QUOTE OF THE DAY
"The secret of getting ahead is getting started."
"The man with a new idea is a crank until the idea succeeds."
"Whenever you find yourself on the side of the majority, it is time to pause and reflect."
"The lack of money is the root of all evil."
"It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so."
MARK TWAIN DOES STRATEGY
All of the quotes above are by Mark Twain, one of my favorite authors. In fact, recently, I saw a LinkedIn post by a famous entrepreneurship scholar who suggested that students should read Mark Twain for insights into venture capital and startups.
What is really interesting about Mark Twain, however, is that he was actually terrible at business and investing! He lost a fortune backing a complex mechanical typesetter, his publishing company failed, and he was eventually forced to declare bankruptcy.
I guess that makes him uniquely qualified to give startup advice—he definitely learned what "not" to do! 😄
But here is the thing that fascinates me the most about Mark Twain's story -- he eventually rebuilt his wealth, not through clever investments or business ventures, but by doing what he did best: writing, giving lectures, and making people laugh. He succeeded when he focused on his strengths rather than trying to be something he wasn't (an astute investor).
And this brings us to another lesson in strategic analysis -- know your competitive advantage and stick to it.
Yes, planning and strategy can be complex topics, but at their core, they are about understanding what you are truly good at and building your business around those strengths.
Twain might have failed spectacularly at business, but he accidentally gave us one of the best lessons in strategy: stay in your lane and focus on what you do best!
By now, you should have a team and a company you want to study for the rest of the semester. So let's get started with your strategic analysis project!
Just like Mark Twain had to learn (the hard way) what he was good at, you will start your analysis by trying to understand what makes your chosen company tick -- its history, leadership, mission, values, business model, and performance.
Just like Twain's story teaches us, success often comes from understanding and building upon core strengths. Your research will help you identify what your company does best and how it has leveraged (or perhaps failed to leverage) its competitive advantages over time.
REQUIRED READINGS
- Ch. 2: Assessing Organizational Performance. Strategic Management [read here]
You can skim through Ch.2 of your textbook, which provides a very general overview of the strategic management process (or you can get to work!). You should be familiar with most ideas in this chapter already.
To save you time, here is a quick summary.
Organizations need to answer three fundamental questions: "Where are we?", "Where are we going?" and "How do we get there? Answering these questions is key to strategic management and your analysis.
The chapter then covers the importance of having a vision, mission, and goals to provide clarity and direction for the organization. It also emphasizes the need to assess performance using diverse metrics, such as financial performance, customer satisfaction, internal process and innovation. Finally, it discusses the idea of competitive advantage.
What is competitive advantage? It's the ability of a firm to offer greater economic value than its competitors. Companies can achieve competitive advantage in two broad ways: (1) cost leadership (e.g., sell things cheaper like Walmart), and (2) differentiation (offer something unique like Apple).
The chapter then goes to explain different strategic tools such as using financial ratios (P/E) for quantitative assessment of the firm performance (we will cover this later in the course in more detail).
ON STRATEGIC ANALYSIS
Why waste time with strategic analysis when you can just wing it?
The lifespan of successful companies has been shrinking faster than the attention span of college students during a lecture on a Friday afternoon. In 1965, the average Fortune 500 company survived for 33 years. By 1990, it was 20 years. Today… less than 15 years!
More than half of the companies on the Fortune 500 list in the year 2000 are now extinct. The only place you will find them is in your Strategic Management textbook as footnotes. And, close to half of today’s Fortune 500 companies will join their extinct buddies in the next decade.
But hey, at least the woolly mammoth may get a second chance with recent de-extinction efforts. (Fun fact: Colossal Biosciences have raised over $435million so far).
Smartphones single-handedly turned the world upside down, causing chaos in just about everything from communication to shopping. Remember the good old days when you actually had to talk to people face-to-face?
Companies like Airbnb, Netflix, Tesla, Spotify, Peloton, Zoom, Robinhood, Instacart, Wikipedia, and Uber are disrupting traditional business models that were once considered safe. It’s like the Wild West, but for businesses.
And while your strategy professors can’t keep up updating their textbooks with all the new business models that are emerging, AI is eating jobs as fast as a swarm of locusts. Ok, not yet. But all this is happening quicker than you can “swipe left” and it's difficult to keep up.
What does this mean for leaders and organizational decision-makers?
A company cannot survive without constantly reinventing itself. To do so, leaders need to continuously reevaluate their business models, customer needs, performance metrics, industry position, and capabilities. In a sense, even established companies need to think and act as startups.
In short, if you are going to run a company in today’s fast-paced business world, you need to have a strategic vision and update it regularly. This is the main point of strategic analysis.
Can strategic analysis help you avoid the same fate as Chegg, Toys “R” Us, Tower Records, Pets.com, Blockbuster, Radio Shack, Circuit City, Kodak, and hundreds of other companies that once dominated their respective industries?
Most likely not! As Bill Gates says: “If you can show me the business case, it is already too late.”
Does this mean that strategic analysis is useless?
Of course not. Research shows that strategic planning has a positive, albeit moderate, impact on organizational performance. And it’s not like we have better options.
Strategic analysis can be a useful tool in providing companies with a structured approach to evaluating their internal and external environment, much like how regular health monitoring helps individuals maintain their wellbeing.
Just as you track various health metrics through regular check-ups and blood work to assess your overall health status, companies need systematic ways to measure and evaluate their organizational vitality. Blood tests reveal key indicators like cholesterol levels, blood sugar, and vitamin deficiencies, allowing doctors to identify potential health issues before they become serious problems.
Similarly, strategic analysis helps companies measure crucial performance indicators, assess competitive positions, and identify emerging threats and opportunities in their business environment.
However, avoiding the same fate of Blockbuster and Kodak also requires a company to be proactive, agile, and willing to adapt to change quickly; it requires an entrepreneurial mindset, foresight, determination, and, at least a little bit of luck.
The problem is that most companies are afraid of change and, more often than not, become victims of organizational inertia--the belief that what got them to the top will keep them there. And, by the time they realize they need to change, it is often too late.
Several cognitive biases can explain these irrational tendencies in our decision-making, such as the status quo bias, confirmation bias, hindsight bias, anchoring bias, and the sunk cost fallacy, which can lead to resistance to change and reliance on old processes and procedures, including old business models (we will cover these later in the semester).
Regardless of these irrational tendencies, with the increasing complexity of the business environment and the need to make informed decisions, companies are putting increasingly more emphasis and resources on strategic analysis and planning. Skills such as analytical thinking, resilience, leadership, creative thinking, and motivation, all of which are key to strategic thinking, are the top skills for the future. Thus, understanding the basics of strategic analysis can make you more valuable on the job market--regardless of whether you aspire to be an accountant, financial analyst, marketing guru, or an entrepreneur.
What is strategic analysis
The goal of strategic analysis is to evaluate a company's external and internal environment to identify opportunities and threats and determine the company's strengths and weaknesses. Ultimately, strategic analysis should help you understand the organization’s current market positioning, capabilities, and competition to develop a strategic plan that will guide the organization’s future direction and decision-making.
Think of strategic analysis as getting ready for a professional sports game. You don't just show up for a big game and wing it. Professional teams carefully analyze their strengths and weaknesses, scout their opponents, and devise a game plan. The best teams have an identity and a franchise culture. During the offseason they work on addressing weaknesses and strategically attracting new talent that can make them stronger. During games, coaches talk about “situational awareness” and adjust their game plans based on their opponent's tactics.
The same goes for strategic analysis in both business and career planning. You don't want to go blindly after your goals without a plan and a vision. If you don’t trust me, then listen to Arnold (see below). By analyzing your skills, interests, and desired outcomes, as well as the job market and potential employers, you can develop a winning vision and game plan for your future (or at least until the robots and AI take over). It's like having a personal coach helping you reach your full potential and score that touchdown (or dream job).
So, grab your water bottle, lace up your sneakers, and let's go do some strategizing.
A plan is not a strategy? Let's think about that
Finally, don't feel intimidated by all the academic jargon in strategic management. Even famous experts can oversimplify things.
Here is a video from the Harvard Business Review which has over 5.1 million views in which Prof Martin (apparently the number 1 strategic thinker in the world!) explains why a plan is not a strategy. Sounds profound, right? People seem to like it -- 126K likes.
However, if you think carefully about the main arguments presented, you will quickly find yourself scratching your head.
First, Prof Martin oversimplifies the idea of planning by defining it as a collection of disconnected activities and resource allocation decision. But this is completely detached from reality.
Think about your own life. When you plan your college courses, aren't you making strategic choices? You analyze requirements (external analysis), consider your strengths (internal analysis), look at career prospects (market opportunities), and balance workload (resource allocation). That's both planning AND strategy!
Second, he creates a false dichotomy between "planning" and "strategy." In practice, strategy and planning are two sides of the same coin - you need both, and they inform each other constantly. It's not "either/or" but "both/and." Think of Netflix. Their success didn't come from just saying "We will beat Blockbuster" (strategy) or just "let's mail DVDs" (plan). They succeeded through careful planning (analyzing broadband adoption rates, testing streaming technology) AND strategic thinking (recognizing the shift to digital entertainment, investing in original content).
Third, his Southwest example is a classic example of cherry picking and survivorship bias. He conveniently forgets to mention that many point-to-point carriers failed using similar models while the legacy's carriers hub-and-spoke system was itself a strategic choice that worked well for decades (and still works for many segments).
Most importantly, Prof. Martin completely misses that developing a strategic vision is difficult--it requires experimentation, learning, adaptation, and all of these come through planning and execution.
Remember, even Harvard professors can overcomplicate simple things and oversimplify complex ones. So trust your common sense--if something sounds unnecessarily complex or surprisingly simple, it probably is.
CLASSROOM EXERCISE
Getting to Know Your Company
Create an engaging 5-10-minute presentation (8-10 slides) that tells the story of your company. Think of this as introducing your company to someone who has never heard of it before. The goal is to make it interesting and memorable, not just list facts.
Use Gemini or ChatGPT's Deep Research to produce reports and find facts about your company. Use Canvas to create interactive timelines. Use Codex or Claude Cowork to put together a website (and experiment with different delivery options).
Slides (be creative).
If you need help getting started, here is a more structured way to approach it.
1. Company Overview
- Company name, logo, size, HQ location
- 2-3 surprising fact that grabbed your attention about the company (e.g., Did you know that the founders of Airbnb sold cereal in the early days of their venture to bootstrap funding?)
2. The Company Story (2 slides)
- Brief history with key milestones
- What problem/need inspired the founders?
- One pivotal moment that shaped the company
- Include an engaging visual timeline (include pictures and tell stories, easy on the bullet points and text)
Here, I used Gemini to create an interactive timeline with fun facts about the company [see here]
3. Leadership & Culture (1-2 slides)
- Current CEO and leadership style (picture, name, and short bio)
- Company's mission, vision, and values
- How these translate into company culture
- Have these evolved over time?
4. Business Model Deep Dive (2 slides)
- What does the company sell? How does the company address customer needs (i.e., what problems the company addresses)
- Who are their target customers? Are customer B2C, B2B, or both?
- How do they make money? (Include revenue breakdown)
- What makes them different from competitors?
5. Recent Performance (2 slides)
- Key financial metrics for last 3 years (revenue, new income, market cap)
- Provide details on what analysts are predicting related to firm performance. Are analysts currently recommending Buy, Hold, or Sell? Has this firm beat, hit, or missed earnings estimates the last 4 quarters?
- Stock performance visualization (what caused major spikes and drops)
5. Recent Events (1 slide)
- Describe two major events related to the firm in the last year (i.e., 365 days): one positive and one negative that have impacted firm performance. You can tie this to the firm stock performance (see above).
6. Team's Strategic Assessment (1 slide)
- What gives this company its competitive edge?
- What's one major challenge you see?
- What's one major opportunity you see?
- Would you invest in this company? Why/why not?
- Do you think this company will be in existence in 15 years? Why?
Guidelines
- Include engaging visuals & professional graphs (charts, images, etc.)
- Focus on telling a story, not just listing facts
- Be prepared to present for 5 mins at the end of class (each team member should present at least one section)
- Upload your PPT slides to Canvas, so you can get credit for participation! (individually)
Longer Guide (with some examples)
You can download the more extensive guide here with some examples here [download]