Distinction and Diversity in Higher Education

New strategy for new times

In case it passed you by we’ve just had “living wage week”. Almost every cause gets a day or a week dedicated to it nowadays, and Nov 4th–8th 2013 was the moment we were supposed to turn our attention to the living wage. It’s a serious issue, of course. Low pay is a big problem for the UK. Just as we have that famous long tail of underperforming businesses we also have a long tail of underpaying employers. And these two phenomena may not be entirely unrelated.

Low levels of pay are clearly demotivating – a “hygiene factor” gone wrong, as the HR department might tell us. So a living wage is a good idea in principle, and probably not as impossibly expensive for some employers to introduce as they might think.

But what is the immediate relevance of this to HE? Clearly students with degrees will be aiming to enter the labour market higher up the pay scales than that. But in a broader sense this topic is entirely relevant: because we are all entering this new world where students are customers, taking big financial decisions that will affect their future. They are making an investment, in part, to escape the trap of permanently low pay.

This is the new world of £9,000 a year tuition fees, leading to student debts after three years of perhaps around £40,000 in today’s prices. That sort of figure certainly frightens parents, even if some young people take it in their stride. To adapt Harold Macmillan: “A wind of change is blowing through higher education… and whether we like it or not, this growth of marketisation is a political fact.”

As recently as 1986, when I went to university, under 20% of 18 year olds entered higher education. Today around 43% do. So this is a different world. And that, of course, means institutions need a different approach, and a different strategy. Ah, strategy! It’s such a lovely word, isn’t it? It comes from the Greek word, strategos, meaning “a general” – so in this old view strategy is clearly something that comes only from the top.

The economist John Kay has written that the word strategy is really a synonym for “expensive” – so that “we are strategy consultants” should be understood to mean “our fees are very high’; and “this is a strategic acquisition” means “we are going to spend far too much money on this thing”.

Gary Hamel, the management guru, says that the dirty secret of strategy is that you often only really find out what your strategy was afterwards, looking back. In fact, he has argued, there is no robust or universally workable or applicable theory of strategy.

Two recent books, a big one and a shorter one, both contribute a great deal to our understanding of what meaningful strategy might be, and how it might be carried out.

UCLA professor Richard Rumelt’s book “Good strategy, bad strategy” (http://www.amazon.com/Good-Strategy-Bad-Difference-Matters/dp/0307886239) has won many admirers for its clear and thorough take on the subject. He has several key observations. Here are just a few:

• Good strategy is rare. Many organisations which claim to have a strategy do not. Instead, they have a set of performance goals. Or, worse, a set of vague aspirations.
• “Bad strategy” occurs when there is bad doctrine, when hard choices are avoided, and/or when leaders are unwilling or unable to define and explain the nature of the challenge.
• Very high quality resources can sometimes win the day almost by themselves. The poorer a firm’s resource base, the more it must depend upon adroit and clever co-ordination of actions.
• Competitors do not always respond quickly, nor do customers always see the value of an offering. Good strategy anticipates and exploits inertia.
• Changes in technology, law, costs, and buyer tastes are normally beyond the control of any competitor, but they can be harnessed.

That’s all “big picture” stuff. For a slightly less grand and more finger-tip set of ideas about strategy consider also Roger Martin and AG Lafley’s book “Playing to win” (http://www.amazon.co.uk/Playing-Win-Strategy-Really-Works/dp/142218739X).

Lafley, ex CEO at Procter and Gamble, says: “Strategy is five choices: what is winning; where am I going to play to win; how am I going to win where I play; where are my core competencies that are going to enable me to win where I play; and what management systems and measures are going to help me execute my strategies?”

Leaders frequently get things wrong in terms of their strategy, Lafley and Martin say. They try to do too much (“Remember, strategy is choice.”) They take on unbeatable opponents (“Remember, where to play is your choice. Pick somewhere you can have a chance to win.”) They take on too much (“No company can do everything well. If you try to do so, you will do everything weakly.”)

Perhaps the bottom line is that a good strategy has to mark your organisation out as different in some meaningful way – unless your strategy is explicitly to copy somebody else. So Lafley and Martin are right: it is about making choices. And Rumelt is right: good strategy means having “a coherent plan to tackle a defined problem”.

Simple, really. But not easy.

Stefan Stern

Stefan Stern is Visiting Professor in management practice at Cass Business School, City University, London

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