Flowing Stream Strategy

A major strategic framework that acted as inspiration for evolution of flowing stream strategy is blue ocean strategy. The blue ocean strategy, rather than taking competition as the benchmark, uses the strategic logic of value innovation. It is a radical and discontinuous change strategy that makes the competition irrelevant by enhancing the value with a big leap and opening up new and uncontested market space. Such dramatic improvement in the value, both for the customers and the company, is made possible through radically different products or services. Some glaring examples of important blue oceans created in the past are the Model T by Ford and small, fuel efficient Japanese cars in the automobile industry; the electronic computer, the PC, and the Internet in the computer industry; and host of innovative services such as low-cost airlines (Southwest Airlines) and partly owned aeroplanes (NetJets).

Though “actors” and “processes” linked with an enterprise create forces to maintain continuity, continuously changing business “situation” (in particular due to globalization) generates forces that direct organizations to strive for change. The situational change forces could be both external and internal. The external change forces may emanate from changes on political, economic, social, and/or technological fronts. The internal change forces may be because of poor performance (low profitability, loss of market share), change in top management, and so on. In the last two decades, a plethora of literature is created around the issues linked with “change” and “transformation.” The mantra of organizational success is proclaimed to be effective management of change as if “change” is inevitable. The guiding line for most of change theorists has been “change is the only constant.” The forces of change might result into either a gradual or continuous change, like Total Quality Management, or a radical change like business process reengineering or strategic/organizational transformation. During such a focus on change, concern for “continuity” is left far behind. Some of the significant change forces that are discussed here include globalization, new opportunities/threats, changing competition, changing customer needs, new technology, e-business models, mergers and acquisitions (M&As), changes in government policy and legislation, emerging environmental concerns, and imposition of global standards (Fig. 5.1). These are generic change forces that are indicative in nature; specific change forces need to be identified and assessed in unique case situation. At the end of the chapter, select change forces are illustrated using running case study of IBM.

The continuity–change matrix presented in the last chapter has identified four types of strategies, viz., tree, mushroom, wind, and flowing stream strategy. It has been observed that though a large class of organizations either fall under the category of flowing stream or are heading toward it, strategic roadmap of balancing high continuity and high change forces is not yet adequately articulated. In order to evolve such a roadmap, guiding principles of flowing stream strategy are discussed in this chapter. First, the overall strategic thinking behind these principles (covering strategic dimensions and associated risks) is outlined. Subsequently, each principle is discussed so as to identify the strategic channel it supports leading to the evolution of key channels framework (to be elaborated in the next chapter).

The existence of key channels of flowing stream strategy could be witnessed in the corporate world in terms of some strategic practices that are in vogue. An inductive study of the strategic practices in a number of leading organizations operating globally, supported by interviews with senior executives, resulted in identification of strategies that deal with continuity and change in a conjunctive manner. These strategic practices are clustered into certain categories that are termed as golden strategies. These golden strategies are found to be rooted in one or more of the key channels, as discussed in the previous chapter, and are presented in subsequent sections as divert, shift, partition, and integrate strategies, respectively. Each golden strategy is discussed in terms of the basic approach, case illustrations, and the forces of continuity and change that are balanced in its implementation. The methodology and tools to select and interpret the right combination of these strategies with innovation are dealt with in Part IV of the book. The golden strategies discussed in coming sections are a handful of lead strategies evolving on the scene. Each organization is to adapt a combination of these strategies or innovate its own strategies to put different channels of flowing stream strategy in practice in a phased manner.

Treating enterprises as flowing streams there could be three major strategic phases, viz., converge, flow, and diverge. By drawing similarities and analogies from nature, enterprises can chart out natural growth trajectories and may open new vistas of growth. A stream might originate in the form of a trickle, and with its flow trajectories through hills, planes, and many landscapes, it may turn out to be a huge river basin like “Ganges” in India originating from “Gangotri” in Himalayas.

The proposed process categorizes continuity and change forces that are acting on an organization and shortlists the vital and desirable ones out of them. On the basis of the continuity–change combinations, it might use any one or all of the four strategic channels (divert, shift, partition, and integrate) to select suitable strategies at various levels of strategic flexibility. An organization can use these strategic channels with growing strategic maturity in the flow; at the highest level of maturity, the organization might implement all the four channels. The most widely used strategic channel is divert, followed by shift, and then partition; the channel integrate is used sparingly and needs richer strategic insight.