Today I want to talk about corporate strategy and how it fits/links into business case analysis, business unit strategy, management skills analysis, organizational design and so on. A lot of consultants and executives in the industry use the terms interchangeably. They use them as if they are the same thing.
Strategy has become a catch all phrase for business unit strategy, marketing strategy and pricing strategy. I often hear people say things like, “I have been on five strategy studies so now I understand strategy.”
I want to point out that corporate strategy is radically different from all other types of strategy due to its messiness and wide open boundaries. Unless you had been on a corporate strategy study and have worked on a corporate strategy stream within corporate strategy study at least a couple of times, it is highly unlikely you are going to sufficiently understand corporate strategy.
We have extensive training material on corporate strategy, within the website, and how it differs from any other type of strategy, as well as step-by-step instructions on how to conduct a corporate strategy study, but in this podcast I want to just briefly touch on it. If you are a member of the Executive Program you can see all those training videos. But if you follow the study through iTunes, Youtube and so on you need to have a sense of why corporate strategy is so different. This is the purpose of this podcast.
I am going to give you one of many examples of a situation when understanding corporate strategy is crucial. We have a lot of clients who want to go into private equity. Private equity seems to be a place people want to go. These clients try to do due diligence work in consulting and in industry so they could develop the “required skills” that will “allow” them to eventually switch to private equity.
I always point out to them that if they are a junior person switching to private equity then, yes, prior experience of doing due diligence work will be somewhat helpful. Yet, many clients want to switch to private equity at a senior level, after rising to a relatively senior level within consulting or in industry, and at a senior level a different set of skills is required to make the switch.
When you are interviewing to join private equity firm at a senior level the expectation is you can do due diligence work, or at least manage it, but you can also help the firm understand which market they should play in, the region they should play in and the part of the value chain that going to explode.
You basically must be capable of taking educated, intelligent bets on trends. And those bets had better be correct.
That ability to identify markets that are going to get bigger, regions that are going to grow and parts of the value chain that are going to explode becomes more important the more senior you become, and not just in private equity but in many other businesses. And the point I am making to all those individuals trying to switch to private equity at a senior level is if they never been on a corporate strategy study and don’t understand how to analyze markets, regions and value chains its very unlikely they are going to have the skill-set that private equity firms seek.
Therefore, those people who want to leave consulting and go into private equity at a senior level absolutely need to understand how to do corporate strategy work. Not pricing strategy, not marketing strategy, not business unit strategy but corporate strategy. And when working with clients we always try to make sure that clients who want to eventually go into private equity understand corporate strategy. Even people who are now at McKinsey, BCG or Bain, I make sure that they get onto corporate strategy studies and that they understand the inherent messiness that is corporate strategy.
Corporate strategy answers those three questions above. Corporate strategy, in a manner of speaking, is only about answering these questions.
So what we have done in this video podcast is we put together a type of breakdown of the way the power sector study is structured and we use it as an example to help you understand corporate strategy better. And this is really the focus of the entire Executive Program across all three studies on the site. This is what we teach: how to structure consulting studies and how to conduct them, with a heavy focus on corporate strategy studies.
If you enjoyed this conversation we will be so grateful if you jump over to iTunes and share a quick review. It helps more people find us.
Also a huge thank you for making “Strategy Skills” one of the most popular podcasts in the world for careers.
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