This is the tenth podcast for the power sector corporate strategy study we will soon release as part of our Executive Program.

In an earlier podcast, we discussed the logic of the corporate strategy recommendations. It will surprise you to realize just how little detailed analyses support that recommendation. There is a deep and clear logic. Yet, the analyses needed to prove that logic is surprisingly light.

In this podcast, we discuss this paradox of corporate strategy. Strategy studies have a reputation for having lots of analyses. This reputation comes both from a misunderstanding of strategy and from watching other types of strategy studies, like pricing, business unit strategies etc., which require heavy analyses.

What many consider corporate strategy analyses is actually the analyses done for the business units etc., once the corporate strategy is done. They are different and should not be confused.

Corporate strategy is essentially a bet on a market and there is no analytic tool in the world anywhere at any firm that can predict how a market will behave. We need to make a reasonable bet.

We also explain how the corporate strategy can still be right even if the tests we are doing prove otherwise. If you are wondering how to apply this to your own work, you need to focus on business judgment.

More than any other type of strategy work, corporate strategy relies heavily on business judgment since the analyses is dramatically open to interpretation. Business judgement cannot be found in any single analyses since no analyses is going to provide the answer.

We finally, explain why we have developed the corporate strategy approach we have developed if its primary role is not to analyze the corporate strategy recommendations.

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4 responses to Corporate Strategy Always Lacks Detailed Analyses

  1. Hello Sharif,

    Being well read is one of the ways to having good judgement. You could travel, watch TV etc., which will all produce the same effect. I would only recommend NYT and WSJ.

    Michael

  2. Michael,

    You mention the importance of being well read in this podcast. Do you have any specific recommendations of books or publications? What do you like to read to expand your mind?

    Thanks,
    Sharif

  3. Hi Scott,

    A consultant should never ever change their recommendation because a client disagrees. That is completely wrong. You have no credibility when you do that. Many, many firms change their recommendations to please clients but which board would trust a consulting firm that sells out its recommendations just to get more money?

    Because that is what you are doing right? Changing a recommendation to make money even though you will hurt the company.

    The client is welcome to disagree. The client is welcome to ignore the recommendations. The client may even ask us to leave. Yet, that does not make the recommendations wrong. If we changed the recommendations we simply have pleased a client in the short term and hurt the shareholders in the long-term. Our job is not to make them happy in the short term but to place their interests first, even if they may disagree with our recommendations.

    We view our client as the shareholders and not the management committee, so our view on an upset client is also different.

    That said, if you take the time to explain the recommendation to the client, they will understand and accept most of it. When the client completely disagrees, you have to wonder how poor the partners’ communication skills must be!

    We will switch the labels – thanks.

    Michael

  4. Hi Michael,

    What will/would you do in the event that Empire International/Empire Energy are vehemently opposed to your recommendation and there appears to be no realistic prospect of changing their minds? I imagine this would occur still relatively early in the study. Do you come up with a totally new strategy and direction in that case?

    Also, the text for this podcast has it labeled as the 9th in this series while the audio is for the 10th. The “Building Leaders” podcast is the opposite. I think this first line of text just got switched.

    Best Regards,
    Scott

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