The modern problem of corporate fluff
“As a simple example of fluff in strategy work, here is a quote from a major retail bank’s internal strategy memoranda:”Our fundamental strategy is one of customer-centric intermediation.” The Sunday word “intermediation” means that company accepts deposits and then lends them to others. In other words, it is a bank. The buzz phrase “customer-centric” could mean that the bank competes by offering depositors and lenders better terms or better service. But an examination of its policies and products does not reveal any distinction in this regard. The phrase “customer-centric intermediation is pure fluff. Pull of the fluffy covering and you have the superficial statement “Our bank’s fundamental strategy is being a bank.” ”
RICHARD RUMELT Good Strategy, Bad Strategy (2010)
The peerless Richard Rumelt has written one of the best books on strategy in recent years, Good Strategy, Bad Strategy. It is required reading for anyone with an interest in the subject.
In the excerpt shown, the professor is scathing about the use of ‘fluff’ – meaningless, wishy-washy, feel-good jargon – to describe strategy. He makes two points: merely saying what you do in fancy language (“intermediation”) does not confer any distinction. And if you use words like “customer-centric”, you had better mean them. The bank in question does not – it’s just a nice thing to say.
Most banks, in most people’s experience, are in fact anything BUT customer-centric. They are self-absorbed, navel-gazing, inbred institutions that suit themselves, their executive teams and their shareholders at every opportunity – rather than customers. Most banks make it hard to bank, hard to borrow, hard to get served. The idea of placing the customer in the centre of anything would be anathema. Yet pretty much every bank you encounter anywhere in the world will try to say it has a “customer-centric” strategy.
This, you will agree, is absurd.
Rumelt tells us: “A hallmark of true expertise and insight is making a complex subject understandable. A hallmark of mediocrity and bad strategy is unnecessary complexity – a flurry of fluff masking an absence of substance.”
One of the most impressive strategic turnarounds ever is the return of Steve Jobs to Apple in 1997. He said at the time: “Deciding what not to do is as important as deciding what to do.” The Apple of that time was utterly unfocused, churning out dozens of unnecessary products with meaningless number tags (Macintosh 1400 to 9600, for example). This was not the Apple way. But the Apple of 1997 was doing its best to be just like any other computer company, bloated product portfolio and all. It was committing corporate suicide by destroying its uniqueness.
Jobs became enraged at one product strategy session, and shouted “Stop!” According to biographer Walter Isaacson, he picked up a marker and drew four quadrants on a flipchart. The two columns were labelled “Consumer” and “Pro”; and the two rows “Desktop” and “Portable.” That was it. Four product lines were all that were needed.
This sharp focus resulted in outstanding products for each of the four quadrants, as Apple’s engineers finally achieved focus and channeled their energies appropriately. The effect was quick: after years of huge losses, Apple returned to profitability in 1998. The rest, as you know, is history.
That is an example of a leader seeing quickly what needs to be done and why, and making it happen through clarity of communication. That, in other words, is strategy. So toss out those tired and banal statements you keep using, and get to the point. Your strategy is simply what needs to be done and why, and how it’s going to be done. Try saying that for a change.