Spotlight on Strategy #5

In this final part of the Spotlight on Strategy series we’ll be exploring how bad strategy, group think, zombie boards and ivory tower syndrome can signal downfall for large, apparently successful organisations.

Becoming supreme in your industry requires skill and determination; staying there and evolving requires even more.

Ivory Tower Syndrome

ivory tower: “a state of privileged seclusion or separation from the facts and practicalities of the real world”

Picture the scene.  A company has achieved global domination.  The board and leadership team have steered the organisation to success. They are invincible; no-one can touch them.  Really?

Success builds confidence it is true and quite rightly so.  What I’m talking about here is cocky elitism.  Organisations may reach supreme status but that does not make them invincible.  It is important to stay connected to the real world, to understand what is really happening within the company and to have insights into changing external trends.

Emerging technologies, changes in consumer behaviour, the advent of new business models and the digital age all add to the dynamism of our modern world.  Organisations which do not embrace the bigger picture and base their strategy on skewed, out-dated perspectives will eventually suffer.  No matter how large or apparently successful.

Can’t imagine an organisation being that out of touch?  Take a look at the decline of the once high-street supremo Blockbuster.

Group Think and The Zombie Board

group think: “the practice of thinking or making decisions as a group, resulting typically in unchallenged, poor-quality decision-making”

So the team’s made it.  You’ve booked your place in the hall of fame.  The organisation is a market leader, a global player and brilliantly profitable.  Supremacy is yours.  What happens next?  Well, you’ve made it so why rock the boat?

No change means no risk, right?  Sticking to the same formulae and strategies that brought success in the past must be the best option.

According to work by Sterling Huang of INSEAD Business School, when board members are no longer truly engaged they gradually become ‘zombie boards’.  They are not effective, have lost sight of what will continue the organisation’s success and are happy to just maintain the status quo.

No change, no evolution and with group think taking hold, no-one is being challenged.

Sounds a little far fetched?  I know this is a few years ago now but here’s an extract from a piece in The Guardian in December 2011 relating to the Royal Bank of Scotland and ABN Amro deal…

“In interviews with the then chairman, Sir Tom McKillop, and other board directors, the FSA was told that “at no stage did any board member propose that we should not proceed”.  One former director reflected, with hindsight, that there had been an element of “group-think” in the boardroom.  “To his knowledge”, he added, “no board member had ever expressed a worry about the deal.”

Constantly evolving the objectives of the board and the organisation’s strategy, regularly changing the chairman in line with the skills needed and bringing in dynamic non-executives or advisors all help to bring governance and challenge.

The day the zombies take hold is the day that supremacy starts to wane.

Bad Strategy

“bad strategy is the active avoidance of the hard work of crafting a good strategy”.  Richard Rumelt

The strategy required to take an organisation to supreme status is unlikely to be the same as that needed to keep it there.  Following the same path that led to old triumphs regardless of changes inside and outside the organisation is following a path to decline.  Take a look at what has happened to Carillion and the quote-unquote “shock profit warnings” issued by Capita in late January 2018.

As Richard Rumelt describes in his book ‘Good Strategy. Bad Strategy’, “an insightful re-framing of a competitive situation can create whole new patterns of advantage and weakness thus creating new strengths through subtle shifts in viewpoint”.  Put simply, the world changes so strategy has to change too.

Organisations must put as much time, thought and effort into continually evolving their strategy as they put in to attaining supremacy.

After all, why throw it all away by being short-sighted and resistant to change?

No organisation is too small, stressed or supreme for strategy.  As Richard R says, “a good strategy does not just draw on existing strength; it creates strength through its coherence of design”.

Making good, genuine strategy our ally helps build a brighter future for individuals, teams and organisations alike.

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