Strategy and Context

Sohrab Vossoughi wrote a great post on HBR about Sony and how its successful strategy in the 1980s ended up being unique to that context. In other words, a winning strategy is context specific, thus it needs to evolve and grow (we talk about this in Humanize in the chapter on Generative). Sony’s model didn’t evolve, and now it’s in trouble. In the middle of the post, he talks about how the economy has shifted, where consumers now care more about experience, rather than just product. Here’s the excerpt:

In the early 80s, simply delivering technology in a usable form was still the biggest challenge, and Sony got it right before anyone else. It had an astonishing ability to find the next technical hurdle—a brighter TV, a smaller tape player, an integrated camcorder—and leap over it with grace, before its competitors even thought to try. In an industrial, product-oriented economy, this was enough. Every year saw new products with unprecedented capabilities. As long as it could do something new, we didn’t seem to care what kind of experience we had using it. Plowing through 70-page manuals and fussing with Dolby II and Metal/Non-Metal switches was just part of the deal.

In the experience economy, these expectations are reversed. Technology is a given, and the question of “what are the specs?” has been replaced by “what is it like to use?” Sony’s expertise at making the next great thing has been matched by companies like Samsung and LG, and soon enough, they’ll all be caught by increasingly sophisticated Chinese manufacturers. Without modifying its business model, Sony has been left behind by a world that’s changed its relationship with technology.

The post is about Sony. And it’s not about Sony. It’s about all of us. That last sentence seems hugely powerful to me. Just make “Sony” and “technology” fill-in-the-blanks spots, and it hits home for most of us:

  • Without modifying its business model, [newspapers] have been left behind by a world that changed its relationship with [information].
  • Without modifying its business model, [associations] have been left behind by a world that changed its relationship with [learning and community].
  • Without modifying its business model, [doctors] have been left behind by a world that changed its relationship with [wellness decisions].

Those are just postulates, actually (well, with the exception of the newspapers; I think that one is a fact). But I think no matter what industry we’re in, we need to have our radars tuned to whatever goes in that last fill-in-the-blank spot. What RELATIONSHIP is changing in our market, and are we responding?

Also, note that when a world (your customers, your members, your stakeholders, your employees) changes its relationship with something that is part of your business, it’s not always easy to identify it. It’s complex and shifting. It requires nuanced conversations and insight to really be able to see what is changing. I don’t think you identify a changing relationship by doing a member needs assessment. I don’t think you’ll be on top of a changing relationship by doing strategic planning sessions once a year. I think it’s a mistake to require a single visionary leader to identify a changing relationship. Leadership, as I’ve said before, is a system capacity, which seems critical for an issue like this.

I also really like the last sentence in the first paragraph, where he talks about what people put up with as “part of the deal” before the relationship changed. That might be something to try and focus on when identifying a changing relationship. What is your company’s (or your industry’s) equivalent of “plowing through 70 page manuals and fussing with metal/non-metal switches.” These are things that were required when you were delivering last decade’s value, but now are viewed as unacceptable obstructions since the relationship has changed. Maybe something like putting up with lame keynote speakers at conferences?

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  1. 26.04.2012 at 8:58 am

    Such a great point you make about context, something that probably isn’t considered enough when our temporal boards are making strategy decisions. When they talk about something that worked or didn’t work in the past, we should make them consider context. When they are deliberating about the present, we should make sure the discussions reflect context. And we need to help them consider very different contexts that may unfold in the future.

    And the gorilla in this conversation for member organizations is that there is not a universal context that all members are experiencing at the same time.