Page 19 - CCCA Magazine Fall 2019

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Hill Home is the better choice to furnish an executive rental. As Lederman points out, while a highly important exercise,
These companies compete in the same industry, but they have it can be very humbling realize there is only one or two things
chosen very different positions, and by being different, each is that make you unique.
going to be better in different situations.
She also points out how their geographic locations suit their Why does Strategy Matter for in-house Counsel?
strategies. IKEA, for instance, is always outside of downtown Lederman has three reasons why we should care about strategy.
because they need a large space for the showroom, warehouse First, strategy affects all the functional areas, including the
and parking lot. Part of its strategy is that you can see the prod- legal department. It enables you to achieve your performance
uct and take it home immediately. objectives. You need to think about what your clients really
want, what you can do to really deliver that, and why you and
Choice your department are uniquely placed to serve them best.
Strategic positioning ties perfectly into choice, as your position Second, strategy affects all the lower-level decisions. Once
dictates your choices about everything. Companies with differ- you set up the high-level strategic positioning, it has implica-
ent strategies should choose to do different things. tions for whom you hire, what services you offer, what tech-
This can be very hard, warns Lederman. Everyone says they nologies you use and more. You cannot do your role as in-house
want to be different, but then they look at their competitors and counsel properly if you are determining priorities and mak-
feel the need to do what they’re doing. You can’t be different and ing trade-offs without frst understanding your organization’s
also do what everybody else is doing. strategy. Even the set up of the department and what work you
Indeed, strategy requires you to make trade-offs. It requires keep versus send out depend on the company’s strategy.
you to choose what you do, and by being good at those things,
you are necessarily making yourself bad at doing other things—
and those are the things you have to choose not to do.
She gives the example of highly successful Southwest Air- “ What is [your organization’s] goal, or
lines. Its goal is to be a reliable, low-cost airline, and you can see long-term performance objective?
the explicit choices it makes as a result. For instance, it only of- Sustainable growth? Increased profts?
fers short-haul fights between mid-sized cities in the U.S., and Excellent customer service? Your
it turns its planes around quickly by not offering meals or seat strategy is therefore the plan for how
you are going to achieve that goal.
assignments. All of these things support their strategic position. Management, Rotman School of Management ”
However, what is really interesting are the things they don’t do Dr. Mara Lederman, Professor of Strategic
that we think make airlines proftable. For example, they don’t
fy the lucrative international routes and they don’t have busi-
ness class. These trade-offs take a lot of discipline to make.
Third, if you have or aspire to have a seat at the senior man-
Uniqueness agement table, you need understand what people are saying
The essence of strategy is about being unique. Yet, from Leder- when they talk about the organization’s “strategy,” “position”
man’s experience, many companies have an overinfated sense and “value proposition.” Only then can you ask the right ques-
of just how different they are. You have to ask the hard ques- tions and contribute in a meaningful way.
tions: Why do we exist? What do we actually do better than any- To close with some tools you can use, here are the questions
one else? Would our customers easily replace us? Who would Lederman suggests asking of yourself and your colleagues:
miss us if we disappeared? ● Does our strategy articulate where and how we compete?
To illustrate uniqueness, she gives the example of LEGO, a ● Does our strategy make it clear what’s truly unique about
Danish company that was hugely successful in the late 20 cen- us, and what specifc resources, capabilities and processes we
th
tury but that almost went bankrupt in the early 2000s. Then, by have that are not easily acquired or imitated?
2013, the company returned to proftability and continues to be ● Why wouldn’t our strategy apply equally as well to our com-
proftable. What happened? petitors?
First, the near-bankruptcy in nineties was in large part due ● Does our strategy guide lower-level decisions?
to LEGO’s response to the changing marketplace, with increased ● What actions does our strategy indicate we will not take?
competition. To compete, for example, it expanded outside its ● Is our strategy logically consistent?
play system, opening LEGOLANDs, creating video games, etc. ● What would need to be true for the strategic choices that
Why did this decision hurt LEGO? Because it didn’t know any- we’re talking about to be the best ones?
thing about theme parks or games. Jørgen Vig Knudstorp, the ● Have we articulated metrics to determine whether our strat-
CEO who led the revival of the brand, sums up the one unique egy is successful once we implement it? ❚
thing about LEGO: “We build bricks that ft together better than
anyone else.” So they sold the other products, licensed the LEGO
brand and focused on the bricks—and revenues started growing. Lynne Yryku is the Executive Editor of CCCA Magazine.

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