Thursday, January 27, 2011

INSEAD Working Paper 2011/09/ST revised version of 2010/80/ST

At the heart of strategy lie streams, or sequences, of decisions and resource commitments. Such decisions include major strategic moves like internationalization and new market entries or diversification and acquisitions. In most companies, strategic decisions are extensively discussed and debated. They are usually framed, formulated, articulated and deliberated in an elaborate language often developed by the best minds in the company. Yet the language used in strategy formulation, and in detailing the strategy for implementation is usually taken for granted and receives little, if any, explicit attention. This is all the more surprising given that companies have come to recognize the importance of language when it comes to national language and often employ the services of specialized interpreters precisely so that they don’t get lost in translation. They also have understood the importance of corporate language for eliciting employee and investor commitment to strategic initiatives – witness, for instance, the wallet-sized, company-issued laminated cards at Cisco or Ford that carry carefully “word-smithed” statements of strategic intent and corporate values, or the effort put into writing annual reports in order to communicate with shareholders. More and more companies are putting in place implicit language guidelines for use in virtual communication, including e-mail, webex, video conferencing as well as Cisco’s Telepresence. While all of us would easily recognize that language matters in the obvious case of different national languages, or in formal strategic communication to and between employees or stakeholders, in the day-to-day emergence of ideas and dialogues around strategy the importance of a firm’s language as an enabler of or constraint on growth and strategic agility has not been recognized. By strategic agility we mean the ability to make well-grounded, thoughtful decisions in a timely fashion as required by changing market and other strategic circumstances, rather than remaining caught in a straightjacket of rigid strategic planning processes. Strategic agility requires a keen awareness of strategic circumstances as they arise in their specific context as well as an ability to conceptualize them in a general sense in order to be able to frame, communicate and develop strategic alternatives.