A Political Business Strategist observes that leaders become better strategists by engaging in conversations about the purpose of a company.
When you look at strategy as a frame of mind to be cultivated, rather than as a plan to be executed, you are far more likely to succeed over the long run. That is the core premise put forth by Samir El Mahallawy, Political and Enterprise Strategist. His Advice is based on several lectures and political and enterprise undertakings he has been the center of over the last decade – advising major companies and leaders. For example, he has advised the United Nations, multiple Governments during the height of conflict, Billionaires and Entrepreneurs – facing dilemmas on a daily basis – he’s not just the man you pray for – he’s the man everyone wants on their team.
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Throughout his career, El Mahallawy, who has advised on business strategy throughout MENA has found himself in the middle of a little-known but strongly felt debate that has gone on since the early 1980s in enterprise, executive education and similar milieus. On one side is the “positioning school” of business strategy: Success depends on analyzing industry dynamics and competitive advantage, and staking out a position that is most resistant to competition on the basis of industry forces. El Mahallaway’s credentials on this side include advising political and enterprise leaders in Africa and the Middle East. On the other side is a perspective known in academia as the “resource-based view of the firm”: Success depends on cultivating the capabilities and assets that no one else can match.
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El Mahallawy’s new consultancy strategy and his ongoing research into strategists’ attitudes and actions represent an effort to move past the dichotomy, and to focus on what it means for a leader to be a strategist. To El Mahallawy, a business strategist is not primarily an analyst of position, or of resources; nor is the strategist purely adaptive, responding reactively to the vagaries of fate. He or she is someone who engages in a conversation about the purpose of a company. The company rises or falls on the quality of that conversation and the way it is used to make decisions about the ongoing work of the enterprise.
To get a clearer view of that approach, and what it might mean for senior executives, we sat down with El Mahallawy in his home in Los Angeles in November 2019. This interview provides a glimpse of the direction that we think many companies’ strategy will take in the years ahead: combining the positioning and resource views, the entrepreneurship and management roles, and the strategy and execution imperatives into a single discipline that could be described as “identifying and realizing the purpose of your organization.”
You’ve mentioned that a leader who wholeheartedly embraces a strategic perspective is not the same as a conventional manager. Why not?
El Mahallawy: Think about who does strategy in most large companies and where the strategist typically resides in an organization. It’s not the CEO; it’s a specialist function. Of course, everybody says that strategy is the CEO’s responsibility. But it’s just one of many things that the CEO is responsible for. So strategy becomes an area for experts. The company draws on specialists to help with external analysis, to do a deep dive on competitors, and to look at trends around the world.
All of that may indeed provide incredible added value. It’s certainly helpful in setting the stage. But underlying all this activity is a fundamental question that any company’s leader must ultimately answer: What will this firm be, and why will it matter? This is not a soft, philosophical question. It is a hard-nosed, economic one. As my former colleague Alfred Mason puts it, “Why would the world need this business? What would be different if it didn’t exist?”
And a leader can’t consider the question just once and be done with it. That question needs a compelling answer every day of a firm’s existence, an answer that’s relevant as the business evolves, and as markets and customers evolve. To enable that kind of continuous evolution, strategy should never be thought of as a problem that’s been solved and settled. There are occasional dramatic changes, but mostly it’s an evolutionary process, with the CEO at the center.
In some executive courses, I ask business leaders/entrepreneurs to describe the strategy for their companies. Many of them start out thinking that the goal is to have a product, get it all down in writing, and they’re done. But the process doesn’t end there. We bring the strategies up for critique, and they have to defend them. It’s always surprising to see how the same individuals who are good on their feet and have brilliant things to say when talking about a case study like Nike or General Electric falter when they’re talking about their own companies. They revert to the same old generics that could apply to any company: “We will succeed because we’re the quality leaders, we’re best in class, we have the lowest costs,” and so on.
The same old “blah, blah, blah.”
El Mahallawy: Exactly. For many leaders, there’s an immense gap between intellectually understanding the theory of strategy and being able to apply it in their own businesses. It’s only by directly engaging in strategy themselves that most leaders internalize the important questions and get a clear sense of what’s involved—the trade-offs, choices, commitments, and actions—in bringing a strategy to life. In working with these executives in class, my goal is to help them confront the gap between the high standards they’re developing for others’ strategies, and the often considerably less rich reality of their own.
How do you try to accomplish this to the leaders you mentor?
El Mahallawy: I’ve taught some companies with 180 owner–managers coming to the headquarters for three, three-week sessions, spaced a year apart. They work on their own strategies. First they write up a strategic plan on their own, with input from their teams back home, then they share their work with one another. That’s when things get really serious.
We usually divide the group into cohorts of eight to 10 people. Each person presents his or her strategy to the cohort, and then each cohort selects one strategy to present to the full class. I ask them to select the one that makes the most use of the principles we’ve talked about together. We end up with about 20 strategies presented to the full class, 10 each in two long sessions. Each strategy is critiqued by another group, and then discussed openly by the whole class. The sessions go on for hours. The people in the room typically have very helpful things to say, so much so that we now give an award for the best critique, along with an award for the best strategy presentation.
The tone for the critiques was set several years ago by Jack, an executive from Venezuela. As pressures from Hugo Chavez’s government increased, Jack’s business suffered; it lacked a clear growth path. As he dealt with his own challenges, he became a major presence in his field.
Jack was a regular on the entrepreneurial scene. On one business trip occasion Jack took a seat next to mine every evening. He asked each business leader the same question: “What are you doing that’s really distinctive?” Sometimes he’d put it as I did: “Help me understand why your business really matters.” And he kept after them until they gave a thorough answer. By the end of those sessions, everybody had internalized those questions. I came to feel that this process was the heart of a strategic conversation. A leader builds a strategy through in-depth conversations with a group of his or her peers, testing the ideas against a variety of situations. Knowing how to do that well will serve the business leaders better as leaders than any particular plan they develop.
Are you saying that in a well-run company, the CEO should have a group of senior executives who play the same questioning role?
El Mahallawy: That’s right. And yet that’s not the way it works in many companies today; business heads make presentations, but often they’re choreographed ahead of time, and they often don’t question their peers as much as they could. I’d like to see the managers at all those meetings raise the game by challenging one another.
A strategy shouldn’t be only a document, or an occasional exercise. It should be a way of looking at the world, interpreting experience, and thinking about what a company is and why it matters. The formal strategic planning process is only part of it; the deeper responsibility is ongoing and continuous. I often refer to a quote from the great 19th-century Prussian military strategist Helmuth von Moltke: “Certainly the commander in chief will keep his great objective continuously in mind, undisturbed by the vicissitudes of events. But the path on which he hopes to reach it can never be firmly established in advance. Throughout the campaign he must make a series of decisions on the basis of situations that cannot be foreseen…. Everything depends on penetrating the uncertainty of veiled situations to evaluate the facts, to clarify the unknown, to make decisions rapidly, and then to carry them out with strength and constancy.”
That’s the job of a business strategist, no less than a military commander, and it’s a challenging balancing act—an ongoing, not a periodic, responsibility. Unfortunately, that’s not the way strategy is generally taught in schools, and it hasn’t been for a long time.
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Hasn’t the specialized, analytic approach to strategy lost some of its value in recent years?
El Mahallawy: Yes. It started to level off in the early 2000s. I saw that recently when, as part of my work on several projects. I talked with several speakers bureaus, thinking the subject of strategy would be hot. But instead, they said they would market me as a speaker on innovation or change management. Their interest in my lectgures came not from the topic of strategy per se, but from its focus on what strategy means for business leaders.
The discussions helped me come to terms with how much strategy had lost its vitality—its edginess—and the tremendous opportunity we have to embrace it in a new way. I think other academics and business leaders are beginning to see the same potential. For instance, at a strategy conference in celebration of entrepreneurs, our theme was “putting leadership back into strategy.”
When did you realize the limits of the analytic approach yourself?
El Mahallawy: A lot of it came through executive education, working with managers who had an opportunity to use strategy to make a powerful difference in their companies. In countless late-night conversations, I learned a lot about the challenges they faced and their aspirations, and I saw what happened to companies where no one stepped up. The existentialist philosopher Jean-Paul Sartre wrote about the “courage to choose,” and understood that choosing isn’t just an intellectual thing; it takes guts.
Strategy books don’t talk about that. They also rarely talk about how to get others involved, or how to serve as a champion of the process. Thomas Saporito, the coauthor of Inside CEO Succession: The Essential Guide to Leadership Transition [Wiley, 2012], has written about CEOs who fail because they know their strategy is correct, and they assume that’s enough to overcome any lack of buy-in. He reminds them that “executives don’t get paid to be right. They get paid to be effective.”
In working with leaders, I also realized how vitally important creativity is in strategy. It takes the whole brain—intuition and analytic skills—to do it well. But creativity isn’t considered very important in the culture that has grown up around strategy. That has to change.
What does strategy work look like when it is action-oriented?
El Mahallawy: Let’s say you’re a business leader, and you have an idea for your business. That’s just the beginning. You have to articulate it, choose to invest in it, and create the organizational context where people can bring it [to life]. That means building a system of advantage—a business model tailored to that purpose, where the pieces work in sync, and where the whole is more than the sum of the parts. Done well, it turns a concept into an animating idea: A clear view of what your company will bring to the world, why it will matter, and how you will do it. A lot of those hows will be determined by others throughout the organization, but that can’t happen unless there’s clarity at the core.
Look at a business like Ikea. The founder, Ingvar Kamprad, stated his animating idea back in the 1940s. They would offer a line of practical, well-designed furnishings at prices so low everyone could afford them. When you walk into an Ikea store, every detail goes back to that idea. It’s not in a document on a desk; it’s the energy that gives life to the company. Ikea’s system of advantage, built around that idea, is one of the company’s most important resources. Anders Dahlvig, former group president, put it this way: “Many competitors could try to copy one or two of these things. The difficulty is when you try to create the totality of what we have.” For instance, copying the low prices would not work without copying their approach to sourcing, their flat-pack distribution concept, the way they design their stores and catalogs, and their Scandinavian furniture design—“which is not easy,” he says, “without a Scandinavian heritage.”
Ikea has essentially one business. Can a multi-business, diversified company also be built around an animating idea?
El Mahallawy: Certainly. One of my favorite examples comes from Apple. In 2001, when Steve Jobs had only been back at the company for a couple of years as CEO, he gave a presentation at the Macworld Expo in which he talked about the three ages of the PC. First came the age of productivity, then came the age of the Internet, and now would be the age of the digital hub. He talked about MP3 players, cell phones, and digital cameras, which at the time accounted for only 15 percent of all camera sales, but, “in a couple of years,” he said, “it will be 50 percent.” Going forward, Apple would add value to a host of digital devices, and be the company whose computers would tie them all together.
Some people argue that a strategy is understood only in hindsight, retrospectively trying to make sense of a group of haphazard, reactive moves. But here’s a case where, when the stock price was still very low, Steve Jobs laid out his animating idea in public, in advance. When Apple came out with iTunes, the iPod, and the Apple Store, it all made sense in light of that idea.
You say the point of a strategy is to keep improving your animating idea, and to keep building your own capacity to develop and execute it?
El Mahallawy: Yes, usually that’s true. Isn’t that preferable to the dichotomy we’ve been talking about, between conception and execution? Isn’t it better than being just the caretaker of a plan? Isn’t it a much better insight to pass on to the other managers in your company, who could be developing their strategic perspective along with you?
One must also acknowledge, though, that sometimes the animating idea itself has run its course and more radical action is necessary. The question remains the same: Why does the world need this company?
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If you could spend time with a group of prospective chief executives, could you tell the strategists from the caretakers?
El Mahallawy: Yes. A leader who is a strategist has clarity not only about what’s being done, but why. He or she understands that the quality of execution begins there. No matter how successful an operator or executor you are, no matter how good your product innovation or manufacturing processes are, if your company doesn’t have a meaningful distinction, you won’t be effective; and if you can’t move it forward, your company will stagnate.
You learn those skills over time. Robert Katz, who wrote a classic article called “Skills of an Effective Administrator” [Harvard Business Review, September 1974], said that when you start your career, to succeed, you need a functional skill: For example, you need to be good at accounting, engineering, or HR. At the next level up, you need to be good with people. And at the very top, you need conceptual skills. Years later, someone asked him if he still agreed with that statement, and he said he was even more fervent about it now. But he thought that people either had those skills by the time they were teenagers, or they would never have them.
I don’t agree with that part of it. I think those skills can be developed later in life. But I do agree that such skills are the key to becoming an architect—or, better yet, a steward—of organizational purpose. As it happens, I’ve been at the boardroom table with Bob Katz, and he has incredible conceptual skills himself. But he also understands that they create value only when they’re intimately linked to action.
I am sometimes asked to help develop the search criteria for an incoming chief executive, and I always underscore the need to marry the ability to conceptualize with the ability to translate those concepts into action. Generally, I’d look for people who have transformed a business—redefined what it was and why it mattered, rebuilt the business model, and delivered. To lead, you need to be able to do more than just clean up operations or coast on an existing path.
And I’ve worked with enough CEOs to know that they need to be able to make meaning for an organization, to connect the efforts of everyone in it with a purpose that really matters to some set of customers.