Friends,
I hope all is well with you and yours.
Quick personal updates before we go-go
I will be blunt: the past seven days have been rough. A manflu from hell has completely shut me down, be it with fevers or day-long migraines. Consequently, today’s newsletter will be, shall we say, rather minimalistic. I do apologize. Next week will be significantly improved.
There are some very interesting things ahead:
For the standard edition, we will begin another round of strategy model and framework analysis (see below for an explanation as to why). Among those on our list will be the 7S model, the GE/McKinsey matrix, PEST, STP, and the Ward-Rivani Model.
For premium subscribers, there will be more and broader industry analysis. Although we will talk e-commerce again today, we have an in-depth look at the EV sector coming up, a piece on how the recession hits different customer segments differently, more AI analysis, management insights, and leadership advice.
I can also, at long last, announce that the first two online presentations are coming up:
The first will be a preview of my keynote at Techsylvania in June: The model corporate citizen: How good management leads to bad results. As the title suggests, it will be on leadership, strategic management, and employee dynamics.
I will then be joined by my co-author Steve McCrone for a talk titled Adaptive strategy in practice: Turning uncertainty into a strategic advantage. Again, the title reveals the content. And yes, there will be some insights from the new book in it.
Virtual attendance will be free for all Strategy in Praxis subscribers. In the event that software limits are exceeded, premium subscribers will take precedence.
In the news
A Florida principal was forced to resign after parents decried Michelangelo’s David, which their sixth-grade children had seen in arts class, as “pornography”. This has little to do with strategy, admittedly, but is so mind-numbingly ass-backwards I just had to include it.
Disney is shutting down its metaverse operations, eliminating the unit entirely. One reason, beyond the obvious lack of adoption, is that any commercial activity inside the Zuckerbergian dystopia/utopia would need effective banking regulation, which is in short supply even in the real world.
Speaking of Meta, the company is lowering company bonuses and increasing the frequency of performance reviews, in the hope that it will continue to increase efficiency. It might, as will likely the number of employees looking to move elsewhere as a result.
Pepsi has yet again presented a new logo, this time along with the claim that it represents the music in the brand’s DNA, because, well, of course it would. Expect the usual commentary by the usual suspects, and the usual indifferent response by consumers.
Elon Musk has decided to remove so-called legacy checkmarks in order to further monetize his platform. This strikes me, and apparently most not employed by Musk, as rather sketchy reasoning. Potential impersonations aside, a large part of Twitter’s historical appeal has been the number of celebrities using it, and the perceived immediacy of communication that follows. If a large number of them leave - and many are now promising as much - so will likely even more advertisers.
Item of the week
One of the most common issues in business analysis is what is called retrospective coherence, i.e., reductive explanations post hoc. In a way, it is unavoidable; unless the observer was present, had insight into the relevant contexts, etc., their conclusions will ultimately be more or less educated guesswork. (The key is to learn from the past while not assuming it will repeat, or that there would be linear causality.)
But because business matters often are complex, even those that were privy to the details can fall into the retrospective coherence trap, not least because they assume they were aware of all details. An interesting read, therefore, is Alan Greenspan’s account of what happened during the 2008 financial crisis; it is a fascinating mix of good points and bad arguments. One should learn from both.
The financial crisis that ensued represented an existential crisis for economic forecasting. The conventional method of predicting macroeconomic developments – econometric modeling, the roots of which lie in the work of John Maynard Keyes – had failed when it was needed most, much to the chagrin of economists. In the run-up to the crisis, the Federal Reserve Board’s sophisticated system did not foresee the major risks to the global economy. Nor did the model developed by the International Monetary Fund, which concluded as late as the spring of 2007 that “global economic risks [had] declined” since September 2006 and that “the overall U.S. economy is holding up well … [and] the sings elsewhere are very encouraging.” On September 12, 2008, just three days before the crisis began, J.P. Morgan, arguably the United States’ premier financial institution, projected that the U.S. GDP growth rate would accelerate during the first half of 2009.
Moving on.
Why strategy frameworks?
Things may exist beyond one’s vision
Every now and again, though perhaps particularly when I discuss prominent thinkers in strategic management, I get asked whether anyone actually uses their theories in practice. The implication is, obviously, that few (if anyone) would.
Habitually, the question reveals something about whoever asked it - namely, a lack of relevant experience. The (to some) surprising truth is that a hell of a lot of executives in large corporations do. In fact, in business strategic circles, the works of people such as Porter are near omnipresent.
In other words, if one is to move up into the top echelon of a company, whether from a starting point in marketing, operations, or whatever else, understanding the strengths and weaknesses of the most popular models and frameworks is not only helpful but sometimes a requirement. And so, I thought there might be a point to looking at another batch of them.
But I want to emphasize that I am here to help, if only to the best of my limited abilities. There is absolutely no shame in asking questions (on the contrary, it is essential to learning), nor is there in lacking experience; everyone did at some point.
For anyone looking at a recap of previous installments, most can be found here, and the rest can be found in the archive.
Next week, we will begin with the 7S model. Until then, have the loveliest of weekends.
Onwards and upwards,
JP
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