EXAM CASE 1 Wanted: more emotion and less rationality about strategy By Stefan Stern, FT.

com site Published: Feb 19, 2007 Was it really only a year ago that investors were calling for the head of Arun Sarin, chief executive of Vodafone, as they despaired at his failure to offer a convincing future strategy for the global telecommunications giant? Well, yes, of course it was. This time last year Mr Sarin was being told to sell this or buy that - at least do something - to reassure the markets that he had a firm grip on the business. His suggestion that after years of big acquisitions Vodafone had some consolidating to do did not go down well. The board was divided, press coverage was unpleasant and morale was low. But 12 months on Vodafone has grabbed a controlling stake in Hutchison Essar, India's fourth largest mobile operator, for $11.1bn, and the formerly unhappy shareholders are suddenly much more cheerful. Here at last is a strategy they like. It's just like the old days again - or very nearly anyway. Markets move fast. They are swift to chide and swift to bless. But we should hesitate to join in today's jubilation at the purchase of "Hutch ", just as we should have hesitated to echo last February's condemnation of Mr Sarin. With characteristic daring, I shall wait to see how events unfold before passing judgment on the deal. But there is one sense in which this strategic move cannot be faulted. It feels good. There seems to be some conviction behind it. And for the Vodafone managers who are going to have to make it work, that is terribly important. They don't merely need to understand the rationale behind the deal, they have to believe in it too. Belief can keep you going when critics and temporary setbacks get you down and make you doubt your strategy. We all need cheering up from time to time although strategy, sadly, is not usually the most uplifting topic. One sure way to suck the life out of a senior management meeting is to declare that the company urgently needs to do some serious strategic thinking. It is a big, heavy subject, which will probably generate some hard, joyless work. Perhaps managers are right to be worried when the "S " word gets wheeled out. Research by management consultancy Marakon in 2005 suggested that most company strategies deliver only about 60 per cent of their promised value. Under half the executives surveyed by consultancy McKinsey last year said they were satisfied with their company's approach to making strategic decisions. This may have something to do with who is "in the room" in the first place. "Strategy workshops " are typically populated by senior management only, making it harder to spot potential problems that only more junior staff might be
Provided by Financial Times, 2007. All rights reserved.

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EXAM CASE 1 aware of. There is also less chance of achieving "buy-in " from the rest of the organisation if it sees the process as remote and mysterious. But maybe part of the problem is also that we are taking a purely rational approach to the formulation of strategy. The London-based strategy consultants Cognosis are currently completing a piece of research into people's experience of (and attitudes to) strategy development. Their evidence suggests that managers are crying out for strategies that engage both heart and head - and that for those businesses that can achieve this, the rewards may be great. Only a quarter of the survey base of 1,600 managers said that they found their organisation's strategy exciting. Half don't feel sufficiently involved, or believe that their opinions are listened to. But the survey data also revealed a lucky 10 per cent of managers who Cognosis label the "super-engaged ": they like the rigour of their company's thinking and are committed to achieving clearly understandable goals, but they also feel that their organisation has a common purpose and that leaders are united round it. According to the research, there seems to be a strong correlation between emotional and rational "buy-in" - and you need both to succeed. But "an ounce of belief is worth a tonne of understanding ", according to the firm's managing partner Richard Brown. This may be a challenging proposition for all you cool, focused and dispassionate executors of strategy out there, but Cognosis's data seem to indicate that stronger engagement and commitment can only be achieved where there is a successful attempt to persuade colleagues - emotionally as well as rationally that a planned strategy makes sense, is credible and doable. Most of us know what it feels like when a new strategy is handed down that does not generate emotional engagement or intellectual excitement. As Professor Henry Mintzberg of McGill University in Montreal wrote in The Rise and Fall of Strategic Planning: "Organisations that are forced to articulate strategies that are not really there - because their managements lack the necessary vision, or because they are still engaged in a complex learning process in order to create their strategies - get caught up in all kinds of wasteful behaviours. One is the pronouncement of platitudes - ostensible strategies that no one has any intention of implementing, even if that were possible. " Maybe it is time to lighten up a little, and go beyond mere reason when developing your strategy. And who says you shouldn't have fun while doing that? "Everybody is so serious, " says Prof Mintzberg in his co-authored work Strategy Bites Back. "If that gets us better strategies, fine. But it often gets us worse ones - standard, generic, uninspiring. Strategy doesn't only have to position, it has to inspire. So an uninspiring strategy is really no strategy at all. "

Provided by Financial Times, 2007. All rights reserved.

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