Strategic Learning

How to use Strategic Learning to rapidly respond to change and gain a sustainable advantage over your competitors

What's even harder than creating a breakthrough strategy? Making it stick. As companies are fighting to survive in a tough economy, this new book by Willie Pietersen demonstrates the power of the Strategic Learning process, a four-step dynamic cycle guaranteed to create and sustain winning performance. Adopted by a wide range of corporations and not-for-profit organizations, the Strategic Learning process builds on eight years of practicing, adapting and honing the original concepts Pietersen first introduced in Reinventing Strategy to explain how organizations can generate superior insights about their customers and competitors, craft a Winning Proposition, focus on a vital few key priorities, create buy-in throughout the organization and achieve success – again and again.

• Teaches organizations to make smarter decisions that help them win customers and earn superior profits
• Explains how to instill a culture of openness, learning, and courage that can face and respond to the constantly changing business environment
• Is a tool that can benefit leaders at all levels, in organizations both large and small, global and domestic, for-profit and not-for-profit
• Author Willie Pietersen, a former president of Tropicana and Seagram USA, is a professor of management at Columbia Business School, and the author of Reinventing Strategy, from Wiley

Strategic Learning shows you how your business or nonprofit organization can develop better, more effective strategies for long-term competitive advantage.

Acknowledgments xi

Introduction xiii

The New Competitive Context xiv

Winning in the New Environment xvi

Reinventing Strategy with Strategic Learning xvi

Why This Book? xviii

Getting to Excelling xix

Part I What Every Organization Needs to Know About Strategy 1

Chapter 1 The Real Job of Strategy 3

What Is Strategy? 5

What Key Questions Must Strategy Answer for Us? 6

Choice-Making in Action 8

Strategy and Planning Are Different 12

Closing the Doing/Excelling Gap 14

Chapter 2 Defining Competitive Advantage: How Much More Value Do You Deliver Than Your Competitors? 15

Mind the Gap 16

Stretching the Elastic Band 18

GM’s Race to the Bottom 21

Value Leadership through a Winning Proposition 24

What’s Your Winning Proposition? 26

The Moment of Truth 27

Part II Applying Strategic Learning to Create An Adaptive Enterprise 31

Chapter 3 Strategic Learning: Four Key Steps, One Cycle 33

Do You Have a Robust Method? 34

What Were We Thinking? 35

The Theory of Natural Selection 37

Complexity Theory 39

Learning Organizations 39

Strategy’s New Mission 40

The Five Killer Competencies 40

The Strategic Learning Cycle 41

What We’ve Learned from Deming 42

Building Capability through Deliberate Practice 43

Chapter 4 Learn: Using a Situation Analysis to Generate Superior Insights about Your External Environment and Your Own Realities 47

The ‘‘Sense and Respond’’ Imperative 48

Learning through the Situation Analysis 49

Analyzing Customer Needs 51

Who Are Our Stakeholders and Why Do They Matter? 59

Analyzing Competitors 63

Interpreting Industry Dynamics 66

Taking a Broader View 68

Facing Your Own Realities 69

Pulling Together the Situation Analysis 73

Winning the Battle for Insights 75

Doing a Great Situation Analysis: The Rules of Success 78

Chapter 5 Focus: Clarifying Your Winning Proposition and Identifying Your Key Priorities 81

Making Your Strategic Choices 81

The Parmenides Fallacy 83

Value Proposition versus Winning Proposition 87

Where Does Your Vision Fit In? 90

Delivering Superior Profits 90

The Three Bottom Lines 93

Your Key Priorities 95

How the Girl Scouts Did It 99

Deciding What Not to Do 103

Chapter 6 Align: Mobilizing Your Entire Organization behind Your Strategy 109

Leading a Journey 110

The Golden Rules of Successful Execution 112

Closing the Gaps 113

The Business Ecosystem 119

Changing an Organization’s Culture 125

Avoiding the Values Trap 131

Chapter 7 Overcoming Resistance to Change and Driving Momentum 135

Dealing with the Sources of Resistance 137

The Lessons of the Sigmoid Curve 138

The Curse of Success 139

Launching the Second Curve 142

Maximize Participation 146

Generate Short-Term Wins 149

Deal Directly with Resisters 150

Set a Shining Example 154

Chapter 8 Translating Your Strategy into a Compelling Leadership Message 157

What Is Leadership? 160

Building a Cathedral 161

Commander’s Intent 162

Who Are the Leaders? 163

Developing Your Leadership Message 165

The Power of Storytelling 167

The Need for Repetition 169

Chapter 9 Execute: Implementing and Experimenting in the Strategic Learning Cycle 171

Learning through Experimentation 172

Learning from Others 174

Learning from Mistakes 175

Experiential Learning: The After-Action Review 176

Strategic Learning 365 Days a Year 179

Part III Integrating Strategy and Leadership 181

Chapter 10 Leading through a Crisis 183

Dealing Successfully with the Unexpected 184

Learning Your Way Out of a Crisis 186

Building Readiness 188

Seizing Opportunities during a Crisis 190

The Human Dimension 191

Chapter 11 Becoming an Integrated Leader 195

The Three Domains of Leadership 196

Articulating Your Leadership Credo 199

The Quest for Self-Knowledge 201

The Lifeline Exercise 202

Applying Strategic Learning to Yourself 206

Conclusion The 5 Cs: Choices, Clarity, Change, Courage, and Compassion 211

The Five Cs 213

Appendix 217

Notes 219

Index 225

Willie Pietersen was raised in South Africa and received a Rhodes Scholarship to Oxford University. After practicing law, he embarked on an international business career, serving as the CEO of multibillion-dollar businesses such as Lever Foods, Seagram USA, Tropicana, and Sterling Winthrop's Consumer Health Group. Since 1998, Pietersen has been Professor of the Practice of Management at the Columbia University Business School. He has served as teacher and advisor to many global companies, including Boeing, Deloitte, DePuy, Ericsson, ExxonMobil, Novartis, SAP, and the Girl Scouts of the USA. He is the author of Reinventing Strategy, which is widely used by organizations as a guide to the creation of winning strategies, and has been translated into Spanish and Chinese.

For more information about the application of Strategic Learning, visit www.williampietersen.com.

The Way You Do Strategy Can Make Your Organization Smarter Than Your Competition!

In today’s dynamic marketplace, traditional strategic planning methods no longer work. The key challenge facing managers is to build adaptive organizations able to assess the shifting environment and rapidly translate insights into winning strategies over and over again. “Strategy as a planning exercise” must become “strategy as a learning exercise.” Excelling at this capability is an organization’s only sustainable competitive advantage.

Willie Pietersen’s Strategic Learning process gives you a practical and proven method for turning key insights about your market, customers, and competitors into action. Since Pietersen first defined them in Reinventing Strategy, the concepts and tools of Strategic Learning have been battle-tested in the harshest economy in a generation, helping to reinvigorate a wide range of corporations and not-for-profit organizations. The strategic learning process also forms the basis for how strategy is taught in Columbia Business School’s Executive Education programs.

Strategic Learning presents Pietersen’s unique “insight to action” model. Using this cycle of four linked steps—Learn, Focus, Align, and Execute—your organization will continuously learn from its environment and its own actions, adjust its strategies to fit the competitive landscape, and consistently outthink and outperform your competition. You’ll navigate through crises while building the organizational readiness to identify the next challenge, the resilience to withstand it, and the ability to profit from it.

Filled with examples showing real-world applications of its principles, Strategic Learning will redefine how you approach strategy. Coming from one of the best minds in business, this far-reaching set of ideas equips managers at all levels to lead the way to lasting competitive advantage.

Praise for Strategic Learning

"Strategic Learning has become a vital element of how we think about the future in Ericsson. The wisdom of Willie Pietersen's approach to strategy has helped us move from planning rituals to strategy as learning, and has made a big difference to the way we work."
—Hans Vestberg, President and CEO, Ericsson

"Strategic Learning is the best method I've ever found for creating winning strategies."
—Michael Mahoney, Company Group Chairman, Johnson & Johnson

"Pietersen's focus on creating highly adaptive and dynamic strategy is essential for our turbulent times. His Strategic Learning process forces companies to confront difficult truths presented by the marketplace and helps them thrive amid uncertainty."
—Jill Spencer, Executive Vice President, Federal Home Loan Bank of Atlanta

"Strategic Learning and Willie Pietersen have had an amazing impact on the Girl Scouts, helping us create a transformational strategy to bring relevance to a ninety-seven-year-old organization. We are confident that we are now focusing on the few things that are making the biggest difference."
—Kathy Cloninger, Chief Executive Officer, Girl Scouts of the USA

"Willie Pietersen's deep insights about strategy and leadership have helped our commercial and medical leaders understand how we can move from merely doing strategy to excelling at it."
—David Epstein, President and CEO, Novartis Oncology, Novartis Molecular Diagnostics