps the biggest barrier impeding strategy consultants from regaining their relevance is changing client leaderships' mindset from prioritizing their ability to pick winning bets and drive towards them to the ability to accelerate the speed at which their organization can learn and adapt.
Nathan Simon is a Senior Director of Research for ALM Intelligence
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