On 23rd March, Xavier Gimbert (MBA 86 / PhD 07), Associate Professor in the Department of Business Policy at ESADE, led a Refresher Programme session at ESADEFORUM. The topic of this session was the "strategic core" management model, whose characteristics were outlined in an article published by the speaker in September 2009. The topic was highly relevant, given the current context of crisis and turmoil that is forcing businesses to reformulate classic management models in order to effectively address the circumstances.
Professor Gimbert began by announcing that he would analyse the "strategic core" model in several steps. In the first step, he invited the audience to think about what strategic management processes mean in the present context. This led to an exercise in reflection on the various types of models, with "strategic core" being just one of many. In the second step, he analysed the needs that a management model must satisfy, an approach that makes it possible to frame the model in terms of these needs.
Professor Gimbert then discussed the "strategic core", explaining that it is not a global or general model, but rather a model that synthesises and prioritises to focus on just five concepts from among the multitudes. The first concept, he explained, is the "framework", thusly named because it delimits that which is contained in its interior. He then analysed the four internal concepts found within this framework. Finally, he discussed strategy in terms of capacities – that is, the opposite of what has previously been done – which enables us to see things from another perspective and understand that the "strategic core" has two kinds of logic and two different paths, both equally valid and complementary to one another.
Professor Gimbert then began his discussion of the strategic reflection process. He posed the question of what this process is and what it consists of, noting that it is a highly complex concept that, nonetheless, is simple to formulate: you begin by observing, by surveying the environment, and only later do you think about the company and reflect on the matter as a whole. The final goal of the process, obviously, is to make an effective decision by taking the best measurements for the company’s progress. Next, Professor Gimbert came to one of the key points in his talk: What is the situation of the environment today, in March 2010? It is an environment that contains numerous variables, is continually growing, and is changing at a dizzying speed. Moreover, he added, these changes are unpredictable, and to make matters worse, the variables coexist in a continual state of interrelationship, all of which contributes to making an even more complex scenario.
What’s more, many of the internal variables have to be adapted to the environment. As a consequence of all this, today’s business owners are required to make a huge number of strategic decisions. Professor Gimbert observed: "Making strategic decisions has never been easy, but nowadays it’s even more difficult". The environment, to put it lightly, is complex. But it’s also turbulent: companies that had been held up as examples to follow have collapsed, and even some countries have gone bankrupt (Iceland) or are about to (Greece). As a result of this turmoil, today there are companies at the head of the pack that are just 12 years old (Google).
Behind all this, Professor Gimbert explained, is the crisis we’re now experiencing. The crisis has exacerbated the turmoil and rapidly brought about changes that are unpredictable and based on a growing number of variables. What’s more, these changes tend to be “for worse¿ (with the exception of just a few sectors). As a consequence of this situation, developing a strategy has become more difficult, although, paradoxically, it has never been so important – or so urgent – to make strategic decisions. The nature of these changes forces us to react and to make nearly instantaneous decisions, since there is no room for strategic planning (that is, rational, systematic, stage-to-stage planning). As Professor Gimbert pointed out, today it is more important than ever to structure our business thinking, because if we do not, it will be very difficult to make the right decisions.
Thus, we need to follow an appropriate management model. What is the mission of a model? Basically, Professor Gimbert explained, it "helps us to think", by structuring the complex reality around us. Generally speaking, a model highlights what is essential in the environment and within the company, and, by combining these two factors, generates the various possible alternatives. But above all else, a model helps to determine the relationships between the many aspects, a task which, according to Professor Gimbert, helps us to "clarify, structure and think better".
Professor Gimbert explained that there are two main types of models. There are broad, generic models that encompass numerous concepts. And then there are the synthetic models, which, like the "strategic core" model, prioritise just a few concepts. The latter type of model is more necessary today, given the short amount of time we have to make decisions.
Professor Gimbert defined "strategic core" as a model that synthesises main ideas in a "framework" and considers four interrelated concepts, such that each concept is determined by the concept preceding it. The framework is the company’s mission – that is, its line of business, its reason for being. And the four concepts are: market/segments, sector/strategy, key activities and key capacities. As in the game of dominoes, one piece sets all the others in motion. Thus, when a company chooses a particular market segment (with its particular needs, and so on), this determines the strategy it must follow. The strategy, in turn, dictates the key activities that the company must perform. And finally, these activities determine what capacities are necessary for the company to function properly.
However, as mentioned above, the model has two kinds of logic and can be used backwards: if we believe that capacities are the most important element, strategically speaking, we can begin there. The capacities indicate what activities are essential, and the activities, in turn, tell us what strategy to follow. Finally, the strategy determines which market segment is best for our company. Both kinds of logic, Professor Gimbert insisted, are valid, although one can work better than the other depending on the particular strategic context.
Programme:
ESADE Alumni invites you to this new Refresher Programme held by Xavier Gimbert (MBA 86 / PhD 07), Associate Professor of the Department of Business Policy at ESADE.
These days, strategic management is like doing a puzzle where the pieces are constantly changing size and shape. The current turbulent environment makes it very necessary to keep a close eye on the strategic situation, since there could be a demand to renew it at any moment.
The problem is that company strategy is very complex, and has too many variables to be monitored every day. So it is necessary to prioritise, to know which strategic perspectives and concepts are key, because those are the ones really needing constant monitoring.
This talk will present a reduced model of a company’s strategy, synthesising the key elements down to a simple framework of four interrelated concepts. This makes it far easier to carry out continuing monitoring of the company’s strategy. If the model’s concepts are interrelated, one leads to the next, like a line of dominoes where if the first falls, all the others are knocked down. This framework and its four strategic sections is what the speaker refers to as the core strategy.
The presentation is based on the article "The Strategic Core" published by Xavier Gimbert in the Harvard Deusto Business Review, September 2009 as well as in the reflections put forth in his most recent book, Pensar estratégicamente. Modelos, conceptos y reflexiones. Publisher: Deusto. February 2010.
Xavier Gimbert (MBA 86 / PhD 07)
Xavier Gimbert is an expert in strategic management, strategic analysis, and the processes of strategic reflection and decision-making. He teaches in ESADE’s University programmes, MBA programmes, Executive Education programmes and In-Company Training programmes (which he directed for four years). He has developed an intense and extensive career as a business consultant, providing his expertise on topics of management and strategic analysis and participating in strategic reflection processes. He has sat on the boards of directors of various different institutions. In his most recent management model, known as the “The Strategic Core" model, he has made an effort to synthesise the key aspects of business strategy in order to allow ongoing strategic monitoring.
