Leg 3. From Cape Town to Melbourne (II). Crafting Strategy.

eleonoraescalantestrategy 12 Dec 2017 Leave a Comment

Bonjour a Tous. coffee holidays pure wob getty images Hope all is well. The weather continues to be cold in here. It is cold outside!. According to the weather local specialists, we have experienced around 8 Celsius at night yesterday, and that is really cold for us. We have to drink lots of warm tea or coffee. Our topic for today is the Role that a Company´s Resources and Capabilities play as a basis for its strategy.

Eliescalante Leg 3 12122017.jpg

The Resources Analysis and Organizational Capabilities Appraisal are part of the strategy formulation and formation. Strategy formulation and formation are intertwined in between. Professor Henry Mintzberg published a paper called “Crafting Strategy” when I was in my last year of high school (1987), and I still find it outstanding when explaining the topic of today. To Identify the resources and capabilities is the first step in validating a tentative strategic choice among several opportunities in the market. To determine if our organization has the capacity to successfully launch and sell products and services is the key to formulate and form the strategy. But before helping you to identify and appraise its resources and capabilities, I would like to describe what should be strategy formulation and formation. Even though Mintzberg article is quite old, because it was published a long time ago, I found it a treasure metaphor to explain how to formulate and form the strategy, particularly now in these disruptive times.

Artesanias-La-Paz-01 I will utilize a simple example of artisan embroidery art produced and sold by Salvadoran hands in El Salvador. There is a lady called Maria Santana Rivera de Hernandez who has an atelier of handmade artisan products in La Palma, Chalatenango, El Salvador. She has a family business which sells different type of artisan products. Maria Santana Rivera de Hernandez has 40 years of experience.

Artist Fernando Llort Choussy.

She follows the art design school of Fernando Llort Choussy. “To talk about Fernando Llort Choussy is to talk about the image of our country, an artist who is the point of reference for the iconography of my country El Salvador, the smallest country in Latin-America”.

Pope Francis received an embroidered stole from La Palma, El Salvador.

Mr. Llort is known for teaching the citizens of the small town of La Palma, Chalatenango, how to make a living through art. Maria Santana Rivera de Hernandez, one of Llort students, learned all his techniques and colorful designs. Salvadoran art embroideries and paintings have been exported and gifted all over the world. Anytime I travel and visit friends living in foreign lands, I always bring these type of art creations as gift-keepsakes. Even Pope Francis received a stole as a gift from our President a few years ago. The stole gift to Pope Francis has La Palma embroideries. Today I wish to share these type of examples which are not technological, but these artisan companies all over the world do need a lot of support nowadays. Some days I will write about Artificial Intelligence and robotics, other days about coffee shops or retailers, other weeks I will write about Facebook or Google, and other about international corporations or multinationals, but today I decided to talk about a local artisan lady, Maria Santana Rivera de Hernandez, which represents many others from Chalatenango, El Salvador. Follow the slides and the explanation below:

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If you wish to download the slides in PDF Format, click here please: Eliescalante Leg 3 Resources & Cap Role Mintzberg Crafting Strategy

What is crafting strategy?

Strategies are both plans for the future and past patterns. There is a mistake in thinking that strategy is planning, or is a plan, an explicit guide to future behavior. The same mistake happens when you think the strategy is consistency in past behavior or a pattern of actions over time. Both views taken separately are mistaken. Strategies are a mix (le melange) of intentions and actions. Finding a pattern in action, or what it is defined as realized strategy and repeat it again is not enough. The same applies to intended strategies, all those formal plans we think we will be able to “automatically” accomplish. Our crafty artisan may have a plan, but she may end her art creation in a different result. The key to craft is the intimate connection between thought and action.
Strategies need not be deliberate, they can also be emergent. Or emerge more or less. Strategies can form as well as be formulated. A realized strategy can emerge in response to an evolving situation, or it can be brought about deliberately, through a process of formulation followed by implementation. But when these planned intentions do not produce the desired actions, organizations are left with unrealized strategies.
Embroidered Salvadoran Table Runner, Nahanche.

Smart strategists appreciate that they cannot always be smart enough to think through everything in advance. There are always strategies that emerge in the process. Let´s go to the example: Our Salvadoran embroidery specialist Maria Santana is making a beautiful embroidery for a table runner. She has completed her artsy work. She sees it from several directions, and then she doesn´t like the result. So she decides to add more petit figures here and adds some colors there. The result looks better. But still, it is not what she wants. She makes another change, and another and another. Eventually, after several days, or months she will finally become satisfied with the art creation. She is off on a new strategy. There is no such thing as a purely deliberate strategy or a purely emergent one. Craft requires control just as it requires responsiveness to the material at hand. Thus deliberate and emergent strategy form the endpoints of a continuum along which the strategists are crafted in the real world may be found.
Effective strategies develop in all kinds of strange ways. Effective strategies can show up in the strangest places and develop through the most unexpected means. The example of our Salvadoran embroidery artisan: she may have thought initially in embroidering butterflies and flowers, but she suddenly runs out of pink and orange threads, and she conceives a new design because she has a lot of blues and green threads and ends up embroidering snails and seashells with its respective ocean surroundings.
Maria Santana embroiders beautiful art. Source: EDH

She decided to change the design based on a mistake of lack of tangible resources. And guess what happens: she sells the artwork by double the planned price. There is no one best way to make a strategy. Errors become opportunities, and limitations stimulate creativity. An example of a deliberately emergent strategy is what Mintzberg calls the umbrella strategy. In this strategy, senior management sets out a broad guideline and leaves the specifics to others lower down in the organization. This strategy is not only deliberate (in its guidelines) and emergent (in its specifics), but also gives openness to great expertise and creativity.
Strategic Reorientations happen in brief, quantum leaps. When emergent strategies happen what to do?
Miss El Salvador 2012, National Embroidered Costume Dress.

Mintzberg said “the quantum theory suggests the really novel ones are generally held in check in some corner of the organization until a strategic revolution becomes necessary. Then as an alternative to having to develop new strategies from scratch or having to import generic strategies from competitors, the organization can turn to its own emerging patterns to find its new orientation. As the old, established strategy disintegrates, the seeds of the new one begin to spread”. The problems are evident in the work of many craftsy artists. On the one hand, there are those who seize on the perfection of a single theme and never change. Eventually, the creativity disappears from their work and the world passes them by. And then there are those who are always changing, who flit from one idea to another and never settle down. Because no theme or strategy ever emerges in their work, they cannot exploit or even develop any distinctive competence. And because their work lacks definition, identity crises are likely to develop, with neither the craftsy strategist nor their clientele knowing what to make of it. For example, our Miss El Salvador 2012 representative decided to show a beautiful handmade embroidered dress which evokes the Palma artisan colors designed by Fernando Llort. The National Costume dress was adapted from the original Llort designs, and it was changed accordingly for the Miss Universe 2012 pageant. The balance between the change and stability has to be our goal.
To manage Strategy, then is to craft thought and action, control and learning, stability and change. What, then, does it mean to craft strategy? Let us return to the words associated with craft: dedication, experience, involvement with the material, the personal touch, mastery of detail, a sense of harmony and integration. Managers and strategists who craft strategy do not spend much time in executive suites reading reports or industry analyses. They are involved, responsive to their materials, learning about their organizations and industries through personal touch. They are also sensitive to experience, recognizing that while individual vision may be important, other factors must help determine strategy as well. Managing strategy is mostly managing stability. Like distinguished craft artists, organizations become distinguished because they master the details. To manage strategy, then, at least in the first instance, is not so much to promote change as to know when to do so. Managing strategy is detecting discontinuities. The real challenge in crafting strategy lies in detecting the subtle discontinuities that may undermine a business in the future. And for that, there is no technique, no program, just a sharp mind in touch with the situation. Such discontinuities are unexpected and irregular, essentially unprecedented. They can be dealt with only by minds that are attuned to existing patterns yet able to perceive important breaks in them. Managing Strategy is knowing our business: Note the kind of knowledge involved: not intellectual knowledge, not analytical reports or abstracted facts and figures (though these can certainly help), not artificial intelligence. machine learning or big data analysis… but personal knowledge, intimate understanding, equivalent to the artisan feeling when she is using the needle and thread for the embroidery. Facts are available to anyone; even to machines… this kind of knowledge is not. Wisdom is the word that captures it best. But wisdom is a word that has been lost in the bureaucracies we have built for ourselves, systems designed to distance leaders from operating details. Crafts artists have to train themselves to see, to pick up things other people miss. The same holds true for managers of strategy. It is those with a kind of peripheral vision who are best able to detect and take advantage of events as they unfold. Managing strategy is learning to manage patterns. Whether in an executive suite in Manhattan or a pottery studio in Montreal or an embroidery atelier in Chalatenango, El Salvador, a key to managing strategy is the ability to detect emerging patterns and help them take shape. The job of any strategist is not just to preconceive specific strategies but also to recognize their emergence elsewhere in the organization and intervene when appropriate. And finally, managing strategy is reconcile change and continuity. Finally, strategists considering radical changes need to keep the quantum theory of change in mind. As Ecclesiastes reminds us, there is a time to sow and a time to reap. Some new patterns must be held in check until the organization is ready for a strategic revolution, or at least a period of divergence. Strategists who are obsessed with either only change or only stability are bound eventually to harm their organizations. As pattern recognizer, the strategist has to be able to sense when to exploit an established crop of strategies and when to encourage new strains to displace the old.