Central to the model and any formal strategy is the CEO and probably how aware he or she is to the ‘Rubber Band Framework’ that was first outlined through Intel. The flexibility that a CEO offers to the organisation to become what the market allows it to be depends on this ability to determine whether an organisation is ‘exploring’ or ‘exploiting’. Some organisations are perhaps structured and resourced to thrive at one end of this scale and it’s their ability to move between the two that enables their long-term sustainability.
Apple’s investment in ‘innovation’ enabled a series of ground breaking, world changing devices such as the iPod and iPhone. However when competitive forces genuinely threatened, the company moved further away from innovation and more towards ‘exploitation’, and in doing so seemed to lose traction (or at least it’s share price seemed to suggest so). Apple’s focus was on innovating better than anyone else, and not necessarily innovating ‘first to market products’ - this surely was a conscious choice by their CEO, Steve Jobs. In fact, Job’s biographer states that one of Job’s key leadership lessons was around providing ‘focus’1 and providing the frames for that focus to operate within. However, similarly when it comes to ‘exploiting’, not many could argue that their market share position wasn’t a success story either. Why was it then that some would argue Apple’s success has subsided in recent years? Was it purely down to focus or a hard lined innovative core with Apple’s internal environment distracted when exploitation became more important to it’s shareholder community? Was it a naivety to the market environment or a blasé view on the competitive threat?
Allied Chemicals demonstrated the implications of what can happen when an organisation’s thirst for growth can get out of hand because of an inability to control itself. This on several occasions has resulted in the most tragic of circumstances. The role of a CEO (a vilified CEO in Darren Henderson in this case) becomes central to the story when assessing the organisation’s path to these tragedies. My own organisation in BP, through the Deep Water Horizon incident, also exemplifies an organisation’s thirst for results, and like Henderson, the CEO for BP (Tony Hayward) was ‘where the buck fell’, not just for the decisions that led to the outcome of the situation, but for allowing the internal environment and process for growth to enable those decisions to occur. Like BP, Ahold had a CEO that was very much liked by the financial community. Van der Hoeven’s success was a built off a platform of a very successful ‘process of growth’ – acquisitions. However Ahold fell foul of the ‘Icarus paradox’ when the thirst for further success and growth seemed to limit Van Der Hoeven and his teams’ ability to see how decision making processes were not as robust as it perhaps they had been with earlier acquisitions.
Internal selection of formal strategies (e.g. Strategic Decisions) can be about providing focus of the required destination without necessarily detailing the specific path to get there. The ability to do this effectively though is as much about the CEO’s ability to understand the organisation and it’s position within the market it operates. This is supported through the ‘Darwinian’ process that Andrew Grove shared from his experiences with Intel. In class, we discussed this