Applying the 5x Why Method to the Persistence of Outdated Strategy Models in Higher Education and Consulting
There is a lot of talk about ‘innovation’ online in the world of universities and management consulting companies. By why are the the so-called ‘experts’ still promoting and using outdated strategy models in high education and management consulting while the external environment is changing rapidly and we know that any model including strategy models and reference models are context-sensitive. They have to be seen within the context of the period in which they were launched and the business environment of that period.
So why do these important and very influential stakeholders keep on doing that instead of for instance digital blue ocean business strategy? Applying the 5 x Why Method gives you this result:
1. Why are outdated strategy models like Porter’s Five Forces, BCG Matrix, Balanced Scorecard, Business Model Canvas, and The Lean Startup still prevalent in universities and management consulting firms?
- Established Curriculum: Universities often have a long-standing tradition of teaching these models, as they are considered foundational concepts in business strategy.
- Industry Standards: Consulting firms often use these models as a common language and framework for analyzing client businesses, reflecting industry norms.
- Ease of Application: These models provide a structured approach to strategy formulation, making them relatively easy to teach and apply.
- Perceived Relevance: Despite their age, these models are still seen as relevant for understanding business dynamics and making strategic decisions.
2. Why are these models considered easy to teach and apply?
- Clear Frameworks: These models offer well-defined frameworks and frameworks, providing a logical structure for analyzing and making strategic decisions.
- Standardized Terminology: The common language and terminology associated with these models facilitate communication and understanding among business professionals.
- Readily Available Resources: There is an abundance of teaching materials, case studies, and software tools available for these models.
3. Why are these models perceived as relevant by these people despite their age?
- Core Business Concepts: These models address fundamental business concepts such as competition, market positioning, performance measurement, and value creation.
- Adaptability to Different Contexts: The principles underlying these models can be applied to various industries and business situations.
- Evidence of Successful Application: Numerous companies have demonstrated success in using these models to guide their strategic planning and decision-making.
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4. Why is the perceived relevance of these models problematic?
- Not Representing The Reality Anymore: Models are supposed to be a simplified representation of reality. These models do not represent the current business environment.
- Oversimplification of Reality: These models oversimplify the complexities of modern business environments, overlooking emerging online non-corporate trends, dynamic factors and the impact on their current and future AI-powered business model.
- Limited Scope: The frameworks of these models do not cater for differences between different types of organizations, different types of internal organizational issues, specific knowledge domains, roles and functions.
- Potential for Misaplication: Misapplication of these models to the wrong companies including startups, scaleups and SMEs lead to ineffective strategic decisions and can endager the continuity of the company and everybody in it.
5. Why is there an urgent need to re-evaluate the use of outdated strategy models?
- Rapidly Changing Business Landscape: The business and especially the online business world after the democratization of AI is changing fast including with new technologies, marketspace dynamics, and new virtual companies, ‘new species’. These new flexible and responsive companies are starting online every using the virtual organization as structure in their new AI-powered organizational design.
- Increased Complexity: Traditional large and slow bureaucratic companies face large external alignment and internal non-alignment issues. Including toxic leadership, creating a toxic work environment.
- Need for Innovation and Flexibiity: To surive and thrive in the fast changing business environment, model innovation is needed. Decisionmakers need new, simple models and tools to embrace innovation including organizational innovation fast and on-time. To challenge often deadly sacred cow assumptions and survive and thrive in the AI-powered economy:
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Conclusion:
While context-sensitive and outdated strategy models like Porter’s Five Forces, BCG Matrix, Balanced Scorecard, Business Model Canvas (BMC), and The Lean Startup have played a significant role in especially business education and management consulting, their continued prominence without critical evaluation raises concerns.
The dynamic nature of the current business landscape and the need for fast innovation and change in both existing large and in new companies call for different approaches to fast and holistic strategy formulation and implementation. In large bureaucratic organizations on the one hand and in new organizations, ‘new species’ online for instance on the other. Why? Because they do not face the same external and internal organizational challenges at all. Different problems, different solutions.
Professors at leading universities and management consultants in the large management consulting firms should re-evaluate their reliance on these old strategy models and learn and incorporate new models, frameworks and methodologies to better equip students and large and small clients for success in our fast changing world of business to become a succesfull, flexible and healthy AI-powered company.
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Kind regards,
Tony de Bree
